ESG Portfolio Spotlight:
November 2021

ESG Portfolio Spotlight: <br/>November 2021

Westmount’s Environmental, Social and Governance (ESG) Portfolio allocates clients across a diverse selection of investment managers that directly support innovative companies driving positive social change. Westmount’s ESG managers are aligned with the United Nations Sustainable Development Goals, a globally recognized framework adopted by the U.N. General Assembly to collaboratively tackle humanity’s most pressing issues.

Portfolio Spotlight: Boston Trust Walden Small Cap Fund

The Boston Trust Walden Small Cap Fund seeks long-term capital growth through an actively managed portfolio of higher-quality, small-cap U.S. stocks. In choosing companies for investment, the Fund's managers seek strong ESG performance in terms of environmental impact, workplace conditions, corporate governance, and community involvement.

As a part of their ESG strategy, Boston Trust Walden proactively engages with the companies held in their portfolios, leveraging their position as an investor to encourage the adoption of more sustainable practices and responsible ESG policies. The firm is also a member of the Investor Alliance for Human Rights (IAHR), an organization that works closely with institutional investors to promote human rights and responsible business conduct.

Ensuring an Ethical and Transparent Supply Chain

Earlier this year, Boston Trust Walden, through their partnership with IAHR, engaged with one of its holdings, Carter's—a children's apparel company—seeking increased disclosure from Carter's evidencing that their products are not manufactured using labor sourced from China's Uyghur Autonomous Region, where an estimated 100,000 Uyghurs and other ethnic minorities are alleged to face forced labor conditions and other human rights abuses.1

Following their initial outreach, the Fund managers advised Carter's executives on ways to enhance disclosure and further monitor their supply chains to ensure that neither raw materials nor finished products are sourced from that area and discussed certain efforts already underway.

The results of this outreach were reflected in Carter's 2021 corporate sustainability report, in which the company outlined plans to enhance the traceability of cotton supplied to their fabric mills and participate in new international partnerships and initiatives that “educate and empower workers.” By 2030, the company aims to “improve the well-being of at least 1 million workers” involved in their global supply chain.2

Building a Pipeline for Diverse and Inclusive Leadership

First Hawaiian Bank (FHB) is Hawaii's largest bank and a leader among financial institutions in corporate governance and community stewardship. FHB has been recognized as one of the state's best places to work for the last 10 years, a reflection of its commitment to employee development, well-being, and diversity.3

When viewed through an ESG lens, one of the areas in which FHB excels is its governance structure. More than 60% of the Bank's board of directors is composed of individuals who identify as ethnically diverse, and 55% of management positions are held by women4 (compared to the rest of the U.S. financial industry, where one out of 10 C-suite positions is held by a person of color, and just two out of 10 are held by women.).5

The Bank provides further support for career advancement and professional development through its talent development program, “Strive,” which offers tuition reimbursements and access to free online courses spanning more than 90 topics. In addition, the Bank offers a number of leadership development programs, including the Women's Leadership Forum, which creates a pipeline for women who aspire to senior leadership roles.6

Externally, First Hawaiian Bank has long supported the development of the communities it serves. Using funds available through the Community Redevelopment Act, the Bank targets projects that promote job growth and stimulate business activity in low-to-moderate-income areas. Between 2016 and 2018, the Bank issued more than $975 million in loans to support various affordable housing, economic development, and urban revitalization projects throughout the Islands.7

For its community reinvestment efforts, FHB received an “Outstanding” rating (its ninth consecutive) from the Federal Deposit and Insurance Corporation (FDIC) following its most recent exam period.8

Improving Energy Efficiency and Investing in Renewable Resources

Another Fund holding, Watts Water Technologies, designs and manufactures products that help individual households, companies, and municipalities efficiently manage energy consumption, conserve water, and mitigate greenhouse gas emissions.

Watts estimates that their line of high-efficiency boilers and water heaters alone eliminated approximately 112,000 metric tons of CO2 in 2020.9 Other household Watts products have been shown to enhance energy efficiency up to 35% annually by minimizing temperature differences between rooms.10
In addition to its product line, the company has also placed a heightened focus on mitigating its own footprint. Between 2018 and 2020, Watts reduced its global water consumption by 33% and greenhouse gas emissions by 16%.11

In the same timeframe, Watts also enabled smart monitoring across 80% of its high water use facilities to promote early leak and surge detection. Earlier this year, the company made an investment to offset the annual electricity consumption of eight U.S.-based production facilities using wind power. The project is estimated to reduce Watts' total carbon footprint by 25% by year-end.12

Have a question about our ESG offering or investment platform? Call us at 310-556-2502 or email info@westmount.com to speak with an advisor today.

Sources
1 U.S. Dept. of Labor: “Against Their Will: The Situation in Xinjiang
2 Carter’s: “2020 Corporate Social Responsibility Report
3, 4, 6, 8 First Hawaiian Bank: “Environmental, Social and Governance Report 2020
5 McKinsey and Co.: “Racial Equity in Financial Services
7 First Hawaiian Bank: “Community Reinvestment
9, 10, 11, 12 Watts Water Technologies: “2020 Sustainability Report


Disclosures

This report was prepared by Westmount Asset Management, LLC (“Westmount”). Westmount is registered as an investment advisor with the U.S. Securities and Exchange Commission. The information contained in this report was prepared using sources that Westmount believes are reliable, but Westmount does not guarantee its accuracy. The information reflects subjective judgments, assumptions and Westmount’s opinion on the date made and may change without notice. Westmount undertakes no obligation to update this information. It is for information purposes only and should not be used or construed as investment, legal or tax advice, nor as an offer to sell or a solicitation of an offer to buy any security. No part of this report may be copied in any form, by any means, or redistributed, published, circulated or commercially exploited in any manner without Westmount’s prior written consent. If you have any comments or questions about this report, please contact us at info@westmount.com.