ESG INVESTING

Aerial solar photovoltaic power station -An example of the E in ESG Investing

Riverwater Partners believes responsible investment or ESG investing is in the best interest of our clients, our firm, our communities and our society.  Therefore, we consider environmental, social and governance (ESG) policies, practices, and outcomes, alongside traditional investment criteria, when evaluating potential investment candidates.

As the only dedicated sustainable, responsible, impact (SRI) investment management firm in Wisconsin, the mission at Riverwater Partners is to make the world a better place by growing wealth through sustainable investing. We employ an SRI lens to select investments for client portfolios that focus on salient environmental, social, and governance (ESG) factors to align investments with values.

RESPONSIBLE INVESTING DEFINITIONS

There can be confusion among the different approaches to sustainable, responsible and impact investments. At Riverwater, our investments focus on ESG, socially responsible and impact investments.

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ESG INVESTING

The integration of environmental, social and governance factors in the investment process. Typically, this means investing in “best in class” companies within each industry. Exclusionary screens may or may not be utilized. Riverwater Partners seeks best-in-class ESG efforts generally.

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SOCIALLY RESPONSIBLE INVESTING

Typically, an “exclusionary only” approach to portfolio management that employs screens to avoid exposure to certain sectors/industries. Examples of excluded sectors/industries are, “sin” stocks, alcohol, firearms, pornography, and gaming.

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IMPACT INVESTING

Investments in public or private companies or other entities with a specific intention of generating social and/or environmental impact alongside a financial return. Direct impact investments are mostly found in fixed income strategies or private equity funds.

ENVIRONMENTAL
We target companies working towards conserving energy and using renewables in their supply chains while avoiding firms with a history of poor environmental practices. We encourage companies to both actively measure their total environmental impact and set sustainability goals.

SOCIAL
We focus on investing in companies that encourage diversity in their workforce, have the best health and safety records in their respective industry, and engage in active discussion surrounding human rights and community issues.

GOVERNANCE
Good corporate governance ensures fair treatment of shareholders, customers and employees. In this realm, we look for diverse boards among the talent, race and gender spectrums. We prefer to invest in companies with separate CEO and Chairman roles, well-aligned compensation structures, non-staggered boards and those that have instituted sustainability reporting.

RIVERWATER PARTNERS’ SUSTAINABILITY REPORT

winding river in green field sustainability report coverOur 2021 Sustainability Report celebrates the ESG Journey.

While each company and manager has a distinct sustainability journey, all of the journeys have the ultimate goal of generating positive outcomes on the world. The landscape of the journey is always changing.

This report highlights the ESG efforts and positive impact of our holdings, how we engage with them to improve those efforts and our own sustainability journey at Riverwater Partners.

PREVIOUS YEARS’ SUSTAINABILITY REPORTS

2020 Sustainability Report

ESG INVESTING AND FINANCIAL RETURNS

Some skeptics of ESG investing believe that one must sacrifice financial gain to achieve real economy gain; however, numerous studies have shown that companies that incorporate ESG policies and practices into running their businesses generate superior returns versus companies that do not.

We believe that these better business practices generally result in superior returns because:

  1. Increased revenue (as customers want to support the efforts), and/or
  2. Decreased expenses (as a result of lower energy consumption, for example), or
  3. Decreased potential liability (reputation risk), resulting in superior returns over the long term.

And this belief is backed by data. In fact, a recent meta-study of over 1000 research papers on the relationship between ESG investing and financial performance and found either a positive and/or neutral relationship between ESG and financial performance.

Click here to read more about debunking the myth of returns and ESG investing.

UNITED NATIONS PRINCIPLES OF RESPONSIBLE INVESTING

As institutional investors, we have a duty to act in the best long-term interests of our beneficiaries. In this fiduciary role, we believe that environmental, social, and corporate governance (ESG) issues can affect the performance of investment portfolios (to varying degrees across companies, sectors, regions, asset classes and through time).

We also recognize that applying these Principles may better align investors with broader objectives of society. Therefore, where consistent with our fiduciary responsibilities, we commit to the following:

Analysis

We will incorporate ESG issues into investment analysis and decision-making processes.

Disclosure

We will seek appropriate disclosure on ESG issues by the entities in which we invest.

Enhance

We will work together to enhance our effectiveness in implementing the principles.

Active

We will be active owners and incorporate ESG issues into our ownership policies and practices.

Acceptance

We will promote acceptance and implementation of the principles within the investment industry.

Report

We will each report on our activities and progress towards implementing the principles.