ESG Investing & Active Ownership

ESG Considerations in Investment Decision-Making

At Boston Trust Walden, we focus on investing client assets in securities we judge to be high financial quality. We seek to invest in enterprises with sustainable business models, strong financial underpinnings, prudent management practices, and a governance structure that supports these objectives. Foundational to our process is recognizing the financial materiality (or significance) of ESG factors. Together, our ESG investment analysts and traditional securities analysts evaluate a company’s performance to enhance our understanding of potential financial outcomes associated with issues ranging from risks (e.g., physical risk to operations) to opportunities (e.g., generating new sources of revenue).

Read our case study on how we integrate ESG risks and opportunities into the equity research process.

Values-Aligned Portfolios

We work with clients to understand their ESG objectives and to help inform what are often nuanced decisions.

Some clients have explicit ESG objectives and ask us to construct a portfolio that is consistent with those guidelines. For clients invested in separately managed accounts, we can customize the portfolio to reflect specific inclusions or exclusions of securities, industries, economic sectors, products, services, or business practices.

Other clients choose to delegate the screening decision to us. In these situations, we apply standard screening criteria to avoid investment in specific products and services.  These criteria are applied to the ESG-screened Boston Trust Walden mutual funds as well.

One of our core strengths is our ability to assess company performance beyond simple products and services criteria. We consider a range of significant ESG risks and opportunities across four broad categories, including the company’s corporate governance, environmental impacts, human capital management, and its impact on the communities in which it operates.

We engage companies to improve ESG-related policies, practices, and performance, with the goal of strengthening business systems and decision-making practices and improving enterprise resilience.

Our approach to company engagement is solutions-oriented and relationship-focused. We prioritize constructive dialogue via multi-year, multi-phase engagements that complement our long-term investment approach. We strive to build trust with the companies engaged, offer guidance and resources, and effectively communicate a strong business case for addressing relevant ESG risks and opportunities.

Over time, we have found companies that are transparent and responsive to stakeholders are more likely to be accountable and make progress in addressing investors’ concerns.

While our first step is to engage companies directly, we may decide to file shareholder resolutions when our attempts at dialogue are unproductive. Shareholder resolutions appear on the proxy ballot for vote by all shareholders at the company’s annual meeting. A strong level of shareholder support — even when not a majority — can be an important driver of more sustainable business policies and practices.

While filing a shareholder resolution can be a valuable tool, we consider an engagement successful when the shareholder resolution never makes it to the annual meeting but is instead withdrawn because the company agrees to take meaningful action. Moreover, a successful and constructive engagement may mean we avoid filing a resolution at all.

Boston Trust Walden has filed nearly 600 shareholder resolutions since 1987, and we’ve withdrawn 44% of these after companies committed to improve their ESG policies, practices, or performance.

Check out our interactive tool to view all shareholder resolutions filed and the outcomes.

Each year Boston Trust Walden casts votes on hundreds of proxy ballots. Proxy voting is a key element of our fiduciary duty in stewarding the assets of our clients. We take a thoughtful, principled approach when casting votes at company annual meetings on behalf of our broad client base.

In cases where Boston Trust Walden votes against management’s recommendations related to our active ownership focus areas, we strive to reach out to companies directly to communicate the rationale for our vote.

Our proxy voting policies and voting record can be found under “Proxy Voting Resources” in our ESG Resource Library.

We believe clear and consistent public policy and regulation is critical for advancing corporate transparency and accountability. We engage policymakers at the state, national, and international levels on issues of relevance to investors, such as strengthening corporate disclosures and protecting shareholder rights.

While direct company engagement is the primary mechanism for fostering positive change at the companies in which we invest client assets, we also collaborate with other investors and issue experts to advocate for improved disclosures and practices that can mitigate material ESG risks and capitalize on key business opportunities. These collaborations complement Boston Trust Walden’s independent commitments and support our fiduciary duty to ensure client assets are invested in securities well situated to minimize risk and produce sustainable returns.

We aim to raise the bar with respect to ESG investing and active ownership by sharing our knowledge and expertise with others. Members of our team serve on various investor working groups and boards. In addition, our expertise informs the development of quarterly client reports, comment letters, and issue-specific publications.