Not long ago, we evaluated investments solely on balance sheets, future expectations and historical returns. Today, there’s not only more data available, but greater variety and precision, making it possible to screen for sustainability factors in addition to traditional performance:
Environmental

• Climate impact and greenhouse gas emissions

• Energy efficiency

• Air and water pollution

• Water scarcity

• Biodiversity and site restoration

Social

• Human rights

• Local community impact and employment

• Child labor

• Health and safety

• Anti-corruption

Governance

• Corporate ethics

• Executive compensation

• Board compensation and independence

• Alignment of interests

• Shareholder rights

The Process
Once we establish your macro strategy (i.e. the appropriate mix of stocks, bonds, multi-asset and/or alternative strategies), the OFM Wealth Investment Committee screens specific assets using established tools such as:

ESG Screening

Selecting assets that have an expressed ESG mandate. Portfolios are entirely built from mandated positions. Additionally, existing non-mandated client assets are scored to reflect their relative ESG rankings. Decisions are made to either hold or replace assets based on scoring.

Inclusionary and Exclusionary Screening

Asset selections are made on an individual basis to reflect client preferences, availability of research information, and practical implementation constraints and opportunities.

Depending on tax implications and where your assets reside, i.e. cash or retirement plan, we work with you to create and design a customized portfolio and/or redesign an existing portfolio for optimal performance in line with your goals. Some clients choose to apply ESG screens to an entire portfolio. Some choose to partially implement. Others prefer to maintain a non-ESG approach. Whatever your objectives, it’s our job to provide services that align with them.
The Results
As time has proven, many times the ESG performance metrics our clients value are the same ones driving long-term growth for companies in which they invest. The table below is one case in point.
Total Return % (07/31/2018) 1-Year 3-Year 5-Year 10-Year
Calvert US Large Cap Responsible Index 15.80 11.4113.29 11.42
Vanguard FTSE Social Index 17.3812.2513.6810.99
S&P 500 16.2412.5213.1210.76
Sources: Morningstar, Calvert Investments, Vanguard. Indices are unmanaged and cannot be invested in directly. Past performance cannot guarantee future results.
As with every asset, OFM Wealth continues to monitor sustainable investments for performance and proper allocation. We believe that a careful portfolio design utilizing ESG strategies can improve performance and/or reduce risk. Above all, we know you as a client and what’s important to you.
(ESG indexes) have a good chance of outperforming the stock market.
- Robert Shiller,
Nobel Laureate and Yale University economist
Conventional wisdom used to be that aligning your investments with your values compromised performance. We couldn’t disagree more, and neither can today’s market. We welcome the opportunity to integrate your sustainable goals into a strategy that advances your portfolio and your impact on the world.