Members of the Sustainability Team cover why we took on a three-year investigative project to refresh our Pillars and what that means for investors.

By Sophie Griffith

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Key Takeaways:

1. Completed a Refresh of Our Sustainability Model

Our team recently completed a three-year research and data refresh of our entire Sustainability model. The effort included 80+ interviews, 400 written research notes, and 200+ Sustainability Model updates, resulting in Pillars that are clearer, better defined, and more aligned with what clients care about.

2. Simplified and Streamlined Pillars

To reduce overlap and increase clarity, we made five key structural changes:

• Renamed: “Clean Water” → “Water Security”, and “Financial System Stability” → “Markets & Innovation”.
• Integrated: Issues related to worker treatment, immigration justice, and corporate diversity and inclusion will now be addressed as part of other Pillars. 

3. Standardized and Expanded Support Materials

To give clients and advisors greater transparency into what’s going on “under the hood” of our Pillars, we’ve created or expanded lots of new materials and other supporting documentation. Internal and external Ethic audiences now have access to high-level summaries in our Pillar Fact Sheets and deep dives into methodology in our Pillar White Papers, across our entire Sustainability Model.

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The Ethic Pillars sit at the core of our offering. These are sets of investment criteria organized around specific causes, which our clients can select as they create a personalized portfolio. In short, they’re our tools for articulating our clients’ values within their portfolios. 

For example, say a client interested in crafting a values-aligned portfolio cares deeply about an issue like water quality and access. They might not always have the time or bandwidth to specify exactly what investment criteria they want to apply across various different water-related company behaviors—like what threshold of hazardous waste emissions or water withdrawals they consider unacceptable. The Pillars are our way of helping clients navigate this complexity. 

Maintaining our Pillars, both as a reflection of ever-changing client demand and a representation of the latest data and research, is vital to our work. That’s why the Ethic Sustainability Team undertook a three-year initiative to tune up, streamline, and refresh our full set of Pillars. For each Pillar, we undertook a detailed review of relevant academic research literature, client preference feedback, and new sources of company-level data. Completing this refresh process means that all of our Pillars are now more clearly defined, more thoroughly evidence-based, and more aligned to our clients’ priorities than they were when we launched them.

Today, team members dive into how client demand drove this project, which Pillars have been reshaped, and why this project means better values-alignment for investors. 

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Our Vision for the Pillars

We decided to undertake this project with a few key goals in mind. 

First and foremost, we believe that every investor’s values are unique. Our Pillars allow clients to select a combination of issues that best captures what matters most to them. We wanted to ensure that our Pillars cover a comprehensive and diverse range of issues to support as many clients as possible. 

Second, we recognize that the issues the Pillars tackle, such as Education and Health & Wellness, are complex and interconnected. At the same time, though, different clients think of their values in different terms and redundancy can be confusing. We wanted to make sure that each of our Pillars captured its subject with sufficient nuance while also having its own distinct identity. 

Last, we require each of our Pillars to be evidence-based. Through this process, we’ve reviewed studies from leading academic, NGO, and intergovernmental sources. We wanted to ensure that each Pillar was defined, structured, and explained based on the most up-to-date data and research available.

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The Results? Clarity, Consistency, and Transparency

This project was a lot to take on; numbers alone can’t fully capture the rigor and care that went into this process. However, we think these few key numbers are worth highlighting:

• Over 80 user interviews conducted with Ethic client relationship managers and other stakeholders
• Over 400 evidence commentaries written and cited, helping ground our pillars in the latest and best thinking
• Over 200 updates to the Sustainability Model, our data-driven system for evaluating the impacts of company behavior

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The outcome of these efforts? Every Ethic Pillar now includes all of the following:

• A clear definition and documented scope of relevant company activities
• A written research notes for every single company activity evaluated in the Pillar 
• A timely review of the company-level data underlying each Pillar
• A white paper documenting the Pillar’s structure and the research methodology that produced it
• A fact sheet highlighting key takeaways on all of the above 

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Key Updates:

This project also yielded some major pillar updates that we’re particularly excited about. Based on assessments of client feedback, data availability, and other “Pillar health” metrics, we identified five Pillars we felt were missing major opportunities for impact. These Pillars either were underutilized by clients, lacked key data, or covered an overly narrow scope of company activities. For these reasons, we launched a cross-team effort to develop and execute some big updates to these Pillars. Here’s what’s changing.

We want to ensure all of our Pillars can be their “best selves,” so two Pillars have been renamed and now cover a broader scope of issues. The Clean Water Pillar is now the Water Security Pillar. And the Financial System Stability Pillar is now the Markets & Innovation Pillar. We’ll be releasing videos and articles diving into these updates in the coming weeks. 

We also want to reduce redundancy and ensure all our Pillars meet the highest standard of quality, so three Pillars will be integrated into others. The Worker Treatment Pillar will be integrated into the Poverty Pillar, and the Immigration Justice and Corporate Diversity & Inclusion Pillars will be integrated into the Racial Justice Pillar. No screening topics are being removed from the Ethic Sustainability Model – they’ll just be organized under different Ethic Pillars. By integrating smaller, more narrowly scoped Pillars into broader ones, we hope to offer our clients a clearer, more consistent values-aligned experience. 

Ultimately, all this work is in service to our clients. We want to build the most rigorous and expressive system for aligning investments with values, and we hope our clients will agree that these updates to clarify and refine our Pillars are an important step toward that goal. 

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