Responsible Investing

March 17, 2017

We apply social, environmental and governance standards to all of our investments, believing they help identify opportunities to provide competitive returns to our fund shareholders while also helping to create a more just and sustainable global economic system.

We are very pleased to announce that the Domini Impact International Equity Fund Investor share class (DOMIX) received an Overall Morningstar rating of four-stars as of February 28, 2017, based on risk-adjusted return. The Fund’s Class A (DOMAX)* and Institutional (DOMOX) share classes received an Overall Morningstar rating of five-stars as of February 28, 2017, based on risk-adjusted return.

The Fund's Investor, Class A and Institutional Shares received five stars for the last 3 and 5 years rated against 275 and 223 U.S. domiciled Foreign Large Value funds, respectively, and three stars for the past 10 years, rated against 139 U.S. domiciled Foreign Large Value funds.

Learn more about the Fund.

 

*The Fund’s Class A shares are intended for investors who invest through a financial advisor. They carry a front-end sales charge (load) of up to 4.75% that is paid to the advisor buying the Fund on behalf of the investor. If you do not invest through a financial advisor, please refer to the Investor shares. The Fund’s Class A shares (load waived) received an Overall Morningstar Rating of five stars as of 2/28/17. 

For each fund with at least a three-year history, Morningstar calculates a Morningstar RatingTM based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a funds' monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three-, five-, and ten-year (if applicable) Morningstar Rating metrics. Fees have been waived or expenses advanced during the period on which the Fund's ranking is based, which may have had a material effect on the total return or yield for that period, and therefore the rating for the period. 

Past performance is no guarantee of future results. Investment return, principal value, and yield will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Investing internationally involves special risks, including currency fluctuations, political and economic instability, increased volatility and differing securities regulations and accounting standards. The Fund may focus its investments in certain regions or industries, thereby increasing its potential vulnerability to market volatility. You may lose money.

Although the Fund's Investor shares are no-load, certain fees and expenses apply to a continued investment and are described in the prospectus. The composition of the Fund's portfolio is subject to change.

©2017 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

March 16, 2017

Adam Kanzer, Managing Director, Director of Corporate Engagement and Public Policy 

In January, more than 630 investors and corporations signed a statement asking the incoming administration and Congress to continue moving us toward a low carbon economy, and not to walk away from the historic agreement on climate change reached in Paris last year.

You can find the statement at lowcarbonusa.org. Alongside our name, you will find the names of some of the largest companies in the world. Today, that statement has grown to include over 1,000 companies and investors headquartered in 46 states.

Perhaps even more importantly, more than 200 major companies have made public commitments to set “science-based targets” for reducing their greenhouse gas emissions. This means that they will seek absolute reductions in line with what climate science demands, while continuing to grow their companies. These commitments replace climate goals that improve efficiency but may not actually reduce emissions as companies grow.

These climate commitments are not based on political ideology, but on a pragmatic, hard-nosed look at reality. These companies—among the largest in the world—have done the math, and they see the risk. As a recent Scientific American article proclaimed, “physics doesn’t care who was elected president.” Commitments based on an accurate understanding of reality will remain.

Just last week, one of the world’s largest money managers installed a statue of a defiant little girl, facing down the famed Wall Street bull. They did this to raise awareness of the need to increase the number of women on corporate boards. They did not do this solely out of the goodness of their hearts. They did this because they recognize that diversity is good for business.

All of this reinforces a core belief we have always held: small things matter. When we look back over the course of our history, we see that movements are made of individuals.  We can all applaud the billionaire philanthropist or private equity investor looking to make a real impact, but those investors are riding the crest of a wave. Looking back, we see one small investor after another merely seeking to build a college fund or a retirement account that reflects their concern for human rights and environmental sustainability.

For many, it began with a small voice that said “I don’t feel right investing in that company.” These are the change-makers that brought us to a world where the largest companies in the world now monitor their supply chains for child labor and environmental abuses.

Many of these corporate commitments began with a call from a responsible investor, explaining how business can be strengthened by taking sustainability seriously. Investors large and small helped to make the case to company after company, year after year, and our voices are being heard. There is much more work to do, but there is also much to celebrate.

Every day, the news seems to give us more cause for alarm. But this is not the time to flinch or to turn back. We have been here through Democratic and Republican administrations, doing what we do—using social and environmental standards to select our investments, engaging companies to move them in the right direction, and finding ways to make a direct impact for communities in need.

We are working to ensure that the capital markets serve society, and not the other way around. We are part of a community of responsible investors that is larger, stronger, more innovative, and more effective than it was ten or twenty years ago, and we have more allies than ever before.

Your investment portfolio may seem like a small thing. When it is invested responsibly, however, it can serve as one more link in a chain of accountability that will not be broken.

October 07, 2016

In June, Bloomberg Markets interviewed Domini’s Tessie Petion, VP of Responsible Investment Research & MIS, to discuss how Domini’s ESG (environmental, social and governance) criteria helps their investors avoid volatile companies, such as the drug maker Valeant. Bloomberg noted that Valeant was once a provider of generic drugs and contraceptives in emerging markets and began cutting its research and development budget rapidly acquiring over 100 companies within five years. In the interview, Ms. Petion noted that Valeant’s focus had shifted from the development of lifesaving drugs to a strategy of financial engineering, and therefore no longer aligned with Domini’s investment approach. Domini excluded the company from eligibility for investment in its mutual funds in October 2014 and watched from the sidelines as Valeant stock price subsequently crashed.  

Watch the video here and learn more about how we choose our investments

July 02, 2016

For many years, Domini has incorporated concerns about the environmental risks of companies owning and producing fossil fuels into our investment standards. Over time, we have gradually eliminated an increasing number of these firms from our holdings as our concerns about a variety of environmental and safety issues, including climate change, have increased.

We have never held coal-mining companies, and have historically approved very few major integrated oil companies. In recent years, we have excluded the few integrated oil companies that we had previously approved, and eliminated an increasing number of the smaller oil and gas companies from our list of eligible investments, due to concerns over safety or the environment.

We had historically favored companies focused on the production of natural gas because it burns more cleanly than oil. But as innovation took hold and hydraulic fracturing became widely used, we began to differentiate between the records of these natural gas companies. Due to increasing concerns about methane emissions, safety and community health issues, we gradually reduced the number of natural gas companies approved, until we divested from this segment of the energy industry entirely.

We exclude companies that are substantial owners and producers of oil or natural gas reserves and are included in the Integrated Oil & Gas or Oil & Gas Exploration & Production Industries as defined by the Global Industry Classification System (GICS), as well as companies significantly involved in coal mining.

We have made each of these decisions in light of the financial, environmental and moral concerns associated with fossil fuels and in recognition that an increasing portion of the responsible investment community has found divestment a productive avenue to further debate on climate change, one of the most important and difficult issues of our time.

June 08, 2016

Corporate tax avoidance has been an important component of our engagement and policy work for several years.  The United Nations’ backed Principles for Responsible Investment is a global network of investors responsible for $60 trillion in assets.  After expressions of interest from a significant number of its members, PRI established a Taskforce on Tax, including Domini, to develop guidance to help investors engage with corporations on global tax strategies.  In the fourth quarter, the PRI published the result of this work, and in the first quarter hosted a roundtable discussion with a group of six non-US corporations to discuss the guidance.  We were very encouraged by the constructive nature of the meeting and look forward to continuing our work with the Taskforce.

June 08, 2016

Although our engagement work has historically focused on corporations, leveraging our rights as shareholders, we are also interested in opportunities to deepen the impact of the Domini Social Bond Fund through engagements with issuers and standard setters.  To date, these engagements have focused on green bonds, designed to finance projects and activities that address climate change or serve other environmentally beneficial purposes.

In January, we spoke with Morgan Stanley to discuss their inaugural green bonds to fund renewable energy and energy efficiency projects, and highlighted the importance of greater transparency in the green bond market.

We attended a meeting with California State Treasurer John Chiang to discuss green bond evaluation approaches, best practices, and policy incentives to grow municipal green bond issuances.  The State is planning on issuing green bonds to address water stress and climate change impacts in the region.  We provided feedback on California’s 2014 green bond and hope to continue our dialogue with the State.

We were also delighted to join the US Green City Bonds Coalition to promote low-carbon and climate resilient infrastructure investments through the development of municipal green bonds.

In the fourth quarter, we participated in a Ceres-organized introductory meeting with S&P Global Ratings (formerly, Standard & Poor’s Rating Services) to discuss the inclusion of climate risks into its oil and gas company credit ratings.

May 31, 2016

This past December marked a historic moment in the fight against climate change, as the world came together in Paris to address what is perhaps the most significant challenge our global community has ever faced. Representatives from 195 nations reached a landmark agreement that provides a framework for universal long-term action on climate change. Although the agreement is not legally binding, it achieves a historic degree of global unity around the need to avoid catastrophic climate change.

The Paris Agreement sends a strong, unified message to businesses and investors around the world that the time for relying on fossil fuels for economic growth is over. We hope that this will spark a new wave of investments and public policies that help to accelerate the shift to renewables around the world and across the value chain—from system manufacturers and electricity generators, to financiers and consumers.

In our essay, we take a closer look at some of the ways the Domini Funds are helping to promote a clean-energy future. This includes investments in manufacturers of wind- and solar-power systems, utilities generating electricity from renewable sources, banks financing renewable projects, corporations purchasing renewable energy to cover electricity consumption, green bonds, and more. We also discuss how we our using our voice as investors to talk to companies about their commitments to address climate change.

Domini Funds shareholders are playing a role in the world’s crucial transition to renewable energy. Click here to learn more about our Environmental Sustainability Story. 

April 19, 2016

Hillary Marshall, Research Associate, Responsible Investment

As a woman working at Domini Social Investments, it can be easy to disregard the pressing issue of gender diversity practices in the workplace. Domini was founded by a woman-Amy Domini-who continues to serve as Chair. Our CEO, CFO, and General Counsel are all women. More than half of the firm’s employees are women. When I attend meetings in the office, most often I am surrounded by more women than men. Although this reality is normal for me, it is especially rare for the financial industry. Recent trends suggest we are in the midst of change, but more assurance is necessary. This is especially true for diversity at the board level.

In 2009, the SEC approved rules for enhanced disclosure about risk, compensation and corporate governance in proxy statements and other corporate reports. Among these new requirements, the SEC required companies to disclose “the consideration of diversity in the process by which candidates for director are considered for nomination.” If a policy does exist, “how this policy is implemented, as well as how the nominating committee (or the board) assesses the effectiveness of its policy” is also required. While this was an important addition to disclosure requirements, the final ruling was a missed opportunity. Companies and shareholders alike are hurt by the fact that the SEC left it up to companies to define “diversity” for themselves. Not surprisingly, many companies define the term broadly, to include educational background, experience, viewpoint, etc.

In 2015, a number of large pension funds petitioned the SEC to require companies to provide investors with information on each nominee’s gender, race and ethnicity, in addition to the skills, experiences and attributes needed to fulfill the corporation’s mission. Early this year, Mary Jo White, Chair of the SEC, said she shared these concerns, and has directed her staff to look into it. This is a hopeful sign. Despite these remarks, last month, a number of lawmakers publicly criticized Chair White, for taking too long to propose new rules for diversity disclosure.

Increased diversity at the board level promotes effective corporate governance. The number of studies that support this conclusion continues to rise with each passing year. Companies with diverse leadership are more likely to avoid group-think and have the potential to better understand customer needs, anticipate new societal trends and emerging issues, and foster cooperation with their workforce and communities.

Since its inception, Domini has advocated for greater gender and racial diversity on corporate boards, and we have a long history of engaging with companies on the issue. However, in order to obtain useful and comparable diversity reporting from all companies, the implementation of explicit guidelines by the SEC is crucial. As boards increasingly become more diverse, we all stand to benefit.

April 12, 2016

Lionella Pezza, Research Analyst, Responsible Investment

Over the past several years, there has been a sharp increase in the number of new auto loans, driven by a surge in lending to borrowers with poor credit. In 2015, the number of new subprime auto loans reached their highest level since before the financial crisis, surpassing subprime mortgage issuance in volume. While providing access to credit to subprime borrowers is essential for a healthy, functioning economy, it is also a risky business which should be conducted with extra care to protect both the borrower and the lender. Because their credit history is weaker, subprime borrowers often pay higher interest rates on loans due to the perception that they are more likely to miss payments during difficult economic times.

In recent years, Americans have been borrowing record amounts to purchase vehicles, which are among the most commonly held type of nonfinancial asset in the United States. Cars have become a necessity for many families who rely on them as their primary means of transportation and to access greater economic opportunities, including employment. For many, owning a car is seen as such a necessity that they will pay their monthly auto-loan payment before paying their mortgage.

According to Experian Automotive, the average loan for a new car in the fourth quarter of 2015 was $31,008 for prime borrowers and $28,231 for subprime borrowers, with the amounts to both types of borrowers increasing from the previous year.  Typically, subprime borrowers tend to stretch the loan for a longer period to reduce monthly payments, increasing the total amount paid over the life of the loan. According to Experian, fourth-quarter 2015 auto loans with a term of 73 to 84 months accounted for 29% of new vehicle loans, with 71% of new car loans exceeding five years. Besides increasing the overall cost of the car, longer loans carry a higher risk of negative equity (when the loan balance exceeds the value of the vehicle) as cars typically lose 15-35% of their value in the first year and 50% or more over three years.

A sizable added cost for subprime borrowers is the dealer markup. When a borrower obtains a loan at a car dealership instead of a bank, the dealer can charge an additional fee for their services. Usually, loans to subprime borrowers have higher markups, which can produce a higher default rate.  Federal officials have expressed concern over this practice, as the system incentivizes dealers to charge higher rates. There have also been cases of discriminatory lending practices. Ally Financial agreed to pay $98 million to settle Department of Justice and Consumer Financial Protection Bureau lawsuits that alleged it marked up interest rates on auto loans to minority borrowers.

Providing access to credit to subprime borrowers, especially the under-banked and unbanked, who encounter the most difficulties in obtaining any kind of access to credit is important for individuals, as well as our economy as a whole. At the same time, if companies do not lend in a responsible way, their lending may constitute harmful predatory lending. At Domini, we seek to invest in companies and securities that provide non-predatory access to capital for those historically underserved.

April 06, 2016

This past December marked a historic moment in the fight against climate change, as the world came together in Paris to address what is perhaps the most significant challenge our global community has ever faced. Representatives from 195 nations reached a landmark agreement that provides a framework for universal long-term action on climate change. Although the agreement is not legally binding, it achieves a historic degree of global unity around the need to avoid catastrophic climate change.

The Paris Agreement sends a strong, unified message to businesses and investors around the world that the time for relying on fossil fuels for economic growth is over. We hope that this will spark a new wave of investments and public policies that help to accelerate the shift to renewables around the world and across the value chain—from system manufacturers and electricity generators, to financiers and consumers.

In our just-released Semi-Annual Report, we take a closer look at some of the ways the Domini Funds are helping to promote a clean-energy future. This includes investments in manufacturers of wind- and solar-power systems, utilities generating electricity from renewable sources, banks financing renewable projects, corporations purchasing renewable energy to cover electricity consumption, green bonds, and more. We also discuss how we our using our voice as investors to talk to companies about their commitments to address climate change.

Domini Funds shareholders are playing a role in the world’s crucial transition to renewable energy. Click here to learn more about key issues we seek to address in our approach. 

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