The Journey to Intentional ESG Integration
Paula discusses her early career experiences at ESG research firms Sustainalytics and MSCI, which illuminated opportunities to more systematically and holistically weave ESG into the investment process. Rather than relegating ESG to a siloed, reactive overlay, Paula set out to put ESG factors on equal footing with traditional financial metrics.
Honeytree's Investment Process
In part of this episode, Paula dives into the details of Honeytree's two-phase investment process.
1. Applying 25 ESG qualification criteria to filter a broad index down to a concentrated set of companies
2. Conducting deep-dive analysis on the selected companies across 45 ESG and financial metrics, from science-based emissions targets to parental leave policies
The result is a high-conviction portfolio of 20-25 companies making a net positive stakeholder impact. As Paula emphasizes, "Our companies aren't thematic in nature. They could be making clothing, shoes, consumer staples, or tech. What we're trying to find are companies that are well stakeholder-governed, that understand the impacts they're making on all their stakeholders is actually what's driving their bottom line."
Looking Beyond the Obvious
Paula shares that Honeytree looks beyond obvious thematic ESG darlings like Tesla to uncover less apparent impact stories, such as Cummins' transition from diesel to electric and hydrogen engines. She also highlights examples of Honeytree's ESG criteria in action, like requiring a minimum of 33% board diversity.
The Future of ESG Investing
Looking ahead, Paula sees ESG becoming increasingly mainstream as corporate sustainability disclosure ramps up, with ESG data becoming as integral as financial statements to holistically understand a company's risks and opportunities.
With its disciplined, integrated approach to ESG analysis, Honeytree is poised to continue pioneering intentional, impactful investing.
To learn more about their innovative strategy and recently launched U.S. Equity ETF, visit Honeytree's website and check out BEEZ ETF.
Be sure to subscribe to the YourStake, Your Story podcast for more conversations with leaders challenging the status quo and innovating at the forefront of values-aligned investing.
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