Calvert Social Index Investment Approach and Products Overview

Calvert Social Index offers a range of investment approaches that aim to balance financial returns with social responsibility. The investment approach is rooted in a commitment to social responsibility and environmental sustainability.

The Calvert Social Index investment approach focuses on identifying companies that meet rigorous social and environmental standards. This approach is based on the belief that companies that prioritize social responsibility and sustainability are more likely to be successful in the long term.

Calvert Social Index products are designed to provide investors with a range of options for incorporating social responsibility into their investment portfolios. These products include exchange-traded funds (ETFs), mutual funds, and separately managed accounts.

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Calvert Investments, Inc. recently announced a major new initiative in responsible investing, expanding its global research expertise and launching a suite of Responsible Indexes and related lower-cost Index Funds.

The firm has created three distinct U.S. large cap indexes based on style: Calvert U.S. Large Cap Growth Responsible Index, Calvert U.S. Large Cap Core Responsible Index, and Calvert U.S. Large Cap Value Responsible Index.

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Calvert is also launching two additional index funds, the Calvert U.S. Large Cap Growth Responsible Index Fund and the Calvert U.S. Large Cap Value Responsible Index Fund, each based on one of the new indexes.

These funds are now available to the public and are tracking the new indexes. The Calvert Social Index Fund has become the Calvert U.S. Large Cap Core Responsible Index Fund.

Additional Responsible Indexes and Funds providing coverage of other significant portions of the global equity markets are anticipated later this year, including U.S. mid cap, non-U.S. developed markets, and emerging markets.

Calvert's indexes and investment products are evolving to meet the growing interest in responsible investing and the increasing demand for lower-cost options.

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The Calvert Social Index focuses on investments that promote social good. This approach is designed to align with the values of socially responsible investors.

By investing in companies that meet rigorous social and environmental standards, the Calvert Social Index aims to create positive impact. The index screens out companies involved in industries such as tobacco, firearms, and nuclear power.

Investors who choose the Calvert Social Index can expect to see a portfolio that reflects their commitment to social responsibility. By doing so, they can contribute to a more sustainable future for all.

As we explore investment opportunities, the environment is a crucial aspect to consider. Companies that prioritize environmental sustainability and resource efficiency are more likely to thrive in the long run.

Calvert Principles aim to identify companies that operate in a manner consistent with environmental sustainability and resource efficiency. This involves reducing the negative impact of operations and practices on the environment.

Companies that manage water scarcity and ensure equitable access to clean sources are also prioritized. Water is a basic human right, and companies that rely on water for their products or services have a corporate responsibility to enforce sustainable practices across their supply chain.

The Calvert Principles seek to mitigate the impact on all types of natural capital and diminish climate-related risks. This includes reducing carbon emissions and driving sustainability innovation through business operations or other activities, products, and services.

Companies that contribute significantly to local or global environmental problems are not prioritized by Calvert. This includes those that demonstrate poor management of environmental risks.

The industries presenting the greatest sustainability risks are those that require a high volume of water, a supply of clean water, or face risk from intensifying water competition. These include the beverage and agricultural industries, as well as clothing manufacturers, food and drug companies, hotels and resorts, and chemical companies.

Some of the industries closely monitored by Calvert include:

Governance is a critical aspect of any investment decision. A company's governance structure can significantly impact its long-term success and profitability.

Companies that prioritize diversity on their boards tend to perform better in the long run. This is because diverse boards bring a broader range of perspectives and experiences to the table, allowing for more informed strategic decision-making.

In fact, Calvert has been advocating for board diversity for over two decades, recognizing its importance in today's competitive marketplace. Companies that actively seek out women and minority candidates for their boardrooms are more likely to be successful.

Excessive executive compensation can be a major red flag. It can lead to employee turnover and is often at odds with shareholders' interests. In fact, excessive executive pay during a period of poor business performance may indicate bigger issues at a company.

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To avoid such problems, companies should adopt "pay-for-performance" compensation plans that link executive pay to clear and rigorous criteria. This ensures that executives are incentivized to prioritize long-term profitability over short-term gains.

Here are some key governance principles to look for in a company:

The Calvert Social Index takes a thoughtful approach to investing in various industries. Calvert could have no or limited exposure to issuers that manufacture alcoholic beverages without taking steps to reduce their harmful impact.

The index avoids investing in issuers that use animals in product testing unless there are countervailing social benefits. This means that if a company is developing medical treatments to ease human suffering, Calvert might consider investing in them.

Calvert also excludes issuers that have significant involvement in the manufacture of military weapons that violate international humanitarian law. This includes cluster bombs, landmines, biochemical weapons, nuclear weapons, blinding laser weapons, or incendiary weapons.

In addition, Calvert avoids investing in issuers that manufacture civilian handguns and/or automatic weapons marketed to civilians.

Gambling operations are also subject to scrutiny under the Calvert Social Index. Calvert could have no or limited exposure to issuers that have significant involvement in gambling or gaming operations without taking steps to reduce their harmful impact.

The index has a strict policy against investing in issuers that manufacture tobacco products.

Here's a summary of the industries Calvert Social Index avoids investing in: