Defining the Purpose: The Path to Constructing an ESG Portfolio

As mentioned in the previous post, I wanted to use the Sonen Capital framework to construct my personal values and mission statement and align them with my investment objectives. This actually proved to be a ver invaluable exercise. This approach really gave me the opportunity to see how each of these concepts interlocked. As I established my stable post, my rock (Values and Mission Statement) it was rather easy to think of those products/services/ideas where I wanted to direct capital.

Personal Values

The outdoors and our natural, physical space is something that is of utmost importance to us. We appreciate the beauty of our natural environment by utilizing this space for recreational purposes. It is in our interest to aid in maintaining the beauty of this common good while minimizing any negative impact we may create.

Mission Statement

Our Mission is to consider sustainability and conservation in all household decision making. We will apply this approach with the products and services we purchase and with the capital we deploy for investments. We understand that we must appreciate and maintain the symbiotic relationship with our human civilization and the world in which we reside.

The EPA believes that sustainability "is based on a simple principle: Everything that we need for our survival and well-being depends, either directly or indirectly, on our natural environment. Sustainability creates and maintains the conditions under which humans and nature can exist in productive harmony, that permit fulfilling the social, economic and other requirements of present and future generations."[1] When making these macro-household decisions we must ask ourselves the following:

Is this product or service made from sustainable products?
Was the process in making or providing the service sustainable?
Do the inputs along the value-add and supplier chain take in to account sustainable practices?
If the decision is made not to choose a sustainable product or services, what will be the impact?
The consumer/investor approach is a very powerful way to help drive change however, we will also create a multiplier effect by contributing and/or volunteering to non-profits and NGOs that align with these personal values.

Investment Themes

Renewable Energy

• Solar Power infrastructure
• Wind infrastructure
• Other renewable energy technologies

Water

• Conservation strategies
• Potable water technologies
• Potable water accessibility strategies
• Large infrastructure

Sustainable/Organic Goods and Consumables

• Hard and soft goods
• Food (perishable & non-perishables)

Service organizations with sustainability cultures

• LEED Certified Commercial Real Estate Development/Retrofit
• Focus on infill development as opposed to greenfield
• REITS
• CMBS
• Single Assets

Thematic Definitions

• Renewable Energy
• MWh of renewable energy generated/dollar amount invested
• Amount of carbon product avoided/dollar amount invested

Water

• Gallons of potable water provided to water restricted population/dollar amount invested
• Number of people impacted by potable water enabling technologies/dollar invested
• Gallons/bodies of water protected by conservation strategies
• Sustainable/Organic Goods and Consumables

Environmental operations

• Sustainable processes
• Sustainable capital inputs/supply chain
• Animal welfare
• Local/global community contribution

Workers rights

• Governance
• Service organizations with sustainability cultures

Environmental operations

• Sustainable processes
• Sustainable capital inputs/supply chain
• Local/global community contribution
• Human rights/labor policy
• Governance

LEED Certified Commercial Real Estate Development/Retrofit

• LEED SF/dollar Invested
• Infill SF/dollar Invested
• Project energy efficiency SF/dollar invested

Hopefully these themes and objectives are not too ambitious given the investment products available to the retail market. More to come.

[1] "Sustainability Information | EPA Research | EPA." EPA. Accessed June 22, 2015. http://www.epa.gov/sustainability/basicinfo.htm.