ESG and
Fixed Income Investing
2
ndAnnual CSR Investing Summit: ESG and Fixed Income Investing
US SRI Fixed Income Mutual Funds
July 22, 2014
Henry Shilling, Senior Vice President
July 22, 2014
Sustainable and responsible investing (SRI) drivers/trends
US/European SRI Assets PRI Signatories
Sources: US SIF, EFAMA and PRI. As of 12/31/2011 and 4/2014
ESG 5
• Exclusionary:
Tobacco, firearms, alcohol, gambling
• Divestment
Ethical
investing/Exclusionary practices
• Community development
• Health/welfare
• Environment (green bonds)
Impact investing
• Equity
• Fixed income
• Real estate
• Other asset classes
ESG Integration
• Use of ownership clout to advocate for stronger ESG stewardship policies and practices: Proxy voting, shareholder resolutions, etc.
Shareholder advocacy
Sustainable and responsible investing (SRI)
Environmental Social Governance
Climate change strategy Stakeholder relations Board structure
Environmental policy Supply chain management Director independence
Environmental practice Health and safety policy Executive compensation
Pollution management Community impact assessment Shareholder rights
Water supply management Product safety management Audit quality
Waste management Working conditions Accounting management
ESG Factors
US sustainable and responsible mutual funds
Fixed Income Funds Equity/Balanced Funds
Sources: Morningstar, ICI and Moody’s analysis. Total net assets as of 5/2014 and 6/30/2014 in $ billions.
SRI Funds,
$15
All Funds,
$3,427.3
SRI Funds,
$70.8
All Funds,
$9,436.8
ESG 7
Fixed income SRI mutual funds: management firms
Investment Manager # Funds*
Total Net Assets ($ millions)
Calvert Investment Management, Inc. 9 4,734.7
PIMCO 2 3,468.4
GuideStone Capital Management 6 2,718.2
Community Capital Management, Inc. 1 1,547.3
Pax World Management LLC 1 721.0
All Other (10 firms) 11 2,108.7
Totals 30 15,298.3
*Excluding share classes, as of 6/30/2014.
Fixed income SRI mutual funds: SRI strategies
Based on prospectus reviews and company discussions.
ESG 9
Total return performance relative to benchmark
Universe of intermediate-term funds: 1, 3, 5 and 10 year time intervals to 6/30/2014
Average turnover rates (%)
180.18
214.00
28.00
252.40
23.68
190.13
244.78
0 50 100 150 200 250 300
Exclusion ESG Integration Thematic: CRA ESG Integration & Exclusion ESG Integration, Exclusion, & Impact Total Comparable Non-SRI Funds
ESG 11
Average expense ratios (%)
1.07
1.34
0.75
0.93
0.75
1.00
0.88
0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60
Exclusion ESG Integration Thematic: CRA ESG Integration & Exclusion ESG Integration, Exclusion, & Impact Total Comparable Non-SRI Funds
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