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:

  • Alcohol
  • Tobacco
  • Gambling
  • Weapon systems
  • Pornography

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 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.
Community Bank of the Bay is a community bank that was founded in 1996 in Oakland.  The Bank's Bay Area Green Fund provides financing to local green businesses or for green purposes.
Sunrise Banks is headquartered in St. Paul, Minnesota and has a long history of serving inner city communities in Minneapolis and St. Paul.  Sunrise is also a certified B Corp;  a certification granted to organizations that demonstrate a commitment to transparent corporate governance, solid environmental stewardship, and positive community impact.
Beneficial State 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 shareholder advocacy efforts encourage boards and management teams to be more transparent and responsible for environmental, social, and governance (ESG) matters.  We believe investors can have significant influence on the companies they own through informal engagement, through proxy voting and through shareholder resolutions.

Proxy voting

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 that are aligned with the creation of long-term value for stakeholders, encourage more transparent reporting on companies' sustainability initiatives, and bolster boards' efforts to govern more responsibly.

The following are recent examples of Appleseed holding boards accountable through its proxy votes:

  • Voted for a shareholder resolution with Avon Products requesting that the Board prepare a report on the company’s use of safer ingredient substitutes as they become available for chemicals that are likely to cause health problems.
  • Voted for a shareholder resolution with Staples urging the Board to provide shareholders with a report assessing the human rights risks related to the company’s supply chain.

Shareholder resolutions

Filing a formal resolution to ratify or request a specific action be taken by a corporate board is another way to encourage companies to become more sustainable.  

In 2014, Appleseed Fund proposed a shareholder resolution with Nabors Industries, asking the company to begin producing regular sustainability reports.

  • September 12, 2014 Greenchipstocks.com Investing in the Appleseed Fund (MUTF: APPLX) When social responsibility leads to profits by Tim Conneally:  "While it's true that no fund manager can predict the future, they can work a strategy through calm seas and rough. When it's a strategy you agree with, investing becomes much easier."
  • April 22, 2013 WealthManagement.com The Upside to Doing Good by Stan Luxenberg:  "Among the value stars is Appleseed, which only takes stocks that sell at big discounts to their fair values.  Instead of trying to stay broadly diversified, the managers bet heavily on a few bargain stocks and avoid sectors that appear expensive or risky."
  • April 4, 2011 Wall Street Transcript Value Creation Through Sustainable Investing: "For any company to go into our portfolio the stock has to pass two criteria. First, it has to pass our strict value criteria, which means there has to be at least a 50% upside between the current stock price and our own independent estimate of instrinsic value. And then it also had to meet our sustainability critera."
  • May 10, 2010 Barron's "A Value Fund with Values" by Karen Hube: "Appleseed is not only the top-ranked socially responsible fund over the past three years; it is also the top performer in the entire mid-cap value stock category for the three years ended April 30."
  • February 23, 2010 Kiplinger "A Superb Socially Responsible Fund" by Steven Goldberg: "Appleseed Fund has shined during the bear market – and the rebound."