Last year, we published our first special edition of The Advisory focused on sustainable investing. At the time I wrote that our firm was fully committed to helping clients sort through an array of choices in sustainable investing, and to developing a tailored approach for each client—one that best fits their long-term goals. I also reflected on the confusing nature of this area with constantly changing word definitions, potentially conflicting investment goals and emotionally charged concerns often colliding with unintended results.

We have been working hard to fulfill this commitment over the past 15 months, enhancing our offerings in a number of areas. We are excited about the progress we have made, but as we move down this road as a firm, I consider it a top priority to maintain focus on our very specific initial mission: To help you, our clients, discover just how powerful a client-driven approach to sustainable investing can be. All of our work is in service to that goal. If we listen well, we believe we can provide each of you a sustainable investment solution that meets your performance targets, aligns with your values and delivers the impact you desire.

With that as backdrop, we want to use this special edition of The Advisory to share with you the framework we are using to help clients hone their thinking about sustainable investing into an actionable investment strategy. This framework seeks to deliver the same performance, advice and service outcomes that guide all of our work with you.

  • We begin with advice—an in-depth engagement and discovery process to learn exactly how you view the intersection of your values with your portfolio.
  • Then, we focus on performance, which we seek via sustainable alpha, screening and impact solutions. The goals you express during our discovery process dictate the types of solutions used in your portfolio. Many of the articles in this special edition will dive deeper into the challenges investors face in implementing these solutions and how we try to help.
  • Finally, we seek to ensure the highest level of service, through compliance with your investment criteria, specialized reporting and regular discussions with you to ensure that we keep pace with any changes in your views and beliefs over time.

We are finding this framework extremely helpful as a starting point in conversations with clients who are deciding how they want to tackle sustainability in their portfolios. In the end, we want to provide some order to a universe that seems to offer new ideas and new solutions every week, any one of which may or may not deliver the outcomes that you specifically seek. Clients seek to incorporate sustainability in different ways; using this framework helps us to build the portfolio that most directly addresses the things you care about most.

As I mentioned above, we have been busy over the past year, building out our capabilities so that we can be more effective on your behalf. Our Large-Cap Sustainable Growth strategy continues to perform extremely well—in fact, as of June 30, 2016, its investment returns were ranked in the top 1% among strategies in its large-cap growth peer group since its inception on Dec. 31, 2009, proving that attractive investment returns can be achieved by focusing on companies that manifest Environmental Business Advantage™. We also launched two sustainable fixed income strategies—a core portfolio and a tax-exempt portfolio— during the past year. For clients seeking a balanced portfolio that incorporates sustainable thinking across asset classes, we now confidently recommend a select group of external managers that meet our standards for fundamental excellence. We are deeply engaged with leading sustainable-investment organizations like CERES, the Intentional Endowments Network, USSIF, the Principles for Responsible Investment and the Green Bond Principles. And we have formed a Sustainable Investing Advisory Board of leading researchers, policy experts and practitioners to advise and guide us as we develop our sustainable investing solutions over time. Daniel Esty, James Gifford, Martin Kaplan and Mamie Parker all bring extremely valuable and diverse viewpoints to this board, and they have quickly become an invaluable source of insight and ideas.

Most importantly, we have been able to use these new capabilities for the benefit of a number of new client relationships centered on sustainable investing, and to introduce new solutions to a growing number of our long-term clients.

This special edition is largely focused on ways that we help clients achieve various sustainable outcomes. First, Emily Dwyer and Chad Larson will discuss the concept of screening portfolios to better understand which investments may match or conflict with a client’s goals. For something that sounds straightforward, screening can be very challenging. Emily and Chad will discuss how screening works and how we help clients do it in a thoughtful manner.

Second, Karina Funk and Amy Hauter will cover sustainable alpha, a term we use to refer to the pursuit of better investment decisions and higher returns by enhancing existing research processes with sustainability information. Karina and David Powell have had great success using this approach in the equity markets, while our fixed income team is finding similar success with our new sustainable bond strategies. Karina and Amy will describe how our teams dig in with primary research to find the real sustainable investment stories driving the stocks and bonds we ultimately select for our strategies.

Finally, Ethan Berkwits and Brigid Peterson will cover impact solutions that pursue outcomes beyond financial returns, in the form of measurable progress toward targeted social and environmental goals. There are a wide variety of ways to achieve this impact, from publicly available equity and fixed income strategies, to innovative private investments that often straddle the line between investing and philanthropy such as microfinance, social impact bonds, and direct loans and investments. One can also achieve impact through proxy voting and shareholder engagement. Dune Thorne, Erika Pagel and other portfolio managers at our firm are well-versed in helping clients consider possible paths for impact investing. Ethan and Brigid will discuss these options and also caution readers to closely scrutinize these investments, as they often offer different risk/reward profiles than more traditional investments.

We are pleased to offer you this update on our progress and our thinking with regard to sustainable investing, and we welcome the opportunity to discuss these topics with you.




The views expressed are those of the authors and Brown Advisory as of the date referenced and are subject to change at any time based on market or other conditions. These views are not intended to be a forecast of future events or a guarantee of future results. Past performance is not a guarantee of future performance and you may not get back the amount invested. In addition, these views may not be relied upon as investment advice. The information provided in this material should not be considered a recommendation to buy or sell any of the securities mentioned. It should not be assumed that investments in such securities have been or will be profitable. To the extent specific securities are mentioned, they have been selected by the author on an objective basis to illustrate views expressed in the commentary and do not represent all of the securities purchased, sold or recommended for advisory clients or other clients. The information contained herein has been prepared from sources believed reliable but is not guaranteed by us as to its timeliness or accuracy, and is not a complete summary or statement of all available data. This piece is intended solely for our clients and prospective clients and is for informational purposes only. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication.

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