“Now that we have more granular data, we are better equipped to judge whether companies are setting science-based goals and are meeting them,” Klaber added. “If not, we work with them. One thing we should point out is that our funds are not going to be perfect on ESG standards. That would be unrealistic. That is why we want to be fully transparent. We selected metrics that are important to investors – ones that affect business performance and reputation. We are not cherry picking companies.”
Performances of the funds and the investments within them will be evaluated quarterly, and ratings will changed based on those reviews.
Parnassus wants to “build wealth responsibly by investing in high quality companies with both strong financial prospects and sustainable business practices,” according to its website. The ESG metrics will enable the firm to do that, Klaber said.