We are long-term investors who recognize that value is not created in a single quarter or even in a single year. Long-term, enduring value
is created over years of hard work with smart decisions and prudent long-range planning. At Appleseed, we examine a company's Environmental,
Social, and Governance (ESG) factors when we evaluate an investment, when we communicate with management, and when we vote on shareholder initiatives.
Through our ESG screens, we believe we can reduce our investment risks. When a company focuses on improving its safety performance, it reduces the
risk of a safety-related lawsuit. When a management team is already looking to improve its own environmental performance, the likelihood of a large
environmental-related liability is diminished. When management incentives are properly aligned with shareholders, managers are less likely to risk a
company's competitive positioning for a short-term gain of the stock price.
The Fund performs both negative and positive ESG screens on its investments, and the research involved provides us with important insights into a
company’s culture and management’s ability to take a long-term view of the business. We apply responsibility screens as an important risk management tool.
We also perform these screens to ensure that we own responsible companies with managers who make decisions with an awareness of their impact on the environment
and on their community.
We exclude companies from the Appleseed portfolio that generate material revenues in the following industries:
- Weapon systems
In addition, we look at other important areas that help us measure risk and determine whether companies are being managed responsibly. For example, we
exclude natural resource companies that have direct investments in certain countries like Myanmar (Burma) and Sudan. Some of the factors and issues we examine
in our positive ESG screens are environmental impact, human rights issues, and Community Investing.
The Appleseed Fund generally holds between one and two percent of its portfolio in investments which have a direct, positive impact on local communities.
We have allocated a portion of the Fund’s capital to CDs in various Community Development Financial Institutions (CDFIs). These CDFIs provide loans to individuals
and businesses which are under-served by traditional banks.
||Self-Help is a credit union that funds mortgages and small business loans to women, minorities, rural residents, and low-wealth families in more
than a dozen communities in North Carolina and California.
||University Bank provides loans in low-income urban neighborhoods in St. Paul and Minneapolis, making these communities a better place to live, work,
and play through innovative programs like the Socially Responsible Deposit Fund and Houses to Homes.
||One Pacific Coast Bank serves the banking needs of individuals, families, businesses, nonprofit organizations, and the environment. The Bank’s mission
is to facilitate prosperity in its communities (including the Bay Area and Pacific Northwest) through beneficial banking services delivered in an economically
and environmentally sustainable manner.
The Appleseed Fund votes its proxies in a manner that considers shareholder interests and that encourages boards to govern companies more responsibly. Our votes support
management incentives which are aligned with the creation of long-term value, encourage more transparent reporting on companies’ environmental initiatives, and bolster boards’
efforts to govern more responsibly.
Some examples of Appleseed’s proxy voting policies:
- Vote for increased reporting on a company’s animal welfare standards and for proposals that phase out testing that is unnecessary or not required by regulation.
- Vote for proposals asking companies to voluntarily label genetically engineered ingredients in their products.
- Vote for proposals at insurance companies and other financial institutions to cease investment in tobacco companies.
- Vote for proposals requesting a report on greenhouse gas emissions.
- Vote for requests for reports detailing a company’s operations in a particular country and on proposals to implement certain human rights standards at company facilities or those of its suppliers
and commit to outside, independent monitoring.