In this Issue:
We publish quarterly impact updates to keep shareholders informed on how their investments are making a difference.
Climate-Led, Impact Leading
We’re on a mission to create a greater and greener world. By seeking companies that are developing innovative models, engaging to encourage change where we feel we can make a positive impact, and strengthening our commitment to advancing the UN Sustainable Development Goals, we’ll uphold our firm’s responsibility to allocate its capital and use its voice to create the world we want to see. Climate change has systemic relevance across portfolios. Together, let’s continue to invest with an awareness that environmental, social, and financial systems are linked.
Domini and the UN SDGs
Each of the 17 UN Sustainable Development Goals (SDGs) are reflected in our Impact Investment Standards, which were first published in 2005. Through the application of our standards, we believe we can build SDG-aligned portfolios that support the strength and resiliency of our social, environmental and financial systems.
In each impact update, we’ll feature a few of our engagements alongside an investment highlight and show you which SDGs these are aligned with.
Domini meets with company executives on its own and in collaboration with other investors to encourage stronger policies and practices on the issues that matter to us. Aligned with our standards, we seek improved disclosure, more responsible practices, and address emerging issues with our companies. Through this constructive interaction – via letters, dialogues, shareholder proposals, and proxy votes – Domini communicates its expectations to companies and encourages innovation and business models that uphold respect for human rights while contributing to ecological sustainability and resilience.
Addressing Climate Change
Strong, effective public policy and investment from government at the international, national, and state level are essential to address the climate crisis . We expect to see governments evaluating and accelerating their commitments in anticipation of November’s COP 26 climate talks in Glasgow. Domini has joined Global Investor Statements because we support ambitious climate and biodiversity commitments, including strong emissions standards. We spearheaded a letter backed by investors with $1.5 trillion in assets under management, urging the passage of the CA Deforestation Free Procurement Act, which unfortunately did not get signed into law this legislative session.
Through engagements with Toyota and Cummins, we’ve also encouraged the auto industry to reduce its carbon footprint from transportation, expand its low-carbon business planning–including with customers, and make investments in battery development and electrified power trains.
The low-carbon transition will require significant shifts in the labor force, and we urge increased disclosure on human capital management in order to evaluate how workers and communities are being engaged and impacted in a just transition, including with Eversource.
Read more on our work in this area at domini.com/insights/climate-led-impact-leading.
Investment Highlight: Domini Impact International Fund
Vestas Wind Systems is a Danish company and a global leader in onshore wind turbine and systems with advanced analytics and data to optimize the energy production for wind turbines. The company engages in the development, manufacture, sale, and maintenance of wind power plants. In addition, as a part of its 2020 commitment to produce zero waste turbines by 2040, Vestas set various short-, mid- and long-term targets to increase the recyclability rate of wind turbine components.
Ensuring Privacy & Freedom of Expression
As data becomes increasingly valuable and central to our society, some companies have access to sensitive information, such as our location, purchasing history, or call data, or are requested by governments or law enforcement to provide user data.
Domini joined an Investor Statement on Corporate Accountability for Digital Rights. We then engaged with AT&T and Deutsche Telekom on their policies and practices on freedom of expression, privacy, requests for data, and transparency with users, as evaluated by Ranking Digital Rights1. Both companies provide vital services and telecommunications access, and through our engagements, we seek to better understand how they are protecting freedom of expression for users, including what they do with sensitive user information. We encourage them to have clear policies, governance and oversight, accountability, and human rights considerations on how they gather, use, and share customer user information.
Access to Products & Services and Equity
Our standards guide us to look for companies with resilient business models that use innovative solutions to address urgent global and societal challenges. Ideally, their products must also be affordable, accessible, equitable, and transparent. Our recent engagements with Pfizer and Moderna encourage a greater technology transfer in order to expand global access to the COVID-19 vaccine.
In alignment with the objectives of the Access to Medicine Index2, we engaged with Eisai, a Japanese pharmaceutical company, to urge it to make epilepsy and cancer medicines affordable and accessible for people in low- and middle-
To support the Access to Nutrition Initiative, Domini joined a collaborative engagement with Unilever to better understand how its business planning addresses global challenges on obesity, diet-related chronic diseases, and undernutrition. Increasing the nutrition profile of their products and giving consumers the information they need will help them make healthy decisions.
Investment Highlight: Domini Impact Equity Fund
Mercado Libre, an e-commerce company based in Argentina, offers innovative payment services for the underbanked. Its e-wallet payment service targets people who have been historically excluded by financial institutions. Mercato Pago allows users to process online payments, send and receive money, and is available in Argentina, Chile, Brazil, Colombia, Mexico, Peru, Venezuela, and Uruguay. The company offers several services, including point-of-sales solutions to process debit and credit cards to small and medium enterprises.
Elevating Human Capital
There are major shifts happening in the global workforce. Labor shortages are contributing to global supply chain delays, transitions, and strong competition, and there is also widespread poverty and inequality, as well as unsafe or inequitable workplaces.
We joined a collaborative engagement with Autodesk on its resilience amid COVID-19. We evaluated the board’s role in human capital management, employee well-being, and business model transformation. In investor letters and engagements, we supported increased disclosure on workplace diversity, equity, and inclusion; human capital management; paid leave; the end of forced arbitration clauses; and encouraged conditions that help foster the kind of resilient workplace where workers can thrive. For workers in the global supply chain, this can be challenging. Around 100,000 people in the Xinjiang Uyghur Autonomous Region (XUAR) region may be held in repressive labor camps, working under conditions of forced labor3. Through a shareholder proposal at Nike and in dialogue with Hennes & Mauritz AB (H&M), we urge strong human rights due diligence and effective monitoring systems to help ensure their supply chains are not contributing to forced labor.
Investment Highlight: Domini International Opportunities Fund
Just Eat is an e-commerce company based in the Netherlands that owns and manages food delivery websites. The company’s 9,000 couriers, which service restaurants that do not have their own delivery capabilities, are directly employed by the company and are provided with e-bikes in most cities. All couriers receive training on road safety. This is a great example of a company providing stable work in an industry where the median hourly wage is low. In New York City, for example, a delivery worker’s median hourly wage is just $7.94, according to a study conducted by the Worker’s Justice Project in partnership with Cornell University.
Domini Impact Bond Fund: Engagement work
This quarter, we engaged with Fannie Mae, focusing on how it invests in housing that is resilient to climate change and how it helps those borrowers most in need. While we appreciate efforts on its expansion of renewable energy integration and energy efficiency retrofits for affordable housing units, we want to make sure that the benefits of this flow to the residents result in a reduced “energy burden.” We also reiterated the importance of linking affordability of housing with climate resiliency in order to ensure long-term viability of their affordable housing programs. In addition, we asked Fannie Mae to report on year-over-year impacts and on their longer-term vision and directions in this area.
Investment Highlight: Domini Impact Bond Fund
Tricolor Auto Group is a CDFI certified Delaware LLC that services a portfolio of approximately 22,500 auto loans. Tricolor Auto Acceptance, the group’s loan subsidiary, provides loans to people with little-to-no credit history to finance late models, fully-reconditioned cars, trucks, or SUVs. It targets the “credit invisible” consumer and provides borrowers with access to financing that helps them achieve more affordable rates and lower fees, which in the long-term, will help them achieve financial independence and close the racial wealth gap.
Applying our Standards
Domini has an internal team of eight analysts who conduct all of the research in house evaluating companies’ eligibility for investments based on the Domini Standards. The two main goals of our Standards are Universal Human Dignity and Ecological Sustainability. To ensure alignment with our standards we evaluate companies based on the indicators, both qualitative and quantitative, that are the most relevant for a specific industry. Our social and environmental standards help us identify strong, long-term investments across both our equity and fixed-income strategies.
Step One: What is the business?
First, we evaluate companies to see if their core business model is aligned with our goals. Sometimes our assessment is straightforward because our exclusionary screens lead us to eliminate certain industries all together. So for example we do not invest in tobacco or gambling and favor industries with a positive impact on society or the environment such as renewable energy. But usually we spend the majority of our time evaluating companies that are in the middle of the spectrum through our proprietary Key Performance Indicators (KPIs). That’s where our experience and expertise come in. And we look to add companies that create solutions for environmental and social challenges and provide access to the underserved.
Step Two: How does the business treat its stakeholders?
We look at the company’s relations with its key stakeholders. How does it treat customers, employees, suppliers, investors, communities, and the natural world? No company is perfect, but we invest when we determine a company’s negatives are offset by counterbalancing its positives toward long-term benefits. We believe that companies have the best chances to succeed and prosper in the long run when they: produce high-quality, safe,
and useful products and services; enrich the ecosystems on which they depend; invest in the wellbeing and development of their employees; contribute to their local and national communities; are transparent with their investors; contribute to the global community, and strengthen the capabilities of their suppliers.
Impact investing is more than a trend. It's our tradition.
We have been exclusively focused on impact investing since our inception in the 90s. We continue to fine tune and develop our Standards and believe that the Standards lead us to identify companies that are additive to society and the environment.
To learn more, visit domini.com/standards.
The care is mutual. The funds are too. Seeking to harness the power of finance to create a better world involves many things. Below, we discuss four of them. Namely, hiring smart, experienced people, maintaining high social and environmental investment standards across every fund, writing books that inspire others to make a difference, and reflecting on the time Wall Street thought responsible investing was insignificant.
New Director of Engagement
We’re excited to announce that Mary Beth Gallagher has joined us as Director of Engagement. Responsible for spearheading our engagement efforts, Ms. Gallagher will develop new initiatives as well as continue to build on our strategic plans for engaging corporations in areas such as worker’s rights in the supply chain, climate change mitigation, and health and racial justice. Read more.
Environmental Finance Award
Domini was honored to receive this year’s Environmental Finance Award in the fixed income category. The Domini Impact Bond Fund aims to increase access to capital for those historically underserved by the mainstream financial community, create public goods for those most in need, and fill capital gaps left by current financial practices. Read more.
The Original Influencers
When Amy Domini launched the Domini 400 Social Index in 1990, Wall Street dismissed the idea. They didn’t think investors cared about ethical standards. Today, as interest in ESG investing grows, we reflect on our 30-year journey and our role as continued influencers. Read our Essay.
People, Planet, & Profit. Made Personal.
Thoughts on People, Planet, & Profit is a collection of essays about impact investing from our beloved founder. It’s also a book about hope. Through short, thoughtful ruminations on everything from championing biodiversity to just saying “no” to war, Amy Domini demonstrates that when investors come together to care for the greater good, they can ensure both people and planet continue to thrive. All shareholders will have the opportunity to pre-order a free copy. The book will be published in early November.
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