Social Purpose Investing

The ELCA calls its people and institutions to encourage corporations to act in socially responsible ways and to invest in alignment with ELCA priorities.

In alignment with the ELCA’s corporate social responsibility ministry, Portico has maintained a social purpose investing strategy for over 30 years — starting well before this type of investing became popular.

Always, our social purpose-related decisions and actions follow ELCA social teachings and policies.

Retirement plan members can feel proud to be answering this corporate social responsibility call in the following ways.

  • Across all our funds, Portico identifies companies we’re invested in that do not demonstrate responsible, sustainable business practices — and advocates for change.
  • Through our social purpose funds, Portico seeks to deliver attractive returns over the long term while also investing in companies creating positive social impact and screening out those creating negative social impact.
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Historical Highlights
  • 1988:
    Well before socially responsible investing became popular, Portico introduced its first social purpose investment funds. Since then, our commitment has strengthened, our experience has deepened, and our social purpose fund options are broad enough to meet the needs of those wanting to be 100% social purpose fund investors.
  • 1993:
    The ELCA social statement, Caring for Creation, was adopted. In the years following, Portico took multiple steps to strengthen our focus on the environment and continues to make this a priority.
  • 2015:
    We approved and implemented the private prisons investment screen following the ELCA’s 2013 adoption of its criminal justice social statement.
  • 2017:
    We researched and made a five-year investment focused on community development in the Holy Land, as the ELCA developed its human rights screen.
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  • 2020:
    We made social purpose funds our default fund for new members.
As Shareholder Advocate

Via all our funds, we wield a collective shareholder voice to create change.

Shareholder advocacy is all about speaking up, as investors, to advocate for more responsible corporate behavior that increases shareholder value. Like all smart change strategies, it starts with dialogue.

First, We Talk

Together with other like-minded shareholders, we invite corporate leaders into conversations to offer them an alternative way to look at their bottom-line risks and competitive opportunities, and encourage them to act in the best interests of shareholders.

If That Fails, We File a Resolution

When dialog fails to prompt change, we file a resolution calling for a specific action that appears on proxy ballots to be voted on at the company’s next annual meeting. If the company commits to take action, we withdraw the resolution before it comes up for a vote.

If That Fails, We Vote

When we don’t get a favorable response, we vote our proxies in support of that resolution. Even votes of less than 50% can capture a company’s attention and bring its leaders back into dialogue.

See Portico’s Shareholder Resolution Outcomes

How We Hold Board of Directors Accountable

When board of directors come up for election and the company or board members are not acting in the best interest of shareholders, we vote against approval of that board member, and clarify our reason in a letter to company management. With many shareholders using their vote to voice their disapproval, companies pay attention. We sent 55 letters in 2020.

Example: We consider a company’s executive compensation excessive. In response, we’ll vote against the company’s compensation strategy. We’ll also vote against re-election of the responsible board members, and explain that vote in a letter to the company.

We’ll likely take the same approach if:

  • A board director is nominated who is too closely tied to the company and not able to be an unbiased conduit between the board and corporate management.
  • A company only puts a portion of its board directors up for re-election each year rather than all of them.

Thanks to many shareholders like Portico expressing their opinions through voting over the years, it’s become more common for large companies to practice good corporate governance. For this reason, Portico is now able to focus this kind of advocacy on more mid-size and smaller companies.

As Social Purpose Investor

Via social purpose funds, we invest to create positive impact and screen out companies creating negative impact.

Positive Investing

In social purpose funds, we’re able to invest a portion of a fund’s assets in companies demonstrating measurable social impact in alignment with ELCA social teachings and policies. We call it social impact first investing.

Fund guidelines allow for the possibility of somewhat higher projected risk and/or somewhat lower projected return on up to 10% of a fund’s assets. Using this strategy, Portico can invest in companies who work to create strong financial returns while also tackling issues like affordable housing and threats to the environment.

Importantly, these companies must commit to measuring and reporting the social impact they create so that we, in turn, can share it with our social purpose fund investors.

Screening

In social purpose funds, we’re able to screen out companies whose business practices conflict with these ELCA social criteria screens:

  • Alcohol
  • Environment
  • Gambling
  • Military weapons
  • Political and civil human rights
  • Pornography
  • Private prisons
  • Tobacco

In response to ELCA calls for action, Portico has, over the last five years, strengthened screening related to climate change and fossil fuel companies and implemented new screens related to private prisons and human rights.

Using the ELCA’s current social criteria screens as a guide, Portico reviews thousands of potential companies on an ongoing basis and typically screens out about 10% of those it reviews.

We currently exclude about 740 companies from ELCA retirement plan investments in the social purpose funds. Guided by the ELCA Environment screen, we have screened out about 200 companies for being most egregious in terms of damage to the environment. These include:

  • Companies with a history of significant toxic spills and releases, energy and climate change issues, poor water management practices, and other waste management issues
  • Some of the largest fossil fuel-producing companies, including ExxonMobil, Royal Dutch Shell, Chevron, and BP
  • About 155 companies owning thermal coal, oil shale, and tar sands reserves, the most carbon-intensive (dirtiest) fossil fuels, accounting for about 82% of the emissions tracked by the Carbon Underground 200™’s top 100 coal companies and in total about 2/3 of the Carbon Underground 200™’s top 100 coal and top 100 oil and gas companies.

Plan members, visit myPortico for more about being a social purpose investor

Stories of Impact
See how our efforts are making a difference. For social purpose fund investors, the outcomes of positive social investing and screening are part of their return on investment.

Protecting The Environment

Investing in the Future of Our Planet, May 2016

Shareholder Advocacy
Climate Change Resolutions Lead to Industry First, July 2017
Convincing Costco to Reduce Its Greenhouse Gas Emissions, Nov. 2015

Positive Social Investing
Impax Reports Positive Environmental Impact for 2020, Oct. 2021
Nuveen Green Bond Impact Results for 2019, Mar. 2021
Green Bond Builds Environmentally-Friendly Landscape, Nov. 2015

Screening
Companies Holding Oil Shale and Tar Sands Reserves Screened Out, Dec. 2018
Targeting Thermal Coal Users, March 2016

Building Stronger Communities

Positive Social Investing
New $25M Investment in Community & Economic Development Bonds, June 2021
RDF Investment Brings Opportunity to Latino & Low-Income Families, June 2021
IFF Investment Brings Positive Change to Communities, Feb. 2020
Bank of Palestine Walks Its Mission Through 2020 Challenges, January 2021
Portico Implements New ELCA Human Rights Screen, April 2019

Promoting Sustainable Business Practices

Screening
Why We Don’t Invest in Private Prisons, Nov. 2015