Fund Complex: Tarkio/Clark Fork Trust
Management Company: Front Street Capital Management, Inc.
Funds Affected: Tarkio Fund
Sustainable Investing Strategy: ESG Integration
Summary:
When making an investment decision, the investment adviser also considers the company’s performance with respect to environmental, social, and governance (ESG) factors. The adviser has developed its own internal process for measuring companies’ performance relative to a set of ESG factors that the adviser believes are a good indicator of long-term financial performance. Each company’s behavior as it relates to these ESG factors is unique, but the adviser generally believes that environment-impacting actions and omissions (including externalizing costs, pollution/conservation, and sustainability in operations), transparency and accountable governance (such as board and officer compensation levels, transparency of reporting, and accountability in the event of rule-breaking), and a commitment to diversity, inclusiveness, empowerment and social justice are all indicators of whether a company adheres to the adviser’s criteria. The adviser believes positive ESG factors (such as environmental stewardship, community and societal well-being, corporate transparency, and ethical treatment of all stakeholders – not just shareholders) are often indicative of a company’s alignment with the adviser’s investment criteria as stated above. The fund, generally, seeks to avoid investing in companies that the adviser deems inconsistent with these positive ESG factors because the adviser believes that typically, companies that are extractive or that profit from social destruction or addictive products tend not to have long-term focus and tend not to have a non-monetary purpose or passion. The adviser also believes that companies managed with long-term performance in mind are less likely to incur the many various liabilities associated with negative ESG factors, including, among others, exploitation of employees, communities, and the environment. Such liabilities can include employee and/or shareholder lawsuits and regulatory sanctions and/or fines. However, the adviser’s internal ESG screening process does not automatically eliminate any type of company from investment. The ESG process is only one part of the adviser’s overall investment analysis process.
Tarkio Fund/Clark Fork Trust
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