Our Social, Environmental and Governance Criteria

Exclusionary screens

From the late 1920s, when modern socially responsible investing got its start, SRI has had a core principle of avoiding ownership in companies that inflict social harm. The ethical position is straightforward: the investor does not profit from financial participation in environmentally or socially destructive practices.

Clean Yield systematically examines companies’ social and environmental track records. No company is even close to perfect, and neither, admittedly, is social responsibility research. Social and environmental virtue cannot be measured in black-and-white terms, and the shades of gray are sometimes highly subjective.

Recognizing that social responsibility judgments have limitations, Clean Yield adheres to certain minimum standards for all companies in its universe.

Clean Yield’s Major Exclusionary Screens:

• No material involvement in gambling, alcohol, tobacco, or pornography.
• No military weapons; no material dependence on military contracts (greater than 2% of corporate revenues), except for companies engaged in environmental clean-up. In this context, we do not invest in U.S. Treasury securities.
• No nuclear power generation.
• No use of animal testing for cosmetics.
• No business dealings benefiting governments engaged in human rights abuse and subject to divestment campaigns, such as Sudan and Burma.

An Important Exception to Exclusionary Screening

New clients often come to Clean Yield with portfolios containing securities that fail our screens. In many cases, immediate sale of these “legacy” securities may be inappropriate because of tax consequences or other reasons. In such cases, we typically sell the securities gradually over two or more years. In the meantime, we can use the ownership positions to engage companies through dialogue and shareholder resolutions.

Affirmative screens

Investors who avoid a particular company have little leverage to change the company’s behavior (except when part of a massive divestment campaign, such as the 1980s movement to isolate apartheid South Africa). By contrast, investments directed toward outstanding companies can create measurable demand and may reward those companies with a stock-price premium.

A Sampling of Clean Yield’s Affirmative Screens:

• Products or services having positive environmental or social impacts.
• Clean EPA record and commitment to source reduction and/or re-use of materials.
• Community support through charitable giving in the host communities.
• Women and minorities well represented on the board and in top line positions.
• Same-sex-domestic-partner fringe benefits equal to spousal benefits.
• Engaged in sustainable agriculture.
• Living wage paid to all employees in the U.S. and abroad.
• Full and frank disclosure of environmental and social responsibility record.
• Executive compensation at or below the norm for similarly situated firms.