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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 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 Mid Cap category. ESG risk measures the degree to which material environmental, social, and governance issues, such as climate change and inequalities, could affect valuations. ESG risk differs from impact, which is about driving positive environmental and social outcomes for society’s benefit.

Parnassus Mid Cap Fund has a sustainability or ESG-focused mandate. Funds with an ESG-focused mandate are more likely to align with the expectations of an investor who cares about sustainability issues. One key area of strength for Parnassus Mid Cap Fund is its low Morningstar Portfolio Carbon Risk Score of 7.24 and low fossil fuel exposure of 3.99% over the past 12 months, which earns it the Morningstar Low Carbon Designation. The fund is therefore well positioned to transition to a low-carbon economy.

The fund has no exposure to high or severe controversies. From bribery and corruption to workplace discrimination and environmental incidents, controversies are incidents that may negatively affect stakeholders, the environment, or the company’s operations.

By prospectus, the fund aims to avoid, or limit its exposure to, companies associated with controversial weapons, tobacco, thermal coal, and small arms. Yet this goal is far from achieved, as the fund exhibits 2.23% exposure to thermal coal. This compares with 1.44% for its average peer in the US Equity Mid Cap category.

Its 7.82% involvement in carbon solutions is in line with that of its average peer 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.

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ESG Commitment Level Asset Manager

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