"Sustainable Impact Investing" is gaining traction not only with our clients, but also with the global investment community, explains John Eade, analyst with Argus Research, a leading independent Wall Street research firm.
According to the Forum for Sustainable and Responsible Investment, assets under management in domestic sustainable funds increased 30% in 2017, compared to the 20% growth posted by the entire mutual fund & ETF industry.
The UN Principles for Responsible Investing — to which Argus Research is a signatory — now represents more than 1,750 signatories with assets of US $70 trillion, according to BMO Global Asset Management.
As assets have flowed in, Sustainable Impact Investing has evolved over the past 40 years. The discipline, originally known as Socially Responsible Investing, focused at first on excluding companies that conducted business in South Africa, or participated in industries such as tobacco, alcohol and firearms.
In time, the list of industries to avoid increased to include soft drinks, fast food, and oil and gas, among numerous others.
Performance of these initial SRI strategies lagged, and the approach subsequently has been tweaked. Now, instead of merely identifying industries to avoid, the discipline promotes “sustainable” business practices across all businesses that can have an “impact” on global issues such as the climate, hunger, poverty, disease, shelter and workers’ rights.
Based on numerous requests from clients, we have compiled a list of companies followed by Argus Research that are in position to have this type of "sustainable impact” on the environment, workplace, community and marketplace.
These firms have exemplary records not only in delivering on the bottom line, but also in improving the environment, contributing to community relations, and showing respect for their employees.
We derived our list by identifying companies that are either BUY- or HOLD-rated by Argus analysts, and score highly on custom ESG (Environmental, Social and Governance) criteria established by Institutional Shareholder Services Inc.
ISS is a leading provider of objective research and technology solutions that help financial professionals evaluate the environmental, social and governance performance of companies.
The criteria ISS has established for our screen include Auditing & Accounting, Board Accountability, Board Composition, Board Independence, CEO Compensation, Climate Change, Community & Politics, Diversity, Environmental Management, Environmental Performance, Human Rights, Recognition, Sexual Orientation and Workforce.
ISS ranks the S&P 1500 on these criteria against a scale of 1-100. Here are the Top 10 BUY-rated companies, ranked by ESG score:
Accenture PLC (ACN): 98
Hasbro Inc. (HAS): 95
Microsoft Corp. (MSFT): 94
Cisco Systems Inc. (CSCO): 90
Johnson & Johnson (JNJ): 89
Humana Inc. (HUM): 89
AT&T Inc. (T): 87
Altria Group Inc. (MO): 86
Intel Corp. (INTC): 86
CVS Health Corp. (CVS): 86
Visa Corp. (V): 85
