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New Investment Strategy Promotes Good Business Practices for a Better World

First National Bank Wealth Advisor, Erica Blake

New Investment Strategy Promotes Good Business Practices for a Better World

Author: Investment Management Portfolio Manager Erica Blake, CFA, CFP®
Publish Date: May, 2018

One of my favorite things about working at First National Bank is that we support the communities we serve. This is a part of our culture and what we do every day. Our operating philosophy states that “we will never compromise our values, ethics or integrity to meet our goals.” We care about the world we live in, and so do our clients, which is why we’re proud to offer a new investment strategy that aligns with these values and extends from our operating philosophy.

First National Bank’s new Environmental, Social and Corporate Governance focused portfolio, the ESG First Mutual Fund Strategy, incorporates valued client feedback and is designed to generate competitive returns while allowing clients to invest in companies that prioritize responsible business practices. It also allows people to make an impact in communities across the globe and contribute to causes they care about.  

Each mutual fund in our ESG portfolio has a defined process to ensure the companies included meet certain ESG criteria, in addition to conventional investment considerations. This could include eliminating companies based on controversial business practices or sources of revenue, considering ESG factors as a key input to the investment decision and/or selecting thought leaders that are developing solutions to ESG concerns. Thematic mutual funds that can be included on a case by case basis focus on certain causes like funding community housing projects, women’s equality and conserving natural resources. Major ESG themes considered in the strategy include:

Environmental

  • Greenhouse gas emissions
  • Resource depletion
  • Waste and pollution
  • Raw material sourcing
  • Alternative energy

Social

  • Product safety and integrity
  • Human rights
  • Working conditions
  • Employee diversity
  • Community impact

Governance

  • Executive pay
  • Board structure and diversity
  • Political lobbying
  • Bribery and corruption
  • Accounting transparency

By investing in the ESG strategy, clients create the opportunity for fund managers to engage with companies through proxy voting and board presentations. Fund managers also research and communicate the benefits of good business practices to company leadership. As the level of assets invested with this focus increase, the managers have more ability to influence change.

Investing in companies that are good citizens not only improves our world, it provides competitive returns. There’s an old myth that you have to give up returns with ESG investing, but research indicates that this is not the case. There’s a growing trend for consumers to do business with companies who have shared values and care about the communities they serve. According to a Unilever study, 33 percent of consumers prefer to buy from brands doing social or environmental good. According to a study conducted by the Harvard Business School, implementing sustainable business practices can increase shareholder value and mitigate risk. For example, firms that meet ESG criteria may save on energy costs, have less waste and avoid sanctions or employee issues – all contributing to the bottom line. The same study found that firms with strong ESG scores outperform firms with poor ratings on the same issues.

First National Bank Wealth Management has been researching and constructing this additional portfolio option over the past year and is excited to now offer it to clients. In our opinion, the ESG First Mutual Fund Strategy is a win-win. It’s good for our global community, the firms in the portfolio and our clients. After all, what’s good for our communities is good for all.

If you’re interested in ESG First Mutual Fund Strategy, contact the Wealth Management Team at First National Bank.

First National Bank is dedicated to investing in the communities it serves. In 2016, First National Bank made a commitment to reinvest $85 million and 100,000 volunteer hours back in the communities it serves by 2020. In 2017, First National reinvested more than $26 million and 40,000 volunteer hours, bringing the two-year totals to $56 million and 76,000 volunteer hours. See First National Bank’s progress toward these goals and read the full “2017 First in the Community Impact Report.”

About the Author

Erica was drawn to First National Bank’s positive reputation in the community and joined the bank in 2007. As a Portfolio Manager, she enjoys partnering with clients to help them realize their financial goals. Erica chairs the ESG First Mutual Fund Strategy Committee and leads the Taxable Fixed Income and Colorado Municipal Bond Strategies. She promotes education of First National Bank’s investment strategies and outlooks through commentaries and presentations.

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This material does not constitute legal, tax, accounting or other professional advice. Although it is intended to be accurate, neither the publisher nor any other party assumes liability for loss or damage due to reliance on this material.