Amid the stress and grief of this pandemic, I encountered an ESG (environmental-social-governance) investing intersection that made me smile. It started when I was scanning Bloomberg’s newswire and came across an article about investor concern over social washing, particularly in light of the pandemic. That’s when a company falsely overstates the positive impact of its investment in its employees. At this moment, think Tyson Foods. If Tyson had really been investing as much in its employee’s safety as it was touting, why would the most serious new outbreaks of COVID-19 be happening in its meat processing plants…well after we knew how to avoid the spread? It seems clear that Tyson has prioritized shareholder return to the detriment of all its other stakeholders – its employees, the small-town communities they live in, the farmers who supply livestock, and its customers. That’s short-sighted, bad business, and frankly, shameful.
Anyway, the Bloomberg article referenced Trillium Asset Management. That caught my eye since Trillium manages one of the funds we’re using in client portfolios here at Mandala Financial Advisors. Trillium told Bloomberg it’s very focused on the “S” of ESG at this time which for them, “involves seeking out companies that invest in their employees rather than treat them as disposable.” High-five, Trillium. 🙌 (Are you listening, Tyson?)
When I turned to my email there was a message from Trillium waiting for me, which I thought was an interesting coincidence. It was a press release announcing that last fall Trillium had filed a shareholder proposal related to Tractor Supply Company, one of its fund holdings. Trillium’s intention was to pressure (my word) Tractor Supply into placing a high priority on achieving gender diversity in its workforce noting there were currently no women among its executive ranks. After a series of dialogues with management which resulted in a number of commitments from the company, Trillium withdrew the proposal this past February. That same month three women were promoted to Tractor Supply’s 10-person executive management team. Trillium has a long record of initiating proposals that lead to these types of positive outcomes. That was an important factor (in addition to consistently strong financial returns) in our decision to add its large cap core fund to our client’s portfolios.
So what about the goat? There’s a third dimension to this ESG intersection. You see, I’ve been a fan of Tractor Supply Company for years and it’s not a name that comes up in the news very often. It’s one of my go-to stores near our rural Colorado home. The store staff are always very friendly and helpful, I love to browse through its myriad of agricultural contraptions, it carries the dog food Morty likes, and it has interesting customers. A year ago when Dave and I were waiting in the checkout line I noticed the man behind us had feed for almost every type of domesticated animal you can imagine on his trolley. Upon pointing out that was quite a menagerie of feed we started talking and he suggested we say hello to his friend in his truck. When we got to the parking lot, there was a miniature goat in the driver’s seat hanging out the window looking for attention. I gave his head a good scratch and took this picture. I thought then how happy I was to be among other people who enjoy making animals part of their lives. And now that I’ve learned Tractor Supply listens to its shareholders and is making changes for a more diverse and stronger workforce, I’m an even more loyal customer and now a proud investor. ESG investment strategies work.