Responsible Investing Today
by Dennis Hammond, Head of Institutional Investments
Responsible investing is the practice today of replacing agnostic stock indices with one or more responsibly-built stock portfolios which closely track a given benchmark. Responsible portfolios are readily constructed by screening out bad corporate actors based on faith, environmental, social, and sustainability screens, accentuating the weightings of good actors, and re-optimizing the resulting portfolio to an acceptably low tracking error to the benchmark.
The following is a list of the Responsible Investing Issues which most concern us today. They are excerpted from the United Nation's 17 Sustainable Development Goals (SDGs), adopted in 2016 and targeted for global implementation by 2030. View more on these here.Together with the corporate responsible investing guidelines for Environmental, Social and Governance (ESG) issues, they comprise (for me at least) "Best Practices" for Responsible Investors today. View more on these here.
SDG 1: Eradicate extreme poverty.
Corporate Actions: Provide jobs at lowest ends of the wage scale with living wages.
SDG 2: End hunger and ensure access to nutritious food for all.
Corporate Actions: Build sustainable food production systems; provide nutritious foods; end abusive marketing of bad food choices to children; maintain genetic diversity of seeds; prevent distortions in world agricultural markets.
SDG 3: Ensure healthy lives and well-being for all ages.
Corporate Actions: Reduce maternal mortality; end preventable deaths of newborns and children under 5 years of age; end epidemics of tuberculosis, malaria, and AIDS; combat hepatitis, water-borne diseases and other communicable diseases; reduce deaths from hazardous chemicals and air, water, and soil contamination and pollution; reduce global deaths and injuries from road traffic accidents.
SDG 4: Ensure quality education for all.
Corporate Actions: Ensure all children have access to free, equitable and quality primary and secondary education; ensure equal access for all to affordable and quality technical, vocational and tertiary education; build and upgrade education facilities that provide safe, non-violent, inclusive and effective learning environments.
SDG 5: Achieve gender equality.
Corporate Actions: Eliminate all forms of violence against women and girls, including trafficking and sexual and other types of exploitation; eliminate all harmful practices such as forced marriage and female mutilation.
SDG 6: Ensure availability and sustainable management of water and sanitation for all.
Corporate Actions: Achieve universal and equitable access to safe and affordable drinking water for all, as well as adequate sanitation and hygiene for all; improve water quality by reducing pollution, eliminating dumping, and minimizing release of hazardous chemicals and materials; reduce the amount of untreated wastewater; increase water recycling and safe reuse to reduce the number of people suffering from water scarcity and increase freshwater generation capacity.
SDG 8: Promote decent work for all.
Corporate Actions: Eradicate forced labor, end modern slavery and human trafficking, in their supply and production chains; help secure the prohibition and elimination of child labor, including recruitment and use of child soldiers; achieve full and productive employment and decent work for all with equal pay; promote safe and secure working environments for all workers, including migrant workers, and those in precarious employment.
SDG 11: Ensure availability of affordable, safe housing for all.
Corporate Actions: Ensure access for all to adequate, safe, and affordable housing and basic services; upgrade slums; provide access to safe, affordable and sustainable transportation systems for all; decrease losses caused by disasters, with a focus on protecting the poor and people in vulnerable situations; reduce adverse impact of cities relating to air quality and municipal and other waste management.
SDG 12: Ensure sustainable consumption and production.
Corporate Actions: Reduce global food waste at the retail and consumer level; reduce food losses along production and supply chains, including post-harvest losses; reduce waste generation; rationalize inefficient fossil-fuel subsidies.
SDG 13: Combat climate change.
Corporate Actions: Reduce climate changes hazardous behaviors; strengthen adaptive capacity to climate-related hazards; integrate education and awareness-raising on climate change mitigation, impact reduction, and early warning.
SDG 16: End abuse, exploitation, trafficking, and all forms of violence against and torture of children.
Corporate Actions: End supply and production chain constituents which employ under-age children, unpaid forced laborers, and under-paid laborers; end business dealings with constituents who fail to provide workers with access to safe, affordable, and sanitary housing.