Parnassus: Step up Shareholder Engagement

Parnassus Funds are highly regarded as leaders in ESG investing. In particular, Parnassus leads the way on using ESG data for constructing its portfolios in a quantitative way.

As I've learned more about responsible investing, I've come to realize that shareholder engagement is a powerful tool to get companies to improve their practices and create real impact. Shareholder engagement means talking directly with the company management and participating in the formal shareholder resolution process. Shareholder engagement often leads to better financial performance.

As a longtime Parnassus shareholder, I'd like to see the fund do more shareholder engagement, and especially collaborate with other investor groups. For example, why is Parnassus not a signatory of the Climate Action 100+, [1] a leading coalition of investors working with companies to improve their climate policies (which just got Shell to announce a comprehensive carbon emissions commitment [2]). Over 300 other investors have joined, including PIMCO, Trillium, and Zevin Asset Management.

In fact, collaboration should be in the name! Parnassus was the home of the Muses in ancient Greece. The famous painting by Rafael depicts the coming together of the four areas of human knowledge: philosophy, religion, poetry, and law. [3]

Shareholder engagement could be particularly effective coming from Parnassus because of their quantitative chops. Many investors can make a compelling business case for a company to move forwards on an important social issue. Few investors can back up that case with specific data in a rigorous manner. Parnassus is also one of the largest socially responsible investment funds in the USA, and because it has a strong track record of financial performance tied to sustainability investing, it can leverage its influence to move companies forward. My desire for Parnassus to take action is not just to keep up with other SRI funds, but because Parnassus can uniquely contribute in a powerful way.

There are some signs that the new leadership at Parnassus is more open to shareholder engagement. [4] Please continue this trend! As one of your shareholders, I'd like you to go further. Please do more to engage with companies and the public on climate change, and publicly report on progress creating climate impact.

 

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[1] http://www.climateaction100.org/

[2] https://www.shell.com/media/news-and-media-releases/2018/joint-statement-between-institutional-investors-on-behalf-of-climate-action-and-shell.html

[3] The Parnassus by Raphael, 1510. Image from WikiMedia

[4] https://www.parnassus.com/our-firm/highlight/200