Our Environmental Sustainability Story
At Domini Impact Investments, we take a comprehensive approach to the promotion of environmental sustainability through our Funds. Our concerns span industries and sustainability issues. We are not just alternative energy or ‘clean tech’ investors, although these are certainly part of our investment considerations. Rather, we view all industries as facing sustainability challenges to one degree or another.
Our investment process is guided by Domini’s Impact Investment Standards, which provide a framework for our research to direct investments toward the promotion of a society that values human dignity and enriches the natural environment, while seeking a competitive return.
Our environmental standards focus on five primary areas:
• Renewable and alternative energy sources
• Eco-efficiency and resource conservation
• Recycling, safer technologies, and lifecycle design
• Pollution control and abatement
• Long-term environmental sustainability
We believe that companies that acknowledge the long-term sustainability challenges of their industries, maximize energy efficiency, use alternatives to fossil fuels, use recycled materials, reduce use of toxic chemicals in manufacturing, and produce less solid and hazardous wastes, will benefit the environment, as well as themselves by increasing their potential efficiencies and reducing their potential liabilities.
Climate change is a global issue that cuts across numerous sectors of our worldwide economy. The primary source of greenhouse gas emissions is fossil fuel consumption, which in 2014 accounted for 76% of all GHG emissions in the United States. According to the Environmental Protection Agency, the primary end users of energy generated by fossil fuels were transportation (33.4% of emissions), industry (27.0%), residential consumers (21.0%) and commercial consumers (18.0%). Electric utilities were the primary generators of energy using fossil fuels1.
If the challenges of climate change are to be addressed, use of fossil fuels and GHG emissions must be reduced across all these sectors. Consequently, Domini sets a goal of GHG reduction for a wide variety of industries. For example, we evaluate fuel efficiency for the auto and trucking industries, age of fleet for the airline industry, emissions for the cement industry, alternative fuels and cogeneration for the electric utilities industry, and energy efficiency for the housing, commercial office space, and REIT (“Real Estate Investment Trust”) industries. We also include positive key indicators for companies whose business model includes the manufacture of energy-efficiency-related products such as LED lighting, next-generation batteries, green building materials and equipment, material recycling, smart grid technology, and alternative and renewable energy research and development.
Moreover, the specifics of how environmental challenges play out differ dramatically from sector to sector. For example, when it comes to water—which along with climate change is likely to be one of the greatest environmental and sustainability challenges of the 21st century—our focus varies from industry to industry. For the pulp and paper industry, we look for reductions in pollution to waterways; for electric utilities, our concern is thermal pollution issues (degradation of water quality by change in temperature); for beverage companies, efficiency in water usage and depletion of local water supplies; for semiconductor firms, reductions in water usage and wastewater management in manufacturing; for banks, our concerns include lending policies for the construction of large dams; and for agricultural firms, preservation of local aquifers by reducing water use and water contamination by agricultural chemicals.
For most industries, identifying “best practices” in sustainability is our preferred approach. For these industries, we favor those companies that are making the greatest progress in addressing their industry specific challenges. However, for a limited number of industries, we believe that even best practices do not hold out hope of addressing intractable environmental issues—and we exclude these industries entirely. For example, we do not believe that adequate solutions currently exist to address the safe operation of nuclear power plants and storage of the high-level radioactive wastes that they generate, and we are skeptical that such solutions can be found. We therefore exclude all substantial owners of nuclear power plants. We believe that it is impossible to burn coal as a fuel in ways that don’t make it an unacceptable greenhouse gas emitter—and therefore exclude companies whose business model relies significantly on coal mining. Similarly, we don’t invest in oil and gas exploration and production companies in light of the financial, environmental and moral concerns associated with fossil fuel production.
To help bring about changes in corporate practice, we communicate our environmental concerns to companies through our proxy voting and direct engagement with corporate management. We consistently vote for environmentally related shareholder resolutions; and we file shareholder resolutions and enter into direct dialogue with corporations on matters of concern. Over the years we have filed or co-filed numerous shareholder resolutions on such environmental issues as climate change, sustainable forestry, toxic chemicals use and environmental justice. We are active in several coalitions of concerned investors and environmental organizations urging improved corporate environmental practices, including Ceres, the Investor Environmental Health Network, CDP (formerly, the Carbon Disclosure Project), and others. We also weigh in on public policy matters affecting the environment when appropriate.
We believe in a comprehensive approach to the environmental challenges of our time that seeks incremental change while urging exploration of revolutionary alternatives. We recognize that, as investors, our ability to produce meaningful change is only one part of the larger efforts that must be made throughout our societies. These include public policy initiatives by government and changes in basic consumption practices in the developed and developing worlds. It is our hope that increasing awareness that the way you invest matters will amplify the voice of the responsible investing community. As corporations learn that investors, i.e. their owners, care deeply about these kinds of global changes, they will increasingly focus on ways to help address the substantial environmental issues we face as our rapidly developing societies move into the 21st century.