Brown Advisory 2021 Sustainability Report

Introduction

We are pleased to present Brown Advisory’s second Sustainability Report. In this report, we express our commitment to our clients, colleagues, communities and society, and we report our progress on initiatives that aim to contribute to a more just, healthy and prosperous future for all.

As we noted in our report last year, the term “sustainability” has come to mean different things to different people. In the context of this report, our idea of sustainability is partly inspired by the definition of the 1987 U.N. Brundtland Commission: “meeting the needs of the present, without compromising the ability of future generations to meet their own needs.” The keen focus on the future is the critical link. For us, sustainability means any aspect of our investment and advisory activities, our operations, our culture and our engagement with our communities, that contributes to building a more healthy, just and prosperous future.

“Raise the Future” is how we articulate this idea in another way—as a reflection of our firm’s higher purpose. With every action we take, we have the opportunity to improve the circumstances of one, any or all of our stakeholders, which we generally define as our clients, colleagues and communities

We have always pushed ourselves to set an example for the role that we as a business and business leaders can play in helping, supporting and speaking for these groups. If anything, that belief has intensified in the past year. The COVID-19 pandemic, ongoing examples of injustice and the ever-growing threat posed by climate change are all examples of our collective challenges. They are shaping what our clients, colleagues and communities expect of us—and what we expect of ourselves. 

This idea of “expectations” is often in our thoughts. The conversation around corporate sustainability is evolving rapidly in society, and part of that evolution is a series of emerging standards for how companies should meet their responsibilities. We think that there is a danger of simply following these trends vs. trying to lead; we want to be thoughtful about the outcomes that we are ultimately seeking. 

As an example, in a spirit of transparency and open dialogue, you will see us report on a variety of metrics related to the diversity of our colleagues, and the work we are doing to improve those metrics. And while those numbers are important, we believe that our more pressing and impactful responsibility regarding equality, inclusion and justice hinges on our attention to the colleagues we already have on staff. We must mentor, train, and provide those who have felt or continue to feel marginalized with the space and opportunity to rise into our leadership ranks in the years to come. If we cannot do that, the numbers simply will not matter.

Another example is climate change. As part of our commitment to being good stewards for the environment, we are seeking a deeper understanding of the carbon footprint of the investments we are making on our clients’ behalf.  Despite the growing calls and pressure across the investment world for blanket implementation of fossil fuel divestment or “net zero” exposure, we will be deeply thoughtful about how we deploy our clients’ capital. As a fiduciary partner, we need to ensure that our investment choices are based on both the risks and opportunities we see in our analysis of companies, issuers and managers, as well as the potential to engage with those parties to encourage them to implement forward-thinking climate plans.

We believe that, as leaders, we need to pursue multiple paths forward. We must satisfy the current expectations of our clients, colleagues and communities, but also think ahead, and act in thoughtful and innovative ways to deliver on expectations that are not yet widely expressed by our stakeholders. To us, that is what sustainability leadership is all about.

The rest of this report is divided into discussions about our work on behalf of our three, aforementioned, primary stakeholder groups. 

For our clients:

Our sustainable investing (SI) business has grown and evolved into a core component of our overall business. We believe that our SI teams have made remarkable progress over the past year on so many different initiatives. In the report, we discuss:

  • Progress on our balanced-portfolio solutions for endowments, foundations and families, including expansion of our sustainable manager platform; improved capabilities for expressing justice-related principles in portfolios; and development of our proprietary sustainable analysis and reporting system, ARIS Analytics.
  • New sustainable strategies being launched by our institutional business, including sustainable offerings in U.S. small cap, global fixed income and dividend income, as well as ongoing work to integrate sustainable and ESG considerations into several of our existing equity strategies.
  • Our SISME (Sustainable Investing Subject-Matter Expert) education program for colleagues, which is on pace to produce more than 160 new graduates in 2021.

For our colleagues:

Our work on diversity, equity and inclusion (DEI) continues, and while we know we have much to learn and much to do on this journey, we are happy to report notable progress in several areas. In the report, we discuss initiatives such as our integration of DEI principles in our hiring and promotions processes, our recruiting partnerships with diverse networks and other efforts to enhance our recruiting and retention efforts. Additionally, we are extremely focused on making sure that Brown Advisory offers an equally rewarding and enriching experience to all colleagues; to us, that means that everyone at the firm has a path for growth and progress. This commitment to our colleagues starts with mentoring and training to provide ample support for every colleague as they advance through their careers. We also pursue this goal through our colleague resource groups, shared learning and discussion programs, our periodic DEI colleague surveys, pay equity audits and many other ongoing programs. 

We also offer a brief look back at our firm’s response to the COVID-19 pandemic. For obvious reasons, we hope that we never need to include a similar discussion in a future firm report, but we felt that this year’s report would be incomplete without discussing how the pandemic impacted us, and how so many different people and groups around the firm rose to the occasion, to ensure that we could deliver the highest levels of performance, advice and service to our clients, and take good care of our colleagues.

For our communities and society:

Our global and community engagement efforts are a core part of who we are—we have intentionally cultivated a culture that values community service, volunteerism and philanthropy, and we seek out colleagues who share that view. In the report, we provide a snapshot of our philanthropic giving in 2020, broken out by various issues and nonprofit categories, and, more importantly, we try to share some examples of how we are trying to engage with communities and the world, whether through philanthropic support, organized colleague initiatives, or strategic investment in innovative, impactful enterprises. Specifically, we highlight several organizations in which we have invested in recent years—CrossBoundary, Blueprint Local and Upsurge Baltimore—each of which seeks to create positive change in unique and exciting ways while also building platforms for long-term financial success.

Our climate strategy encompasses our commitment to carbon-neutral operations; we achieved that goal in 2020 through investments in renewable energy certifications and other carbon offsets, as well as efforts to mitigate our operating emissions where possible. We are also focused on our impact as investors—the carbon footprint represented by our investment holdings, and the ways in which we can affect that footprint. We aspire to be a leader on this issue, in both our thinking and our actions. We are focused on our core responsibilities as fiduciaries, and we want to be clear-minded when it comes to carbon reduction in our investments—any steps taken in that regard need to be informed by our commitment to long-term investment performance OR by the specific directive of a client who expresses a desire for their portfolio to reflect certain ESG parameters.

Every year, we will aim to improve and enhance this report, with new and better ways to present information, measure our progress and express our goals for the future. This year, we are publishing the report in a fully digital format, a first for us in terms of major Brown Advisory firm publications. It is true that this step should have an environmental benefit by saving a lot of paper, but our reasoning was less about environmental sustainability and more about transparency and disclosure—this report is intended to convey key information about our actions as a firm, to drive conversations with a wide variety of stakeholders about those actions, and ultimately lead to new ideas on how we can further advance our sustainability efforts. We believe that publishing digitally helps us ensure that the report is as easily accessible to as many people as possible. We hope that the digital format is helpful. We encourage you to share it with friends, colleagues and contacts who may be interested in reading about how we are tackling the challenges and opportunities ahead of us.