As part of our Member Engagement Guidebook outlines ways that member businesses can take targeted action on climate change through sustainability, political advocacy, and community building. Trillium Asset Management chose to participate in a Member Interview, an engagement option that allows members to share their thoughts and experiences regarding climate action to enhance the community’s overall perspective.

Member Interview: Trillium Asset Management

Joseph Carpenter (JC), Director of Sustainability, CABA:

Sustainability is such a broad topic and other terms such as Environmental Social Governance (ESG), Socially Responsible Investing (SRI), People Planet Profit (PPP) are often used interchangeably. So, do these terms mean different things to you and if so, are there any important differences?

Susan Baker (SB), VP of Shareholder Advocacy, Trillium Asset Management:

You are right. As the interest in sustainable investing grows so has the terminology.  At Trillium we firmly believe in Environmental, Social and, Governance (ESG) integration. So, how a company manages climate risks, treats its workers, and structures its board, for example, are among many ESG factors we assess when choosing stocks and bonds. In addition to “ESG integration” we believe it is important and really a responsibility to focus on impact. To do that we use dialogue and shareholder advocacy to push companies to improve on their ESG performance. Moving from here to some of the other terms – a critical part of the definition of Socially Responsible Investing (SRI) assumes exercising the rights and powers afforded to a shareholder to affect positive change in corporate behavior. SRI takes a values based approach, is about generating positive societal impact in addition to integrating ESG criteria. And, People, Planet, Profit also points to positive regenerative outcomes from business and how environmental and social factors are managed. My best advice- if you are speaking with someone about sustainability particularly in the context of investing it’s important at the outset to have a common understanding of the terminology being use.  

JC: Along a similar vein, there are a number of reporting methodologies out there such as the Global Reporting Initiative (GRI), Benefits Corporation (B-Corps – Certification), Carbon Disclosure Project (CDP), Sustainability Accounting Standards Board (SASB), etc. In your opinion, are they all effective, and how do they relate to smaller businesses?

SB:  Corporate reporting on ESG issues is so important and all of these methodologies can over a short or long term aid in the investment decision making process. CDP compiles climate change and water data that we use in our investment research and shareholder advocacy work. The GRI was the first corporate sustainability reporting framework. It gives companies of any size and sector a well-honed framework for collecting data. Many companies build sustainability reports from this data framework. SASB metrics are industry specific and of most use to investors. The B- Corporation certification starts with the premise that a business model that best succeeds as a sustainable entity is one that truly embeds the interests and values of all stakeholders, including communities and the environment.  This emphasis on embedding broad stakeholder interests into a company’s governing documents creates some barriers for some larger companies I understand but it sounds like those issues are getting attention. Trillium as a B-certified company supports and collaborates with this network. The assessment process in itself has made us look more closely at areas of strength and areas needing improvement..  

JC: Ok, so I know you said to focus initially on what is material, but there are a lot of things one can do to become more “sustainable.” Is there a point of saturation regarding ESG type factors and if so, what can you do about it? What can you do to keep up with all the changes?

SB: I’ll start with the last question first. Regular dialogue with stakeholders and experts are good ways businesses can keep up with changing or emerging ESG issues. For example, companies often come to us and our investment partners to learn about topics we think are important to a company and ones we think should be address in a meaningful way. Then companies should do their own risk assessment looking at the financial and social impacts of an issue. If companies do a rigorous assessment of their environmental and social impacts I think there should be a reduced chance of experiencing ‘saturation’.

JC: Given all the work you do assessing other people from the perspective of ESG issues, how has it affected your own internal operations?

SB:  Throughout our history we have made intentional efforts to model behaviors and policies we expect in companies we invest in. In recent history, receiving the B-Corp designation in 2008 ( we were the 4th financial firm to do so), and going through the independent assessment of the B Corp process has been valuable not only in guiding our mission, maintaining broad attention on ESG trends, but also influencing our internal operations. Related to that, we made an intentional move a few years ago to move our main office to a LEED certified building that was working toward gold certification. We chose low impact materials like recycled crushed glass countertops (from a B-Corp vendor) and installed recyclable tile carpeting for our office space. We have an office in Portland, OR and colleagues there were the first tenants in the first gold-rated building in Oregon. And, , in reclaiming 98% of the construction debris during restoration, , it set the city record for recycling materials.  

I also have to say the legacy of our founder, Joan Bavaria continues to impact our internal operations. When Joan chose the name Trillium the three petals that shape the Trillium wildflower was used to describe the three overarching goals of our mission- those being ecology or health environment; equity or social justice, and economy or health commerce.  We see ourselves at the intersection of the three in seeking to providing clients with competitive investment returns while helping to shape economies that we believe prioritize fair resource sharing among stakeholders and more appropriately value our environment.

JC: As the saying goes, life is what happens when you are busy making other plans. How has Trillium evolved as a business in the context of ESG?

SB: When Joan Bavaria founded Trillium in 1982 she wanted to create a space for clients to invest their money in alignment with their values and use public markets to create positive change. Our mission hasn’t changed – we remain deeply committed to using the power of capital to create responsible and sustainable change while seeking to providing competitive financial returns to our clients. What has changed is the level of interest in and demand for sustainable investment options. This has helped us evolve to a point where we can provide investors more ways to invest, whether it be folks looking for a fossil fuel free option or a mutual fund, for example.

JC: To wrap it up, what recommendation would you make to an organization just beginning to view their business from an ESG perspective.

SB: For businesses that want to systematically integrate sustainability into their operations and culture focusing on a few ESG factors is a good first step. Develop a plan to engage with stakeholders (customers, investors, suppliers, community members) and agree to focus on a few key performance indicators – a short list of critical sustainability issues that you can measure, track and improve on. Ask where can I collaborate with industry peers on an ESG issue to tackle an environmental concern? Companies committed to resolving an issue in many instances do not have to compete when it comes to addressing a problem. For example, I’ve seen companies agree to collaborate in phasing out toxic pesticides from their supply chain while protecting biodiversity and also brand loyalty. Seeking outside expertise can move companies further faster if internal expertise is not available. Here are a few places to start:

• http://www.ceres.org/roadmap-assessment/landing
• https://www.bcorporation.net/become-a-b-corp/how-to-become-a-b-corp
• http://www.brownflynn.com/
• http://www.sustainserv.com/
• http://www.cabaus.org/

JC: We are grateful to Susan, and Trillium Asset Management at large for participating in this member interview and helping to build community. It is our hope that the information contained here in makes you think, and is a benefit to you in your journey to take targeted action on climate change.