ESG PORTFOLIO
ENVIRONMENTAL SOCIAL GOVERNANCE
WHAT IS ESG INVESTING?
ESG, formally known as Socially Responsible Investing (SRI), is an investment orientation emphasizing a company’s handling of environmental, social, and governance strategies.
What considerations go into sustainable investing?
Environmental
Carbon emissions
Energy efficiency
Water scarcity
Waste management
Pollution mitigation
Social
Diversity & workplace policies
Labor standards
Supply chain management
Product safety and usefulness
Community impact
Governance
Board structure
Executive compensation
Political contributions & lobbying
Bribery and corruption policies
Strategic sustainability oversight
Source: Morningstar
Benefits of ESG Investing
- Actively addresses solutions to real global problems including climate change, social injustice and board diversity.
- Enables investors the opportunity to align their personal values with their investments.
- ESG analysis demonstrates sustainable competitive advantage and helps mitigate potential long term risk.

Transition to “Stakeholder Capitalism”
- As generational wealth transfers to millennials, the importance of sustainable investing follows.
- 95% of millennials are interested in sustainable investing.
- “Stakeholder Capitalism” is the ideology that corporations serve the interest of all stakeholders both corporate and general public.
How interested are you in sustainable investing – the practice of making investments in companies or funds which aim to achieve market-rate financial returns while pursuing positive social and/or environmental impact?


Sources: Morgan Stanley table/research, Business Roundtable, Investopedia
Current ESG Funds Landscape
- In 2020, $51.1 billion flowed into sustainable funds eclipsing flows in 2018 by 1000%.
- “$17.1 Trillion managed according to sustainable investing strategies” US SIF Foundation’s 2020 report on US Sustainable and Impact Investing Trends.
- “From January through November 2020, investors in mutual funds and ETFs invested $288 billion globally in sustainable assets, a 96% increase over the whole of 2019. ” Larry Fink, CEO of Blackrock.

Stakeholder Capitalism in Action
- Funds aligning their impact themes with the U.N. Sustainable Development Goals
- Funds emphasizing on clean energy
- Funds investing in companies who are industry leaders in gender diversity
- Funds investing in the sustainability of global water resources
- Funds focusing on affordable housing and communities
Karel Capital Inc. Maintains a Model ESG Portfolio
- Mutual Funds and Exchange Traded Funds (ETFs) are handpicked and based on high ranking ESG scores and positive impact on ESG issues.
- Mutual Funds and ETFs have a Morningstar Sustainability score of 3 or higher
Approximately 85% of holdings received a Morningstar low carbon score. - Using industry leading 3rd party sources including Sustainalytics/Morningstar, MSCI, and ISS for ESG scores and sustainability ratings.