Ocean windmills and plant illustrations.

Impact Update

1st Quarter 2022

Where sustainability
meets solidarity.

In recent months, the troubling Russia-Ukraine war has sent ripples through the international community, global economic markets, and the push toward decarbonization. It underscores a key reality: the defining issues of impact investing—war and conflict resolution, access to basic resources, climate change, and more—are closely interconnected. At Domini, we believe that thoughtful, values-based investing is one of our most powerful tools for improving an interconnected world. 

This past quarter, we made efforts to support an equitable and rapid transition toward clean energy. We worked to promote access to housing, healthcare, and financial opportunity. And we reached out to companies impacted by conflict in Ukraine to better understand how they are responding carefully and providing humanitarian support. 

The UN Sustainable Goals (SDGs)

In the five years since United Nations member states adopted the 2030 Agenda for Sustainable Development, the Sustainable Development Goals (SDGs) have been widely embraced by governments, civil society organizations, companies, and investors. The SDGs aim to address broad global topics such as poverty eradication, food security, protection of forests, sustainable cities and economic growth, gender equality, and climate change.

In each impact update, we’ll feature a few of our engagements alongside an investment highlight and show you which SDGs these are aligned with.

Q1 Engagement Overview

Domini meets with company executives on its own and in collaboration with other investors to encourage stronger policies and practices on the issues that matter to us. Aligned with our standards, we seek improved disclosure, more responsible practices, and address emerging issues with our companies. Through this constructive interaction – via letters, dialogues, shareholder proposals, and proxy votes – Domini communicates its expectations to companies and encourages innovation and business
models that uphold respect for human rights while contributing to ecological sustainability and resilience. 

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The Climate Transition Article Header Photograph

The Climate Transition

Many everyday products—like plastics, fertilizers, and even clothing—are made using fossil fuels. This is why we are joining ShareAction and other investors to engage with chemicals companies on their decarbonization strategies. In an engagement with Koninklijke DSM, N.V., we acknowledged the company’s climate commitment and innovations.  We continue to urge DSM to speed its transition toward using bio-based and natural inputs instead of fossil fuel-based materials.

At the same time, one of our greatest defenses against the climate crisis, the Amazon rainforest, is under increasing threat. Deforestation is at its worst levels in decades,1 approaching a potential tipping point, beyond which the ecosystem will not be able to recover from drought and land use change.We are using our voice with policy makers and government leaders in Brazil as we continue to advocate that they preserve the rainforest using a strong legal framework and enforcement mechanisms, protect the rights of Indigenous peoples, and increase supply chain transparency. 

1. https://news.mongabay.com/2022/03/amazon-deforestation-starts-2022-on-the-fastest-pace-in-14-years/
2. https://www.nytimes.com/2022/03/07/climate/amazon-rainforest-climate-change-deforestation.html

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Access to Insulin

Access to Affordable Insulin

No one should have to forego or ration the medicine they need because of its price. Unfortunately, in the United States, many people living with diabetes who take insulin daily are struggling with its rising costs.3 High prices are most detrimental to patients who are economically vulnerable or under-insured. This is especially acute among communities of color, which have both a higher burden of disease from diabetes4 and are disproportionately represented among low-income, uninsured, and under-insured populations.5

Lawmakers have been examining this issue for years, and there may soon be legislation to cap out-of-pocket monthly costs or lower insulin list prices.6,7 We initiated engagements with two of the three major insulin manufacturers, Sanofi and Novo Nordisk, encouraging them to take steps to lower costs for patients. We’re seeking to understand how their pricing principles work in practice—and we want more clarity on what they are doing to make sure that people living with diabetes, whether they are insured or not, have affordable access to the medicine they need.

3. https://www.mayoclinicproceedings.org/article/S0025-6196(19)31008-0/fulltext
4. https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(21)02315-1/fulltext
5. https://www.brookings.edu/blog/usc-brookings-schaeffer-on-health-policy/2020/02/19/there-are-clear-race-based-inequalities-in-health-insurance-and-health-outcomes/
6. https://www.nytimes.com/2022/03/31/health/insulin-price-house-bill-democrats.html
7. https://www.finance.senate.gov/chairmans-news/grassley-wyden-release-insulin-investigation-uncovering-business-practices-between-drug-companies-and-pbms-that-keep-prices-high

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Evaluating Exposure To The Conflict In Ukraine

Domini is closely monitoring how companies are addressing the war in Ukraine initiated by the Russian government. While we don’t currently invest in any companies domiciled in Russia, the conflict may have broader impacts. We engaged 15 companies in banking, technology, insurance, and other sectors to gather more information. We want to see companies conduct enhanced human rights due diligence to prevent or minimize any potential human rights impacts associated with company business. 

Companies are currently faced with an array of complex decisions which may present legal, financial, operational, and physical risks. They’re deliberating how to comply with sanctions, whether to exit the conflict-affected region (regardless of sanctions), and how to carry out their plans responsibly. Companies are also grappling with how they will balance human rights expectations—around access to food, medicine, and information—with their responsibilities amid conflict.

It has been more than a month since the initial invasion, and the conflict continues to take a devastating human toll. We aim to engage in dialogues that shed light on companies’ human rights policies, oversight methods, and risk management systems.

Company Highlights

Demonstrating solidarity with the people of Ukraine

Investment Highlight: Domini Impact Equity Fund

Alphabet has disabled live traffic data from being displayed on Google Maps in Ukraine. The change protects Ukrainian civilians by concealing their movement patterns. Alphabet has also barred Russian YouTube channels from being able to monetize content.  

Investment Highlight: Domini Impact Equity Fund

Microsoft is helping the Ukrainian government protect against Russian cyberattacks through threat intelligence and defensive support. In one instance, Microsoft’s Threat Intelligence Center detected a round of cyberattacks directed at Ukrainian infrastructure and immediately provided an alert accompanied by technical guidance to prevent damages. 

Investment Highlight: Across Our Fund Portfolios

Mobile phone carriers including T-Mobile, AT&T, Deutsche Telekom, Swisscom, Orange and Verizon are offering free international calls to Ukraine. Some of these companies are also supplying free SIM cards to Ukrainian refugees in neighboring countries. 

Investment Highlight: Domini Impact International Equity Fund

Randstad is a Netherlands-based company that provides flexible work and human resources services. It launched a specialized jobs portal that connects refugees—who are arriving in Belgium, the Czech Republic, Germany, Poland, Portugal, and Spain—with country-specific job sites translated into Ukrainian. 

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Domini Impact Bond Fund – Engagement work

Investing in Strong Cities

Municipal bonds help fill some of the most pressing financial gaps. They can provide much-needed capital for schools, hospitals, affordable housing, transportation, and other vital infrastructure. Bonds are central to our commitment to be a good neighbor and invest in communities, especially those that have been underserved by the mainstream financial community. Recently, we submitted a comment to the Municipal Securities Rulemaking Board (MSRB) on why the disclosure of environmental, social, and governance data is crucial for analyzing municipal bonds. 

Severe climate impacts—like more frequent droughts, floods, and fires—will have financial consequences at the municipal level.8 It’s important that local governments evaluate their exposure and disclose plans to mitigate damage. We also encourage municipalities to report on community composition and how bonds will address issues like the racial wealth gap and other markers of income inequality. As we stated in our comment to the MSRB, we believe this kind of information will position us, and all investors, to better understand the impacts of our bond investments. 

8. https://theconversation.com/cities-worldwide-arent-adapting-to-climate-change-quickly-enough-169984
9. Based on portfolio holdings as of 3/31/22, excluding cash & cash equivalents, cash offsets, futures, swaps and options with the exception of short-term U.S. Agency bonds and Certificates of Deposit, which are reflected in this reporting. Numbers may not sum to totals due to rounding. The composition of the Fund’s portfolio is subject to change. Visit domini.com to view the most current list of the Fund’s holdings.
10. “Corporate Debt” includes general-obligation corporate bonds, bank loans, and corporate debt not classified under other themes.

Investment Highlight: Domini Impact Bond Fund

Responsible for the mass transportation policy of New York City, the Metropolitan Transportation Authority (MTA) is the largest transportation network in the United States. One of its primary focuses is improving accessibility to persons with disabilities. In an effort to restore and expand a critical public asset, the MTA continues to complete its $30 billion 2015-2019 Capital Program and has begun work on its $51.5 billion 2020-2024 Capital Program. By their completion, approximately 43% of subway stations will be accessible. 97% of New York City’s population lives within a quarter mile of a bus stop and 71% lives within a half mile of a subway station.

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Amidst Conflict

Doing business and respecting human rights in high-risk areas

Opposition to war is perhaps the most essential, emboldened through-line in the evolution of ethical investing. War is catastrophic and painful—and the collective mission to promote peace has been a cornerstone of ethical investing since its beginnings.

Unfortunately, right now, this mission demands our attention. A spate of international conflicts, civil wars, and other violent disputes have caused tragic losses of life and severe humanitarian repercussions. A UN assessment in 2021 revealed that over 84 million people were forcibly displaced by war, violence, and persecution—the most since the end of World War II.11 

This year, Russian government’s invasion of Ukraine has brought conflict to the fore of the ethical investing conversation. Shareholders need to know whether the companies they invest in are prepared to respond to conflict and respect the human rights of all those affected.

What role do companies play?

Companies are not neutral actors. They can exacerbate conflict and profit off it. Reckless or ill-intentioned companies can endanger their own employees, customers, suppliers, and local communities.12, 13

On the other hand, their wide resources and international presence allow companies to help reduce harm in dire situations. They can be instrumental in providing conflict-affected communities with access to food, water, and medicine. They can help people receive information and communicate with loved ones, near and far.14 Companies also have legal obligations to comply with international sanctions.

What are the best practices?

When operating in conflict-affected areas, companies need to conduct their due diligence, as defined by the United Nations Guiding Principles on Business and Human Rights. This detailed guidance directs companies on how to assess the human rights impacts of their operations, remedy harms they may have contributed to, and report these outcomes to stakeholders.12 

Continuous, diligent work—in the form of research, investment analysis, and direct dialogue—are how we invest responsibly amidst conflict.

The foundation of Domini’s approach

Conflict presents distinct challenges for companies and investors. For decades, Domini has engaged with companies operating in conflict-affected areas, urging them to conduct enhanced due diligence that prevents human rights abuses. 

Universal human dignity, one of two fundamental goals embedded in our Impact Investment Standards, guides how we approach conflict. It’s the bedrock of our position to exclude investments with significant ties to weapons production, nuclear power, and fossil fuels—three elements that have intensified the complexity in Ukraine. 

How we take action

With our standards in place, we’re able to respond quickly as conflicts unfold. First, our in-house research team carefully analyzes how countries and companies are being impacted. Then we initiate dialogues with portfolio companies, urging them to respect human rights by adhering to UN-defined best practices and, further, by enacting programs that support conflict-affected communities and refugees. Companies can improve their conflict responses by consulting experts, peer companies, civil society groups, and government actors. 

From there, we remain steadfast. Conflicts can be lengthy and complex, so our initial response rarely means our work is done. 

11. https://www.unhcr.org/en-us/news/press/2021/11/618bec6e4/unhcr-conflict-violence-climate-change-drove-displacement-higher-first.html
12. https://www.ohchr.org/sites/default/files/Documents/Issues/Business/Intro_Guiding_PrinciplesBusinessHR.pdf
13. https://www.accessnow.org/digital-rights-ukraine-russia-conflict/
14. https://ccc.bc.edu/content/ccc/blog-home/2022/03/companies-respond-to-war-in-ukraine.html

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Domini News

The Care is mutual. The fund is too.

Our Impact in 2021

How did shareholder dollars help make a difference last year? The Domini 2021 Impact Report explores how Domini and its investor community helped to advance racial justice, further the climate transition, expand access to affordable housing, and much more.

Our CEO, Carole Laible, Talks Sustainable Investing

Domini is an official supporter of the UN’s Sustainable Stock Exchanges Initiative (SSE). Carole Laible recently joined SSE TV to discuss how finance is changing. She talked about some of the innovations Domini is helping bring to the field—and why impact reporting may be the next big step in the evolution of sustainable finance. 

Circular Economy 101

If you’ve heard of the circular economy, you know how integral it is to reducing waste, delivering on climate commitments, and achieving meaningful sustainability. If you haven’t heard of it, our new essay is a good place to start.

Domini on the Road

This year, Domini is excited to be back on the in-person conference circuit. We’ll be in Santa Ana Pueblo, New Mexico for the US SIF Annual Conference on June 6-8

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