Fund Complex: Domini Funds
Management Company: (1-2) Domini Impact Investments LLC; (1) sub-adviser: Wellington Management Company LLP, (2) sub-adviser:
SSGA Funds Management, Inc.
Funds Affected: (1) Domini Impact Bond Fund, (2) Domini Sustainable Solutions Fund
Sustainable Investing Strategy: (1) Values-based investing; Negative screening (exclusions), Impact investing, ESG Integration, Shareholder/Bondholder engagement and proxy voting, (2) Thematic-impact investing, ESG Integration
Summary:
(1) Domini believes that by factoring social and environmental sustainability standards into their investment decisions, investors can encourage greater issuer accountability. Domini’s social and environmental standards are incorporated into its investment process. Domini’s investment process also seeks to identify investments that may provide access to capital, creation of public goods and filling capital gaps left by current financial practices. Domini’s interpretation and application of its social and environmental standards are subjective and may evolve over time.
Domini evaluates potential corporate debt instruments against its social and environmental standards based on the businesses in which an issuer engages, as well as on the quality of the issuer’s relations with key stakeholders, including communities, customers, ecosystems, employees, investors, and suppliers.
With respect to noncorporate debt instruments Domini’s standards seek to identify issuers, asset classes or individual securities that, among other things, play a positive role with respect to community development or otherwise generate positive social, environmental or community impact across multiple themes, particularly when serving historically underserved communities. In general, Domini seeks to identify those debt instruments that build strong communities, and in particular those that support affordable housing, education, climate mitigation, small business development, community revitalization, rural development, the environment, and healthcare.
At its discretion, Domini may invest a portion of the fund’s portfolio in mortgages, loans or pools of loans issued by community development banks, credit unions, non-profit community development organizations, government agencies or instrumentalities and government-sponsored entities. In addition it may place deposits or make loans with such organizations, or community loan funds or make investments in, other debt or equity instruments issued by these or similar organizations that seek a positive social or environmental impact. Such investments are not subject to the sub-adviser’s proprietary analytical tools. These investments may not be insured by the FDIC and may earn below-market rates of return. Some of these investments may be in unrated or lower-rated securities that carry a higher degree of risk than the fund’s investment-grade securities. Some of these investments may be illiquid and are subject to the fund’s limit on illiquid securities (which is 15% of the Fund’s net assets).
There are certain lines of business that Domini believes are fundamentally misaligned with its goals of universal human dignity and ecological sustainability. The following exclusionary screens are applied across all funds: Weapons and firearms, Nuclear, oil, natural gas, coal mining, tobacco, alcohol and gambling.
(2) The fund invests in securities of companies that demonstrate a commitment to sustainability solutions. A company demonstrates a commitment to sustainability solutions if, based on the adviser’s fundamental analysis, the company provides, invests in or creates products or services that help:
• Accelerate the transition to a low-carbon future including through renewable energy, distributed generation, off-grid solutions, energy storage, electric vehicles, or energy-efficient technologies.
• Contribute to the development of sustainable communities including through safe and affordable housing, eco-friendly design, low-carbon transportation systems, or climate-resilient infrastructure.
• Ensure access to clean water including through the development or maintenance of water infrastructure, affordable water services, or solutions for water treatment, harvesting, conservation, flow-control, plumbing, or heating.
• Support more sustainable food systems including through the improvement of, or access to, healthy, natural, organic, or plant-based food, the reduction of food waste, promotion of resource-efficient agriculture, or support for small-scale farming.
• Promote societal health and well-being including through the improvement of, or access to, healthcare products or services, preventative healthcare solutions, innovative diagnostics or medicines, mobile medical technologies, or health education services.
• Broaden financial inclusion including through improvement of, or access to, capital, banking, insurance, investment, or other financial products or services.
• Bridge the digital divide and/or expand access to economic opportunity including through improvement of, or access to, information or communication technologies, education, training, or software/services.
Investment selections are based on fundamental analysis of environmental, social, and financial criteria.
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