Impact Report Innovates Saturna's Anti-Greenwashing Framework Based on the UN Sustainable Development Goals
August 27, 2019 - As investing through an environmental, social, and governance (ESG) lens continues to gain momentum, Saturna Capital, in its recently released 2019 Impact Report, highlights how the Sustainable Development Goals (SDGs) can serve as a new compass for ESG-focused investors in identifying areas of risk and potential new opportunities. The Report tracks how the Saturna Sustainable Funds have aligned their financial objectives with the SDGs, a series of 17 goals and 169 targets that were created by the United Nations to end poverty, protect the planet, and promote prosperity and well-being for all. The Impact Report details the alignment with the goals and includes case studies on how some of the holdings of the Saturna Sustainable Bond Fund and Saturna Sustainable Equity Fund are meeting specific SDG objectives, such as climate action and gender equality.
“Our annual Impact Report communicates how we think about sustainability from an investment perspective,” said Jane Carten, president of Saturna Capital and portfolio manager of the Saturna Sustainable Equity Fund. “We hope the data and insights in this report can further illuminate for clients how sustainable investing can make a positive global impact while still meeting their financial objectives.”
Saturna’s 2019 Impact Report features an overview of the Sustainable Development Goals. Although the SDGs were not created specifically for investing, Saturna’s Report points out that they provide a meaningful and comprehensive framework for adding more rigor to the sustainable investment process, and more depth and sophistication when looking at risk and impact as an investor.
“The specific nature of the goals and targets within those goals, as well as specific disclosures on a company’s contribution to a goal, help prevent ‘greenwashing,’” Carten explained.
The inclusion of the SDGs represents an evolutionary extension of Saturna’s proprietary ESG scoring model within its actively managed investments. The Report details how the portfolio holdings of the Saturna Sustainable Funds align to the individual SDGs.
In two graphs, Saturna discloses the percentage of the Funds’ holdings which report on the 17 SDGs, with 73 percent of companies in the Bond Fund and 69 percent in the Equity Fund reporting on one or more of the goals.
The Report provides detailed case studies on select SDGs and how Saturna’s investments align with them. The case studies include examinations of the following SDG criteria:
- Gender equality
- Affordable and clean energy
- Decent work and economic growth
- Reduced inequalities
- Climate action
- Peace, justice, and strong institutions
Finally, the Impact Report provides an update of Saturna’s two sustainable strategies, the Saturna Sustainable Equity Fund and the Saturna Sustainable Bond Fund, including a detailed look at their portfolios, top 10 holdings, sector and geographic allocations, and investment strategies.
Launched in 2015, the Saturna Sustainable Funds were founded on the idea that companies that proactively manage business risks related to ESG issues are more resilient and make valuable contributions to society and the global economy. By using a combination of negative and positive screening, along with financial analysis and an emphasis on low debt, the Funds seek issuers who outperform their peers on a variety of ESG factors.
The Saturna Sustainable Equity Fund (SEEFX) seeks investments that exhibit long-term sustainability characteristics. The Fund prefers issuers demonstrating financial sustainability as measured through management strength, low debt, and strong balance sheets.
The Saturna Sustainable Bond Fund (SEBFX) seeks current income and capital preservation. The Fund seeks to achieve this objective by investing in a portfolio of global bonds that meet financial, sustainable, and responsible investment criteria.
The Saturna Sustainable Funds limit the securities they purchase to those consistent with sustainable principles. This limits opportunities and may affect performance.