Shareholder Advocacy - Effecting Positive Change
Parnassus reconnects the idea of owning a business to owning a stock. Like many institutional investors, we work with companies' management on business issues. We take it a step further and work with companies on both the financial and social aspects of their business. Public corporations are beholden to their shareholders, and if their shareholders only care about short-term financial performance, then companies are pressured to only deliver short-term financial returns without thought to long-term returns and ethical actions. But when shareholders care about how their businesses are run, then the management of those companies have to care. By being thoughtful, long-term investors, we give management the flexibility they need to make the right decisions. We also use our proxy votes on corporate resolutions to impact companies' policies.
Over the years, we've worked with companies' management teams on various social responsibility issues, creating a positive social impact. Our mission is simple: Provide superior financial returns to our shareholders while investing in companies that have a positive impact on society.
This means that while a company may have a great benefit to society, if it doesn't meet our financial criteria, we will not invest in it. We do not sacrifice our financial discipline to accommodate companies with strong social profiles. After applying our social criteria, we have a universe of socially responsible companies. We then select companies for our portfolio strictly based on our investment process. Just because a company has a positive benefit to society does not make it a good financial investment.