ESG in investments
Putnam incorporates consideration of ESG elements in our investment research processes. We consider ESG analysis as additive and complementary to the fundamental understanding that is at the center of our investment philosophy.
Examples of relevant and material ESG issues that we research might include carbon intensity, water use, or plans to reduce waste; employee well-being or commitments to workplace equality and diversity; and board independence or alignment of management incentives with the company's strategic sustainability objectives.
ESG integration within equities
Putnam's Sustainable Equity team collaborates with portfolio managers and analysts on ESG integration by assessing the fundamental relevance of ESG issues at a security level and the potential for alpha generation and risk mitigation at a portfolio level.
We consider it important that the Sustainable Equity team is part of the Equities team, not separate from it.
Given Putnam's investment-centric philosophy, our ESG integration and engagement is guided by our internally developed materiality maps. They are inspired and guided by the work of the Sustainability Accounting Standards Board (SASB, newly consolidated under the International Financial Reporting Standards (IFRS) Foundation and linked to the developing International Sustainability Standards Board (ISSB)).
Our equity materiality map shows that our research focuses on context-relevant issues for different types of businesses. We believe this kind of tailored and forward-looking research focus can be a key contributor to long-term investment results.
|Consumer||Health Care||Financials||Tech (hardware)||Comm and Tech (software)||Industrials||Materials and Energy||Utilities||REITs|
|Board structure and composition|
|Management incentives, ownership, and comp alignment|
|Systemic risk management and leadership|
|Corporate purpose, culture, and mission alignment|
|Diversity, equity, and inclusion|
|Employee well-being and development|
|Product impact and customer well-being|
|Supply and distribution network management|
|Privacy, data security, and data use|
|Marketing and selling practices|
|Pricing philosophy and access|
|Climate change mitigation and adaptation|
|Physical climate change risk|
|Greenhouse gas (GHG) emissions|
|Energy intensity and renewable energy use|
|Materials sourcing, intensity, and lifecycle management|
|Water intensity and stress|
|Biodiversity and ecosystems impact|
As of 1/31/23. For illustrative purposes only.
Source: Putnam Investments, adapted from SASB Materiality Map.