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Use Your Investments to Protect the Environment

The Trump administration is beginning to act on its dangerous promises to roll back environmental regulations and undermine EPA’s ability to develop rules and quantify the benefits of regulations, as well as its authority and enforcement capabilities. As the administration continues to follow up on its rhetoric with regulatory action, more people are looking for ways to take an active role to protect environmental safeguards and promote the transition toward a more low-carbon, sustainable economy.

Utilizing the financial markets is one way businesses and individuals can vote with their dollars for the ideas, companies, and the products and services they support. Responsible investing businesses and their employees can put their assets to work for the advancement of the environmental values they care about. For example, Vestas Wind Systems, a global energy company which produces turbines that account for 16% of global wind production and generates 100% of its own electricity from renewable sources.

All investments are not created equal. To decide how you want to make an impact, familiarize yourself with these terms, but more importantly, how they work:

Social, responsible, and impact investing or SRI for short, is also called values-based investing because it often screens out or excludes investing in specific industries. Many of the early screens focused on tobacco, alcohol and gambling, but the exclusions have progressed to exclude fossil fuels, genetically modified organisms (GMOs), human rights violations, gender inequality, or association with place-based conflicts. Investors use screens to align their investments with their ethics. Screening is the process of selecting companies to invest in based on social and/or environmental performance in addition to a company's financial performance. There are two forms of social screening: negative or avoidance screening and positive screening, which selects investments with strong environmental and/or social characteristics. In the case of fossil fuel divestment, exclusions are an integral piece of a larger campaign designed to change an industry. ASBC has been involved in the DivestInvest movement for several years.

Environmental, social and governance (ESG) refers to the three central factors in measuring the sustainability of a company. Many times, it is used to evaluate or rank companies within a sector rather than eliminate any one industry – military and civilian firearms for example. Using ESG criteria may help investors avoid the worst offenders in each category and may also contribute to improved long-term performance, lower volatility, and the mitigation of potential risks.

For more information on how to use your investment dollars to support clean energy, take a look at Make a Clean Break: Your Guide to Investing Fossil Fuel Free. This guide helps individuals and institutions divest from fossil fuel companies and reinvest in sustainable, solutions-oriented companies.

In addition to investing in environmentally and socially-responsible businesses, investors can leverage their clout in shareholder advocacy programs to get information about or secure changes in a company. While tactics can range from gathering information through “dialogues” with company executives to presenting a shareholder resolution at the company’s annual meeting, a key differentiator in this category is the measurement of progress.

Shareholder resolutions can serve as a powerful tool for shareholder advocacy. Shareholder proposals often pave the way for policy changes regarding environmental and social issues. For example, climate risk proposals received an average support of 29% last year, up from up from just 7% in 2011. This fact even led Ernst & Young to recommend that, “boards should make sure they understand company- specific sustainability risks and integrate those risks into oversight of strategy.”

At Green Century, we are currently engaging with companies throughout the palm oil supply chain to address deforestation and its impact on climate change. Deforestation contributes nearly the same amount of greenhouse gas emissions as the entire global transportation sector. The deforestation commitments of one company alone will help prevent 1.5 gigatons of carbon dioxide from the air between 2014 and 2020, which is equivalent to the amount of carbon dioxide emissions from 168,785,866,997 gallons of gasoline consumed.

Our work on deforestation is merely one example of how shareholder advocacy can help mitigate the potential impacts the current administration could have on the environment. Asking other asset managers and mutual funds to join in advocacy efforts like these is a tangible way to use your investments to push for stronger environmental and social progress.

Over the next few years, there’s plenty of work needed to protect the environment. It’s important to remember there is ample opportunity for both the investment and corporate communities to stand up, take action, and help the transition toward a more sustainable economy and world. Using your investments is one powerful strategy.

Leslie Samuelrich is the President at Green Century Capital Management.

Stocks will fluctuate in response to factors that may affect a single company, industry, sector, country, region, or market as a whole and may perform worse than the market. Foreign securities are subject to additional risks such as currency fluctuations, regional economic and political conditions, differences in accounting, and other unique risks compared to investing in securities of U.S. issuers. Bonds are subject to risks including interest rate, credit, and inflation. The Funds’ environmental criteria limit the investments available to the Funds compared to mutual funds that do not use environmental criteria.

You should carefully consider the Funds’ investment objectives, risks, charges, and expenses before investing. To obtain a Prospectus that contains this and other information about the Funds please visit, email, or call 1-800-934-7336. Please read the Prospectus carefully before investing.

This information has been prepared from sources believed reliable. The views expressed are as the date of publication and are those of the Advisor to the Funds.

The Green Century Funds are distributed by UMB Distribution Services, LLC. 5/17