January 2020


We are excited to share our first Positive Impact Annual Report.

In our initial Positive Impact Spotlight article back in March, we stated:

Our goal is to share how environmental, social, governance and economic issues impact decision-making for investors, employees, customers, companies and other stakeholders. These issues are often complex and multi-faceted. Solutions may require major structural changes and significant resource reallocation.

We do not claim to have all the answers, but we do hope that greater education and conversation will lead to a more robust market of ideas and opportunities.

Our goal has not changed, and we have learned so much in the past year. We look forward to improving our investment process and incorporating feedback from our clients. Thank you for joining us on this journey.


Positive Impact Portfolio Strategies

Bigelow offers Positive Impact strategies to support investors interested in integrating environmental, social and governance (ESG) considerations into their portfolios. Research indicates that material ESG issues including corporate governance, carbon emissions generation, fossil fuel exposure, water and waste management and usage, board and management diversity, employee safety and wellbeing, and customer and community relationships are affecting the financial and investment performance of companies and issuers.


Investors may also ascribe additional value to owning companies that are reducing their ESG impact (e.g. low carbon emissions portfolio) or targeting new opportunities (e.g. renewable energy) emerging from global sustainability issues.  In 2015, all United Nations Member States adopted the 2030 Agenda for Sustainable Development which identified 17  Sustainable Development Goals (SDGs). Since the release of the SDGs, “sustainability” has emerged as the preferred term describing investment strategies, private, public and non-profit initiatives, and policies and regulations involving the environmental, social and governance issues identified in the Sustainable Development goals.   

Bigelow’s Positive Impact strategies target and prioritize companies and issuers with better than peer performance on the sustainability issues material to their businesses and industries. Portfolios are managed to maintain appropriate diversification, alignment with a client’s individual risk tolerance, and exposure to asset classes appropriate for a client’s return needs.


Sustainable Investing Trends

Interest in sustainable investing is growing dramatically. In 2018, global sustainable investing assets grew 34% and the upward trend continued in 2019.












Source: 2018 Global Sustainable Investment Alliance Review


As shown below, sustainable funds in the U.S. attracted new assets in 2019 at nearly four times the rate of 2018.  As shown below, an estimated $20.6 billion were added to sustainable funds in 2019.





















Sustainable Investing Strategies

Measuring the size of the sustainable investing market depends on which underlying investing strategies are included. The Global Sustainable Investment Alliance takes a broad definition of sustainable investment.












Source: 2018 Global Sustainable Investment Review http://www.gsi-alliance.org/wp-content/uploads/2019/06/GSIR_Review2018F.pdf


Sustainable Investing Expectations

The private sector can serve as a major force for change in addressing significant global challenges including climate change risks, human rights abuses, living wage and gender pay inequality, and poor safety and health conditions for workers.  Companies can also create value for shareholders, employees, customers and communities as new opportunities are created. However, companies must act quickly. Expectations and pressures are increasing for companies to reduce their environmental impact, offer living wages, achieve gender pay equity, diversify boardrooms and management ranks, and create sustainable business models that work for all stakeholders. Company boards and executives are starting to respond:

“CEOs Commit to A New Standard for Corporate Responsibility”

On August 19, 2019, 181 members of the Business Roundtable (an association of chief executive officers of America’s leading companies), representing more than 30% of total U.S. stock market value, issued a new statement on the purpose of a corporation. The CEOs set a new standard for corporate responsibility – companies should benefit all stakeholders – customers, employees, suppliers, communities and shareholders. The new purpose statement concludes “each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities, and our country.”


Change, Impact, and Materiality

Companies are positioned to create positive change in three ways 1) address material internal ESG risks and issues, 2) create solutions (services and products) that create a direct positive external impact and 3) advocate for policy and regulatory changes that accelerate and promote needed sustainability changes. A critical first step is determining the issues most material to the business. The Sustainable account Standards Board (SASB) Materiality Map (https://materiality.sasb.org/) aids companies and investors in identifying the likely material issues to sectors and industries. Many companies develop a materiality matrix, such as the one seen here, to assess the issues most likely to have an impact on their business and primary stakeholders.

Source: Ingersoll Rand Website, https://company.ingersollrand.com/strengths/sustainability/materiality-assessment.html

Currently, we believe most companies are focused on addressing internal ESG risks and issues. Companies should target the ESG issues that are most material to their businesses and stakeholders.  Companies are pressured by different stakeholders (employees, shareholders, lenders, communities, customer and suppliers) with different interests. Ultimately, the company’s board of directors must determine which stakeholders’ interests are prioritized. As more companies deliver on managing these risks and issues, the cumulative impact should increase.


Bigelow’s Positive Impact Portfolio Strategies: Measurement and Attributes

Bigelow offers three sustainable investing strategy models:  Positive Impact Core, Positive Impact Sustainability and Positive Impact Diversity, as well as more customized options.




The ESG data provided below is based on the Positive Impact Core portfolio model. Actual portfolios may differ. The Positive Impact Core model targets greater than benchmark overall ESG performance as well as higher ratings for the environmental, social and governance pillars. Performance is measured on the overall portfolio ESG performance which is the market value-weighted average of the underlying company holdings performances.

The Positive Impact portfolio strategies utilize positive screening, tilting the portfolio toward companies with better-than-peer ESG performance. Equity asset classes are measured vs. their benchmark (e.g. Russell 3000 for U.S. equities). Fixed income asset classes are measured vs. their benchmark (e.g. Bloomberg Barclays Intermediate U.S. Government and Credit Index) on a best efforts basis because many bond issuers are not rated and do not disclose ESG related data (e.g. U.S. federal government, mortgage-backed securities).

Sustainalytics, MSCI, Just Capital, Bloomberg, company filings (10-K, sustainability reports) and asset management firm-based data (e.g. Calvert, Blackrock, Vanguard, Nuveen, others) are used to measure and assess company and portfolio ESG performance. All companies do not disclose ESG data or sufficient ESG data to assess their performance.  However, 95%+ of the underlying market value of the Positive Impact Core equity portfolio, U.S. and foreign, was rated providing reasonable coverage.  All data is as of December 31, 2019. Actual portfolios may differ.


Bigelow’s Positive Impact Core U.S Equity Portfolio Model

The Positive Impact Core U.S. equity portfolio model is well diversified with exposure to all eleven major sectors (e.g. Consumer Discretionary, Financials, Health Care, Information Technology, Materials). Technology was the largest overweight and energy was the largest underweight vs. the Russell 30000 index. No tobacco or civilian firearms were held in the portfolio (debt or equity). The largest position was 4.2% of the portfolio and the largest ten positions were 18.2%.   Actual portfolios may differ.



In terms of ESG performance, the Positive Impact Core U.S. equity portfolio ratings exceed the ratings of its U.S. equity benchmark, the Russell 3000 Index.  As shown below, the portfolio exceeds the benchmark’s overall ESG rating and the benchmark’s environmental, social and governance ratings. The greatest outperformance is in governance. Governance is material for all companies, and governance performance is often a lead indicator for performance in environmental and social factors.




While it is important to consider how the portfolio compares to the benchmark, selected data is also presented on an absolute basis to assess how the Positive Impact Core U.S. equity portfolio performed. Ultimately, positive absolute performance for the overall private industry and the economy is needed to achieve system-wide change and deliver system-wide impact. As shown below, total greenhouse gas emissions declined 4.5% annually.  Total waste generated declined 15.6% and water usage was flat.  The portfolio generated nearly half of the emissions of the benchmark using weighted averages. The portfolio was also more efficient in greenhouse gas intensity, generating fewer emissions per dollar of sale.  The portfolio was also more efficient in water intensity. The portfolio had better than benchmark diversity as measured by the percentage of women on the board and more independent directors on the board.  Actual portfolios may differ.



Sustainability disclosure standards, ratings methodologies and measurement practices continue to evolve. While there is general agreement on what factors to measure (e.g. diversity is important and creates value), investors and ratings agencies may differ on how much to weigh a particular issues (e.g. Is diversity 10% of the overall rating or should it be 5%?), and how to measure the issue (e.g. gender diversity on the board vs. gender diversity in executive rankings vs. gender workforce diversity).  As such, convergence in ratings among the major ESG ratings providers is unlikely to reach the level of convergence among credit ratings providers. Credit rating providers (S&P, Moody’s) ratings are nearly identical over 90% of the time. More ESG data is likely to improve measurement and assessment. However, we expect differences of opinion to continue and view it more as an opportunity than a hindrance.


Bigelow’s Positive Impact Core U.S Equity: Top 20 Holdings Ratings

As shown below, in the top 20 holdings there is significant overlap in the ratings of the Positive Impact Core U.S. equity portfolio among rating providers. Fifteen are rated A or better by MSCI, and ten are rated as industry leaders.  Sustainalytics overall rating is 28.2% above the benchmark.  JUST Capital ranks fifteen in the top three of their industry, eight as industry leaders and six in the top ten of all companies. Actual portfolios may differ.




Bigelow’s Positive Impact Core U.S Equity Portfolio Environmental Footprint

A large motivator for sustainable investors is concern surrounding the climate and the environmental impact from consumption and manufacturing. Environmental issues are strongly represented in the U.N. Sustainable Development Goals.  Significant work is required to reduce global emissions.  Using tools on the EPA website and underlying ESG portfolio data, greenhouse gas (GHG) emissions were converted to different equivalencies to illustrate the underlying savings. Savings is measured as the difference between Bigelow’s Positive Impact Core U.S. Equity Portfolio weighed average emissions and the benchmark, the Russell 3000 Index. Actual portfolios may differ.




This is the equivalent of the amounts in the chart below:




Engagement and Advocacy

Engagement is a critical part of driving change and addressing stakeholders’ needs. Bigelow closely monitors the proxy voting guidelines and engagement and advocacy activities of the asset managers used in the Positive Impact portfolios.  Please see the engagement and advocacy initiatives highlighted in the Positive Impact Spotlight Blogs on Gender Diversity, Water and Governance.





Looking Ahead

Sustainable investing holds great promise for addressing global sustainability issues by encouraging companies to assess their impact, providing capital to deliver solutions, and increasing individual and corporate awareness of the challenges and opportunities to create value for all stakeholders. While much progress has been made, significant work remains. We look forward to helping clients interested in creating a more sustainable world.