Director of Sustainability Research Travis Korte covers how we consider both direct and indirect impacts of company behavior when crafting portfolios.
by Travis Korte
Our sustainability team dedicates a significant amount of time to considering the ripple effects of company behaviors. But, while it’s easy to say “everything is connected,” we want to go a step further and identify which connections are the most important. This can provide a significant challenge when determining the scope of which companies are most aligned with our clients’ values.
On this episode of Just Ask Sustainability, Travis Korte breaks down how his team considers the impacts of company behaviors while also honing in on what our clients want to see truly reflected in their portfolios.
Key Takeaways:
Balancing Direct and Indirect Impact in Investing–Ethic considers both the direct and indirect impacts of investments on social and environmental issues but avoids overly broad connections that dilute meaningful decision-making.
The "Two Hops" Rule for Relevance–To keep investment strategies focused and actionable, Ethic limits impact connections to two degrees of separation, ensuring that links between company behavior and values remain tangible and relevant to clients.
Prioritization Over Endless Connections–While everything may be interconnected in some way, Ethic emphasizes the importance of prioritizing the most significant and measurable impacts, rather than stretching too far into abstract cause-and-effect chains.
