In that vein, Tuite also likes Mattel. “They make a lot of things from plastic, which is based on fossil fuels, but they’re aggressively moving to making products from cornstarch and ethanol-based plastic.” She adds the company is striving to minimize its packaging and to use recyclable, compostable and sustainable packaging, and that it has improved its corporate governance.
Robert Smith, president and chief investment officer at investment manager Sage Advisory Services in Austin, Texas, says his firm has been doing responsible investing since 2004.
Sage offers a number of ESG strategies on the fixed-income side, and Smith says the same criteria exists for both fixed income and equities. “We’re looking at industry-level analysis in terms of the E, S and G,” he says, adding that his team then looks at each individual company by itself.
He notes that Sage doesn’t exclude oil and gas companies from its strategies. “Some people recognize that by cutting out a large part of the marketplace, you’re inducing a tremendous amount of risk in your portfolio from a performance standpoint,” Smith says. “If one wants some exposure to the oil market, a company like Total would be a good example of a leader in the industry in terms of where it intends to go and its actions in terms of execution.”
He offers that Total is making “transformative” strides in growing its renewable energy business. “We’re trying to induce good behavior as opposed to admonishing bad behavior, which was the old SRI model,” he says.
To Smith, sustainable companies are those that maintain their business model and strengthen it on an ongoing basis to improve resource management and interactions with all of their stakeholders including shareholders, communities and the human capital of their employees.