Boston Common Asset Management: An ESG Investing Guide
Boston Common Asset Management: A Deep Dive into ESG Investing for a Sustainable Future
In a world grappling with climate change, social inequality, and corporate governance issues, the concept of investing with a conscience has moved from a niche interest to a mainstream movement. Investors are increasingly seeking to align their financial goals with their personal values, leading to the rise of sustainable and responsible investing. At the forefront of this movement is Boston Common Asset Management, a firm that has been pioneering Environmental, Social, and Governance (ESG) investing for over two decades.
This comprehensive guide will take you on a deep dive into the world of Boston Common Asset Management. We will explore their rich history, their unique investment approach and strategies, their range of impactful funds, and their significant influence on corporate behavior worldwide. Whether you’re a seasoned ESG investor or new to the concept, this article will provide you with a thorough understanding of how Boston Common is not just generating financial returns, but also driving positive change in the world.
A Legacy of Purpose: The History of Boston Common Asset Management
Boston Common Asset Management was founded in 2003 by Geeta Aiyer, a visionary leader with a profound belief in the power of public equity investing to effect meaningful social and environmental change. This was a time when ESG investing was still in its infancy, and Aiyer was one of its earliest and most influential innovators. Her vision was clear: to create an investment firm that would not only deliver competitive financial returns but also actively engage with companies to improve their corporate citizenship.
The name “Boston Common” itself is symbolic of the firm’s philosophy. Since 1634, the Boston Common has been a public space, owned by no one but essential to all, a place where commerce and community intersect. Similarly, Boston Common Asset Management operates at the intersection of the ecological and economic realms, striving to foster a world that is both prosperous and sustainable.
From its inception, the firm has been an independent, employee-owned entity, with a strong commitment to diversity and inclusion. Today, it is a women-led and majority women- and employee-owned firm, a rarity in the financial industry. This ownership structure has allowed Boston Common to remain true to its founding principles and maintain its focus on long-term value creation for its clients and for society as a whole.
The Architect of Change: Boston Common's Investment Approach
At the heart of Boston Common’s success is its distinctive investment approach, which is built on the belief that a company’s financial performance is inextricably linked to its ESG practices. The firm’s philosophy is to “activate capital for a sustainable and inclusive economy” by investing in companies that are not only financially sound but also leaders in sustainability.
Their approach is guided by four key focus areas:
Earth Renewal and Climate Change: Boston Common seeks to invest in companies that are actively working to mitigate climate change, promote a just energy transition, and protect the Earth’s natural resources. They look for businesses that are innovating in areas like renewable energy, energy efficiency, and circular economy solutions.
Health, Wellness, and Community Wellbeing: The firm invests in companies that are contributing to the health and well-being of individuals and communities. This includes businesses in the healthcare sector, as well as those that are promoting healthy lifestyles, providing access to clean water and sanitation, and supporting community development.
Human Rights, Equity, and Social Mobility: Boston Common is a strong advocate for human rights, diversity, and social justice. They invest in companies that have strong labor practices, promote gender and racial equity, and are committed to ethical supply chains. They also seek to support businesses that are providing opportunities for underserved populations.
Good Governance and Corporate Culture: The firm believes that good governance is the bedrock of a sustainable business. They invest in companies with strong corporate governance structures, transparent financial reporting, and a culture of ethical behavior. They also engage with companies to improve their policies on issues like executive compensation, board diversity, and political lobbying.
To implement this approach, Boston Common has developed a rigorous, proprietary ESG integration methodology. This involves a deep-dive analysis of a company’s ESG performance, which is then fully integrated into the investment decision-making process. The firm has a dedicated team of ESG analysts who work closely with the financial analysts to identify companies that meet their stringent criteria.
A key feature of their approach is the use of “seek” and “avoid” criteria. They actively “seek” to invest in companies that are providing solutions to global challenges and demonstrating leadership in ESG performance. Conversely, they “avoid” investing in companies that are involved in harmful products or practices, such as fossil fuels, tobacco, and weapons manufacturing.
Strategies for a Better World: Boston Common's Investment Strategies
Boston Common offers a range of investment strategies designed to meet the diverse needs of its institutional and individual clients. These strategies are all underpinned by the firm’s core ESG philosophy and its commitment to active ownership.
Long-Only Equity and Balanced Strategies
The firm’s flagship strategies are its long-only equity and balanced portfolios, which invest in a diversified mix of U.S. and international stocks. These strategies are actively managed, with a focus on identifying high-quality, undervalued companies with strong growth potential. The ESG analysis is a critical component of the stock selection process, helping the firm to identify companies that are not only financially attractive but also well-positioned to thrive in a rapidly changing world.
All Material Risk Investment Strategies (AMRIS)
In a testament to its commitment to innovation, Boston Common has recently introduced a new set of investment strategies called All Material Risk Investment Strategies (AMRIS). AMRIS leverages cutting-edge financial data science and large language models (LLMs) to analyze corporate risk disclosures from regulatory filings. This allows the firm to gain a deeper understanding of the full spectrum of risks facing a company, including those that are not always captured by traditional financial analysis. The goal of AMRIS is to enhance investment returns by identifying and pricing these material risks more effectively.
Active Shareowner Engagement
A cornerstone of Boston Common’s investment approach is its active shareowner engagement program. The firm believes that as a significant shareholder, it has a responsibility to use its influence to encourage companies to improve their ESG performance. They engage in a variety of activities, including:
Dialogue with management: They have regular conversations with the management teams of the companies in their portfolios to discuss ESG issues and advocate for best practices.
Shareholder resolutions: They file and co-file shareholder resolutions on a range of ESG topics, such as climate change, diversity, and human rights.
Proxy voting: They vote their proxies in line with their ESG principles, supporting resolutions that promote sustainability and good governance.
Collaboration with other investors: They collaborate with other like-minded investors to amplify their voice and drive collective action.
Through these engagement efforts, Boston Common has a proven track record of influencing corporate behavior and driving positive change.
Investing with Impact: Boston Common's Funds
Boston Common offers a suite of mutual funds that allow investors to align their investments with their values. These funds are managed with the same rigorous ESG integration and active ownership approach as the firm’s other strategies.
Boston Common ESG Impact US Equity Fund (BCAMX): This fund invests in a diversified portfolio of U.S. large-cap stocks that meet the firm’s stringent ESG criteria. It seeks to provide long-term capital appreciation while promoting sustainable business practices.
Boston Common ESG Impact International Fund (BCAIX): This fund invests in a diversified portfolio of international stocks from developed markets. It aims to deliver long-term growth by investing in high-quality, undervalued companies with strong ESG performance.
Boston Common ESG Impact Emerging Markets Fund (BCEMX): This fund provides investors with exposure to the fast-growing economies of the developing world, while also promoting sustainable development. It invests in a diversified portfolio of emerging market stocks that are leaders in ESG.
These funds have been recognized for their strong performance and their commitment to impact. They offer investors a tangible way to make a positive difference with their investment dollars.
By the Numbers: A Snapshot of Boston Common's Success
While Boston Common is first and foremost a mission-driven organization, its financial performance is a testament to the fact that you don’t have to sacrifice returns to invest responsibly.
Assets Under Management (AUM): As of March 31, 2024, Boston Common managed approximately $4.0 billion in assets, including sub-advised assets. Their latest SEC filings show a portfolio value of over $3.2 billion.
Annual Revenue: While specific annual revenue figures are not publicly available, the firm’s steady growth in AUM is a strong indicator of its financial health and the growing demand for its services.
Number of Employees: As of December 31, 2022, the firm had 41 employees, a close-knit team of seasoned professionals dedicated to the firm’s mission.
A Network for Change: Boston Common's Partnerships
Boston Common recognizes that collaboration is key to driving systemic change. The firm has a long history of partnering with other organizations to advance the cause of sustainable and responsible investing.
One of their most significant partnerships is with the Conservation Law Foundation (CLF), a leading environmental advocacy organization in New England. In 2022, CLF selected Boston Common to manage 100% of its invested funds, a testament to the firm’s expertise in mission-aligned investing.
Boston Common is also an active member of several industry initiatives, including:
Interfaith Center on Corporate Responsibility (ICCR): A coalition of faith-based and values-driven investors who engage with companies on ESG issues.
UN Principles for Responsible Investment (PRI): A global network of investors committed to integrating ESG factors into their investment and ownership decisions.
Finance for Biodiversity Pledge: A commitment by financial institutions to protect and restore biodiversity through their financing activities and investments.
ShareAction: A non-profit organization that promotes responsible investment and corporate accountability.
Through these partnerships, Boston Common is able to leverage its expertise and influence to drive change on a larger scale.
Acknowledged for Excellence: Awards and Recognition
Boston Common’s leadership in the field of ESG investing has been widely recognized by the industry. The firm and its leaders have received numerous awards and accolades, including:
PSN Top Guns List: Boston Common has been named to the PSN Top Guns List of best-performing separate accounts, managed accounts, and managed ETF strategies.
TIME100 Climate List: In 2023, Geeta Aiyer, the firm’s founder and president, was named to the inaugural TIME100 Climate list, which recognizes the 100 most influential leaders driving climate action in business.
Top 100 Women-Led Businesses in Massachusetts: Boston Common has been consistently recognized as one of the top 100 women-led businesses in Massachusetts.
ICCR Legacy Award: In 2023, Steven Heim, Boston Common’s Director of ESG Research, received the prestigious ICCR Legacy Award for his lifelong advocacy for Indigenous rights.
These awards are a testament to the firm’s commitment to excellence, both in terms of financial performance and social and environmental impact.
The Ripple Effect: Boston Common's Impact
The ultimate measure of Boston Common’s success is its impact on the world. Through its investments and its active ownership, the firm is driving positive change in three key areas:
Environmental Impact: Boston Common has been a leader in climate finance for over two decades. They have a 0% direct investment in fossil fuels and their investment strategies have 80% fewer emissions than the benchmark. They have engaged with 58 banks on climate risk and have been instrumental in pushing companies to adopt more sustainable practices.
Social Impact: The firm is a passionate advocate for human rights and social equity. They have engaged with 39 companies on racial equity and have voted against 70 companies on gender or racial board diversity. Their engagement with GlaxoSmithKline resulted in the company committing to increasing female representation in senior roles to over 37%.
Governance Impact: Boston Common believes that good governance is essential for long-term value creation. They have engaged with 95 companies on their response to the COVID-19 pandemic and have seen 44 corporate policies, processes, or products improved through their engagements.
These are just a few examples of the tangible impact that Boston Common is having on the world. By using their power as investors, they are helping to create a more just, sustainable, and prosperous future for all.
The Future of Investing is Here
As we look to the future, it is clear that the principles of sustainable and responsible investing are no longer a niche but a necessity. Boston Common Asset Management has been at the forefront of this movement for over two decades, demonstrating that it is possible to achieve both financial success and positive social and environmental impact.
With its unwavering commitment to its mission, its innovative investment strategies, and its dedicated team of professionals, Boston Common is well-positioned to continue leading the way in the years to come. For investors who are looking to make a difference with their money, Boston Common offers a compelling and inspiring example of how to invest with purpose.
Boston Common Asset Management Leadership & Teams
Geeta Aiyer – President & Founder
Praveen Abichandani – Portfolio Manager
Alexander Archambo – Senior Portfolio Operations Associate
Joana Arthur – Investment Director
Vicki Benjamin – Chief Financial Officer
Kristina Eisnor – Chief Operating Officer & Chief Compliance Officer
Lauren Compere – Managing Director, Head of Stewardship & Engagement
Tara Doyle – Senior Vice President, Business Development
Kev Hart – Director of Marketing & Communications
Steven Heim – Director of ESG Research
Ashley Lyon – Senior Vice President, Business Development
John Streur – Chief Investment Officer
Leah Turino – Head of ESG Integration
Matt Zalosh – CIO, International Strategies
Headquarters: 200 State Street, 7th Floor, Boston, MA 02109, USA
Phone: 617-720-5557
Number of employees: 11-50
Website: www.bostoncommonasset.com