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Baywood Socially Responsible Instl BVSIX Sustainability

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Sustainability Analysis

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Sustainability Summary

Baywood Socially Responsible Fund has a number of positive attributes that may appeal to sustainability-focused investors.

This fund has a Morningstar Sustainability Rating of 5 globes, indicating that the ESG risk of holdings in its portfolio is rather low relative to those of its peers in the Morningstar US Equity Large Cap Value category. ESG risk provides investors with a signal that reflects to what degree their investments are exposed to risks related to material ESG issues, including climate change, biodiversity, product safety, community relations, data privacy and security, bribery and corruption, and corporate governance, that are not sufficiently managed. ESG risk differs from impact, which is about seeking positive environmental and social outcomes.

Based on its latest prospectus, sustainability or ESG factors are a focus in the investment process of Baywood Socially Responsible Fund. Funds with ESG-focused mandates are more likely to deliver positive sustainability outcomes. Baywood Socially Responsible Fund has an asset-weighted Carbon Risk Score of 8.2, indicating that its companies have low exposure to carbon-related risks. These are risks associated with the transition to a low-carbon economy such as increased regulation, changing consumer preferences, technological advancements, and stranded assets. Its 10.3% involvement in carbon solutions is higher than the 7.5% average involvement of its peers in the Large Value category. Carbon solutions include products and services related to renewable energy, energy efficiency, green buildings, green transportation, and so on. By prospectus, the fund aims to avoid, or limit its exposure to, companies associated with controversial weapons, tobacco, and and small arms. The fund fulfills this goal by having negligible investment exposure to each of these activities.

Currently, the fund has 18.4% involvement in fossil fuels, surpassing 15.3% for the average peer in its category. Companies are considered involved in fossil fuels if they derive some revenue from thermal coal, oil, and gas.

The fund has a modest level of exposure (4.80%) to companies with high or severe controversies. Companies with controversies are involved in incidents such as corruption, employee abuses, and that pose some degree of business risks to the company. Severe and high controversies can have significant financial repercussions, ranging from legal penalties to consumer boycotts. In addition, they controversies can damage the reputation of both companies themselves and their shareholders.

ESG Commitment Level Asset Manager