As noted throughout this report, our sustainability and impact work are interwoven with our core research process. The form of this integration can be difficult to convey, as we are not simply adding thoughtful sustainability work to Putnam’s core fundamental research. Rather, we are combining the two elements throughout the investment process. In doing so, we aim to create a holistic approach that is greater than the sum of its parts. Here we offer some additional detail from a week of our team’s meetings in December 2019 as a way to bring these processes more vividly to life.
These meetings are typically with CEOs, CFOs, and investor relations representatives, and usually involve our fellow portfolio managers and analysts from Putnam’s core equity research team. In addition to assessing traditional business fundamentals, we aim to discuss key sustainability issues as part of or regular investment discussions, supplemented by deeper topical conversations with corporate sustainability leaders.
| Company | Sustainability topic |
|---|---|
| Financial | Improvement of next-gen access and strategy for student loan management products |
| Medical technology (two companies) | Patient benefits of new product innovations |
| Transportation | Efforts to ensure passenger and driver safety |
| Retail | Product mix and consumer trends |
| Investment | Capital deployment strategy and sustainability focus with investee companies |
| Waste management | Increased demands for recycling and environmental improvements in the fleet of equipment |
| Hotel | Environmental programs and focus on employee safety |
| Industrial | Efficiency and environmental benefits of product platforms |
| Materials | Zero-carbon production process and challenges in raw materials mining |
In addition to our conversations with company management teams, we perform a wide range of independent research, including discussions with other researchers, industry experts, non-profit organizations, and other types of investors. This work is in addition to all of our traditional fundamental research and the discussions above.
| Research event | Purpose |
|---|---|
| Due diligence on a medical benefits company | Verify positive client experience |
| Meeting with a service provider | Assess their approach to measuring impact |
| Meeting with a nonprofit | Learn about structural access to resources women-led businesses |
| Discussions with an academic researcher | Review analysis of gender bias in investment management |
| Conversation with a philanthropic consultant | Learn more about their client interest in impact investing |
| Meeting with local impact investors | Analyze needs of local food enterprises |
| Discussion with sell-side researchers | Review of their ESG research along with traditional fundamental work |
Our investment work also benefits from inputs from our colleagues and business partners, within Putnam
| Partner | Purpose |
|---|---|
| Clients | Discuss our work and evolution in the broader sustainable investing field |
| Putnam’s ESG leadership committee and PRI committee | Set priorities for the coming year |
| Cross-company collaborative group | Review 2019 progress and discuss best practices for organizing ongoing ESG-related workflow |
