Risk-Based Negative Screens

For 20 years, Trillium’s P21 Global Equity Fund (Global Equity Fund) has been managed in accordance to our risk-based negative screens.  The Fund’s performance history supports our investment thesis that certain industries and business activities are too environmentally risky or present social outcomes that are too unattractive to warrant investment consideration.

 

Agricultural Biotechnology

Risk: Agricultural biotechnology increases environmental risk as it reinforces monoculture and mechanization thereby reducing biodiversity.  Simultaneously, this technology poses a social risk to farmers, who may become trapped financially by seed licensing and fees.  As consumer demand for organics and natural foods increases, agricultural biotechnology will likely face increased resistance and decreasing demand.

Animal Testing

Risk: Consumer demand and awareness surrounding animal welfare is increasing. Companies that utilize inhumane practices including animal testing, factory farming etc. are exposed to increased reputational risk and diminished brand value.

Mining and Fossil Fuel Production

Risk: Emissions from burning fossil fuels contribute to climate change, which is one of the largest environmental risks facing our society today.  Additionally, the fossil fuel industry is fraught with social risks including employee health and safety and impacts on local communities as well as governance risks stemming from corruption and bribery.  As these risks manifest and regulations tighten, fossil fuel companies are at greater financial risk through an increasing number of stranded assets.

Gambling

Risk:  Gambling poses a host of social risks ranging from compulsive behavioral patterns to crime.  Furthermore, poor corporate governance often perpetuates this Industry.

Nuclear Energy

Risk: Although a low carbon energy source, the environmental, social and financial risks of operating nuclear power plants are excessive.  Nuclear waste, a radioactive byproduct of nuclear power generation, poses a long-term environmental risk as well as financial costs. Communities located in the proximity of nuclear plants also face long-term human health risks.

Tobacco

Risk: The human health risks associated with tobacco are undeniable.  As these risks are ever more transparent, companies face increased reputational risk and decreasing consumer demand.

Weapons Production

Risk: Beyond the social impacts weapons have on families/communities; the weapons industry is known for its poor governance and labor practices and is often subject to negative consumer campaigns.