Sustainable and Responsible Investing

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. As the adviser to 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:
  • Fossil Fuels
  • 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 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.
Spring Bank was founded in 2007 to serve New York City’s underbanked, Spring Bank is a certified community development bank headquartered in the South Bronx.  Since its founding, its primary mission has been to provide a wide range of innovative deposit and lending services that enable low-wealth customers to benefit from mainstream banking.  Spring Bank is equally committed to stimulating and supporting small business growth and job creation, with a significant portion of its commercial and business loans designated for low and moderate income census tracts.
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, as initiated by Pekin Singer Strauss, 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
Pekin Singer Strauss, on behalf of the Appleseed Fund, votes 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 boards being held accountable through our 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.

Annual Impact Report

2017Impact Report
2016Impact Report
2015Impact Report