How We Invest

Responsible Investment Approach

At Parnassus Investments, we follow a responsible investment approach to understand the full impact of a company. We carefully consider a company's environmental, social and governance (ESG) factors. By incorporating ESG factors into our fundamental investment process, we often identify risks and opportunities that the market may have ignored, and identify responsible companies.

We seek to invest in companies with positive performance on ESG criteria.
The ESG factors we evaluate include:

  • Corporate governance and business ethics
  • Employee benefits and corporate culture
  • Stakeholder relations
  • Product, customers and supply chain
  • Environmental impact

All the Parnassus Funds consider ESG factors as part of the investment process.

ESG research at Parnassus Investments is dynamic, proprietary, and benchmarked against third-party sources. All members of the investment team consider ESG factors, and three team members exclusively cover ESG factors. ESG analysis is integral to the rigorous review and consideration process that each company undergoes as a new investment opportunity. In addition, we review the ESG factors of our portfolio companies during periodic reviews throughout the year.

Parnassus Investments uses qualitative analysis of environmental, social and governance (ESG) factors to help determine if a company is appropriate for investment. ESG analysis can provide insight into a company's management, culture and competitiveness, as well as its impact on society. We believe that integrating ESG analysis into our investment process can help minimize investment risk and improve returns.

Our integrated approach to ESG analysis is demonstrated by the following:

  • A wide range of ESG issues is considered for each company, including those affecting employees, customers, the supply chain, local communities, the environment and shareholders.
  • ESG factors are considered at multiple points during the investment process.
  • ESG factors are considered both from an ESG and financial perspective.
  • All members of the investment team consider ESG factors.
  • Three investment team members exclusively analyze ESG factors.

We are thoughtful and pragmatic in our ESG factor analysis, as we are throughout our entire investment process. While no company is perfect, our portfolio companies meet our overall investment criteria, including ESG factors.

Parnassus Investments applies exclusionary screens to our investment universe. The spirit of these exclusionary screens, as described in the Funds' prospectus, is to avoid investment in companies with negative impacts that outweigh any potential benefits from their business activities.

We do not invest in companies that derive significant revenue from the following activities:

  • Manufacture of alcohol products
  • Manufacture of tobacco products
  • Direct involvement with gambling
  • Manufacture of weapons
  • Generation of electricity from nuclear power
  • Business involvement with Sudan

The majority of these screens have been applied to the Parnassus Funds since the firm's inception. The Sudan screen was added in 2006 when the international community recognized the Darfur region conflict as genocide.

 

Community Development

At Parnassus Investments, part of our responsible investment philosophy means investing back into our community. Up to 2% of the Parnassus Funds' assets may be invested with community development financial institutions (CDFIs) that offer credit, capital, and financial services to individuals and organizations engaged in work that benefits low-income communities.

Proxy Voting Information

We take into account ethical business practices and shareholders' interests when we vote our shares on corporate resolutions. Public companies and shareholder groups issue corporate resolutions to their shareholders for approval through what is known as a proxy ballot. The issues can range from executive compensation to environmental policy.