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SUSTAIN
ABLE
INVESTM
ENTS
SU
ST A
I NA
BI L
I TY
FR
AM
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K F
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IN
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Lysis Bourget-VenninSuday JainVanessa CaronJimmy Huang
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AGENDA
1.Defining sustainability – Market angle
2.Our definition
3.Sustainable Investment strategy
4.Evaluation of the Funds
5.Conclusion
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DEFINING SUSTAINABILITY – MARKET ANGLE
sustainable investment means taking account of environmental, social and governance factors - known as ESG - across all our day-to-day investment
business. - CalPERS
Manifacturing sustainability - beyond green - GE
sustainability means
making every day better for people and the planet through how we innovate and how we
act. – P&G
principle of a triple-bottom-line. This means managing our operations and growth plans
in a way that enhances social and economic benefits, while striving to
minimize the environmental impact
associated with development. - Suncor
committed to developing
the most efficient power systems in the world. This helps the environment and our customers by enabling
them to do more, using less. –Rolls Royce
We view sustainability from two perspectives: one, as a valuable tool and skill set we offer our clients, from life cycle analysis to reducing environmental impact to community engagement;
and two, as the most compelling way to conduct ourselves professionally and live up to our employees’ expectations –SNC Lanvlin
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SUSTAINABILITY - REVISITED
Sustainable investment
should equally be based on
financial metrics and performance
metrics, namely, ESG.
Improving social and environme
ntal performan
ce
Positive impact on
society Maintaining financial
goals
• Input and outputs are not being depleted over time• 3 factors or equal importance: Environmental, social, and
governance. • Long-term vision for innovation and growth, consideration for
the future
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ENVIRONMENT, SOCIAL AND GOVERNANCE, OR ‘ESG,’
PERFORMANCE, IS WHERE SUSTAINABILITY AND CAPITAL MARKETS
CONVERGE.
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SUSTAINABLE INVESTMENT STRATEGY
ESG
Financial Performanc
e
Sustainable
Investments
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INVESTMENT STRATEGY - CRITERIAS
• Interdependence of ESG factors
• No tradeoffs between financial returns and ESG performance
• Morally conscientious investing
• Financial critieria: Benchmark, expense ratio, turnover ratio, asset class, total rate of return, confidence intervals
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ENVIRONMENTAL SUSTAINABILITY, SOCIAL RESPONSIBILITY, AND GOOD GOVERNANCE ARE INTERDEPENDENT
Environmental
sustainability
Social Responsibil
ity
Good Governan
ce
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NO TRADEOFFS BETWEEN FINANCIAL PERFORMANCE AND ESG
• Sustainability is the root of innovation
• Correlation between financial performance, not causation
• Equal weights for both financial data and ESG
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MORALLY CONSCIENTIOUS INVESTING
• Consulting a moral stance on the question of human freedom and autonomy, we believe:
• We should focus efforts towards investing in companies that promotes the prevention of negative externalities
• We should not be divesting in companies that offer socially irreesponsible goods and services
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MORALLY CONSCIENTIOUS INVESTING
• No judgement on what activities free agents should or should not engage in because:
• There is no quantitative method to measure harm
• Undermines human agency and autonomy
• Sustainable efforts should not be based on arbitrary values which investors impose onto others
Focus on preventing harm originating from
an external source
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• Benchmark• Expense Ratio• Turnover Ratio• Asset Class
FINANCIAL CRITERIA
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ABBE SRI FUND
Octob
er (0
6)
Decem
ber (
06)
Febr
uary
(07)
April
(07)
June
(07)
Augus
t (07
)
Octob
er (0
7)
Decem
ber (
07)
Febr
uary
(08)
April
(08)
June
(08)
Augus
t (08
)
Octob
er (0
8)
Decem
ber (
08)
Febr
uary
(09)
April
(09)
June
(09)
Augus
t (09
)
-25.00%
-20.00%
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
Abbe SRI FundRussell 2000
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• 3-year rate of return: -10.04%• 3-year benchmark (Russell 2000
index): -9.35%• Expense Ratio: 1.25%• Turnover Ratio: 252%• Asset Class: Small Growth
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WINSLOW GREEN GROWTH FUND
Octob
er (0
6)
Decem
ber (
06)
Febr
uary
(07)
April
(07)
June
(07)
Augus
t (07
)
Octob
er (0
7)
Decem
ber (
07)
Febr
uary
(08)
April
(08)
June
(08)
Augus
t (08
)
Octob
er (0
8)
Decem
ber (
08)
Febr
uary
(09)
April
(09)
June
(09)
Augus
t (09
)
-40.00%
-30.00%
-20.00%
-10.00%
0.00%
10.00%
20.00%
30.00%
Winslow Green GrowthMorningstar Small-Cap Core
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• 3-year rate of return: -26.69%• 3-year benchmark (Morningstar
Small Cap Core): -12.28%• Expense Ratio: 1.20%• Turnover Ratio: 113%• Asset Class: Mid-Cap Growth
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CALVERT SOCIAL INVESTMENT EQUITY FUND
Octob
er (0
6)
Decem
ber (
06)
Febr
uary
(07)
April
(07)
June
(07)
Augus
t (07
)
Octob
er (0
7)
Decem
ber (
07)
Febr
uary
(08)
April
(08)
June
(08)
Augus
t (08
)
Octob
er (0
8)
Decem
ber (
08)
Febr
uary
(09)
April
(09)
June
(09)
Augus
t (09
)
-20.00%
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
Calvert Social Investment Equity FundS&P 500
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• 3-year rate of return: -3.68%• 3-year benchmark (S&P 500): -
15.43%• Expense Ratio: 0.67%• Turnover Ratio: 51%• Asset Class: Large Growth
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CONFIDENCE INTERVAL TESTING
Benchmarks Russel 2000Growth
Morningstar Small-Cap Core
S&P 500
95% C.I. 0.04±2.4 -0.07±2.588 -0.302±1.922
Funds Abbe SRI Winslow Green Growth
Calvert Social Investment Equity Fund
95% C.I. -0.072±2.245 -0.359±3.292 0.058±1.927
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OUR RECOMMENDATION
Calvert Social Investment Equity Fund
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KEY POINTS
• Sustainable investments incorportate ESG performance with financial returns, without tradeoffs.
• Environmental and social leadership is compatible with profit. Calvert shows commitment to ESG and strong financial performance.
• High performing fund with low risk ensures financial stability and thus sustainability.
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Thank you.
Questions?