Impact Blog

The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Calvert disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Calvert are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Calvert fund. References to individual companies for Engagement or Research purposes are provided for illustrative purposes only and may not be representative of the results of all of Calvert’s engagement efforts. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Past performance is no guarantee of future results.

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      By John Streur, President and CEO, Calvert Research and Management

      Washington - As responsible investors, our objective is to seek competitive investment returns. But one factor that sets Responsible Investing apart is that it measures success by social and environmental impact metrics as well as by traditional financial metrics. When you invest responsibly, pursuing your investment performance goals and participating in positive societal and environmental progress is the overall objective.

      Two meaningful ways of measuring an ESG portfolio center around engagement and impact. Both are critical components of Calvert's Four Pillars, which we believe represents the best way to achieve a positive societal impact and favorable investment results.

      Engagement and Impact metrics allow investors go beyond the balance sheet and provide a fuller picture of what an investment offers. In particular, they can show how shareholders are using their power to push society forward, and the specific ESG impacts or risks a particular investment may have compared to a benchmark.


      At Calvert, "engagement" means communicating directly with the management teams of the companies we invest in, for the purpose of moving those companies in a positive direction on key environmental,social and governance issues. A robust engagement strategy requires a comprehensive approach, utilizing direct dialogue, shareholder resolutions and other measures to convince companies to make positive change and tangible progress in the way they do business. One specific way to evaluate an ESG portfolio is by looking at how proxies are voted.

      Proxy voting—investors' right to vote on shareholder resolutions—is an important tool for any individual or institutional investor to use. Analyzing how an asset manager exercises its shareholder rights indicates how the investment manager stands on key ESG initiatives. Shareholder resolutions are filed at companies when a shareholder (like Calvert) wants the company management to take steps to improve environmental or societal impact or improve its governance, but the company management has not done so voluntarily. In these cases, investors should make sure that their shares are being voted in accordance with their goals, and hold asset managers accountable for how they vote. For example, a portfolio that claims to incorporate responsible investing but votes against proposals designed to decrease the impacts of climate change or increase board diversity may not be following its Responsible Investing mandate.

      We vote according to Calvert's proxy voting guidelines, which influence how each fund will vote and provides a comprehensive overview of our perspectives, aligned with the Calvert Principles for Responsible Investment. Over this past proxy season, which ran July 1, 2016 to June 30, 2017 - we voted 99.6% of the time at 4,466 meetings, covering 44,958 proposals. Calvert voted on issues ranging from climate change and energy to board diversity and sustainability reporting. In ESG-directed proxy proposals, Calvert voted contrary to management 91.8%, and on proposals regarding environmental issues we voted against management and for the proposal 97.89% of the time.

      Impact Metrics

      Calvert believes that the impact of your investments is material and measurable. Investors should be able to see that their portfolio has a specific set of environmental and social impacts relative to a benchmark. This type of transparency and information flow can help investors to understand the environmental and social risks present in their portfolio. Most investors would choose to have less environmental or social risk in their portfolio, all else being equal. While impact metrics are still in their infancy, their development is critical to the long-term success of Responsible Investing.

      At Calvert, we report how our investment portfolios are doing with material, insightful metrics from a social, environmental and financial perspective.1 For example, our new Impact Tool shows the relative carbon emissions, water consumption, toxic emissions and tobacco exposure for certain Calvert portfolios compared to a benchmark index.

      Bottom line: By understanding how an ESG portfolio engages with companies, how your shares are actually voted on important shareholder resolutions, and how a portfolio fares on impact metrics along with performance, an investor can more accurately assess the full benefits of a Responsible Investing portfolio. Investment performance is still critical to measuring portfolio success, but it is only one aspect of the long term, responsible investment process.