Trillium Mutual Funds

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    Fund Complex: Trillium Mutual Funds

    Management Company: Trillium Asset Management, LLC

    Funds Affected: Trillium Small/Mid Cap Fund and Portfolio 21 Global Equity Fund

    Sustainable Investing Strategy: ESG Integration, Shareholder Engagement and Proxy Voting

    Trillium Funds Summary

    Trillium seeks stocks with high quality characteristics and strong environmental, social, and governance (ESG) records. Trillium defines high-quality characteristics to include:

    • Financial Statement Integrity
    • Conservative Debt Management
    • Positive and Growing Cash Flow from Operations
    • Sector-leading policies and performance related to key ESG Issues

    When selecting securities for the fund, the adviser conducts bottom-up financial analysis that includes a review of environmental, social, and governance issues and how they may impact stock valuation or performance. ESG factors reflect a variety of key sustainability issues that can influence company risks and opportunities and span a range of metrics including board diversity, climate change policies, and supply chain and human rights policies. Companies that meet the advisor’s ESG requirements or sustainability criteria typically have strong sustainability data and policy reporting, for example publishing a comprehensive corporate sustainability report. These companies may have strong board diversity, such as two or more women on the board. ESG criteria may be somewhat different industry by industry. For example, in the apparel industry the advisor would seek companies with a comprehensive supply chain code of conduct and monitoring. In the energy industry, Trillium would seek companies with solid worker safety records and environmental management programs.

    Trillium Environmental Mutual Fund Practices

    The adviser believes that the best long-term investments are found in companies with above-average financial characteristics and growth potential that also excel at managing environmental risks and opportunities and societal impact. The adviser believes that a company’s understanding of environmental principles demonstrates the qualities of innovation and leadership that create a distinct competitive advantage and build long-term value. Therefore, the adviser conducts fundamental research to find companies with attractive environmental, societal, and financial attributes. In conducting fundamental research the adviser combines traditional investment information with proprietary environmental analysis. The adviser believes that this creates a complete picture of how each company behaves commercially and how it deals with existing and emerging environmental risks and opportunities. The adviser considers a company’s position on various factors such as ecological limits, environmental stewardship, environmental strategies, stance on human rights and equality, societal impact as well as its corporate governance practices.

    The adviser believes that finding companies that meet its financial and environmental standards is an important part of the process, but that it is also critical to make investments at reasonable valuations.