Info on Green Century
Narrative
This company claims to be the only U.S. mutual fund company that is “wholly owned by environmental and public health nonprofit organizations.” It invests in ESG leaders and innovators, and it advocates for better environmental practice. “Every year, Green Century presses dozens of companies to adopt stronger environmental practices and policies throughout their supply chains.” This “in-depth shareholder advocacy program goes well beyond voting proxies.” [To assist the Green Century team of advocates, they hire short-term student interns (paid for by MassCEC, the Massachusetts Clean Energy Center) to research specific environmental issues at certain companies.]
Here are examples of this advocacy reported in 2023. With the aid of Green Century Funds and its investment advisor negotiations, Costco, the third largest retailer in the world, agreed to shrink its greenhouse gas emissions. The company will set targets to reduce carbon pollution from growing or producing the products they sell, which account for 98% of the company’s emissions. (Parnassus also claims credit for working with Costco in earlier years.) Also, Morgan Stanley will require all Indonesian palm oil growers seeking financing to have a zero-deforestation policy. Citigroup implemented a nearly identical policy after it adopted it last year.
As an example from a few years ago, Green Century had filed a shareholder resolution with Verizon because of its inadequate goal of obtaining 4% of its electricity from renewable sources. In 2019, however, Green Century withdrew its resolution, after Verizon committed to 50% of its electricity usage from renewables by 2025. Other investment firms, including Impax, (formerly Pax World Funds), also claim credit for getting Verizon to make this change.
For more, including several videos, see https://www.greencentury.com/resources-videos-podcasts/ and www.greencentury.com/impact/.
I wrote Green Century asking how they balance the desire to own green companies and the desire to urge less-green companies to improve. They sent the following reply.
The Green Century Funds invest in companies that lead their industries in environmental, social, and governance practices. The majority of our advocacy work is done with companies held in the Funds, because we believe that even corporate sustainability leaders have room for improvement. One example here is our recent engagement with Mattel on plastic packaging reduction, https://www.greencentury.com/mattel-agrees-to-reduce-plastic-packagin/
We do, however, engage other companies that do not qualify for the Funds. Green Century Capital Management holds small amounts of stock in these companies in a separate account strictly for the purpose of influencing their environmental practices. For example, our recent successful engagement with JPMorgan Chase falls in this category, https://www.greencentury.com/jpmorgan-chase-adopts-deforestation-policies/
Funds Offered
The 2021 prospectus lists the US Equity Fund’s history for ten years, 2010-2019. In that period, the average annual return was 12.25%. For comparison, the Vanguard 500 Index Fund had an average annual return of 13.51% during that period. I used Vanguard 500 as a comparison because I had it and did not have the figures for MSCI KLD 400.
The Balanced Fund typically has from 25% to 40% bonds, and the rest stocks. Of the bonds, all are with fossil-free companies; roughly half are issued specifically to support climate or environmental initiatives, while the others are for more general purposes.
Fees and Hassles
Withdrawal of money from an IRA can be requested by a phone call. The usual requirement of a medallion signature guarantee, on paper, is made if a withdrawal is to be used as a charitable gift. However, Green Century allows multiple gifts to be covered by a single signature guarantee, and subsequent donations to any particular charity do not require repeated medallion guarantees.
For owners of the Institutional Share Class (more than $250,000 in the account) all purchases and redemptions other than charitable gifts from IRAs may be made online.
Green Century has intentionally set up their passwords so that they expire after a few months. When this happens, a brand new password must be defined, following stated instructions. A phone call to the help line can assist in this process. Some users may regard this as a hassle.