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Parnassus Mid Cap Institutional PFPMX Sustainability

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Sustainability Analysis

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Sustainability Summary

Parnassus Mid Cap Fund has a number of positive attributes that a sustainability-focused investor may find appealing.

This fund lands in the 10% of strategies with the lowest ESG risk in the US Equity Mid Cap category, earning it the highest Morningstar Sustainability Rating of 5 globes. 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 Parnassus Mid Cap Fund. Funds with ESG-focused mandates are more likely to deliver positive sustainability outcomes. One key area of strength for Parnassus Mid Cap Fund is its low Morningstar Portfolio Carbon Risk Score of 6.50 and very low fossil fuel exposure over the past 12 months, which earns it the Morningstar Low Carbon Designation. Thus, the companies held in the portfolio are in general alignment with the transition to a low-carbon economy.

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. No companies held by Parnassus Mid Cap Fund are recognized as being involved in controversies at a high or severe level. From bribery and corruption to workplace discrimination and environmental incidents, controversies are incidents that have a negative impact on stakeholders or the environment, which create some degree of financial risk for the company. Severe and high controversies can have significant financial repercussions, ranging from legal penalties to consumer boycotts. In addition, they can damage the reputation of both companies themselves and their shareholders.

The fund's 8.2% involvement in carbon solutions is roughly in line with the 7.8% average involvement of its peers in the Mid-cap Blend category. Carbon solutions include products and services related to renewable energy, energy efficiency, green buildings, green transportation, and so on.

ESG Commitment Level Asset Manager