Sustainable Equity Fund

2020 Sustainability Report



We believe integrating environmental, social and governance (ESG) factors into our investment process leads to better decision-making and improved outcomes for our investors.

Joe Reiland, CFA, Portfolio Manager


Letter to Shareholders 

The long-term consequences of various events over the past year have brought home the importance of integrating environmental, social and governance (ESG) opportunities and risks into our investment process.

Having profoundly changed our lives, the COVID-19 pandemic will undoubtedly be a defining moment of our lifetimes. Beyond its devastating tolls on human health and employment, the pandemic has also affected portfolios from both an investment and ESG perspective. The economic disruptions produced major market volatility while magnifying social inequalities and increasing scrutiny of corporate policies around employee health and safety.

We have also witnessed further evidence of the impact of climate change on the environment. Shifting weather patterns produced more frequent and intense storms while wildfires ravaged millions of acres of land worldwide. These were reminders that global climate risks not only affect us all personally but can have material long-term financial implications.

There have been positive developments as well. Companies are increasingly taking action to reduce their environmental footprints by putting policies and procedures in place to lower carbon emissions, use energy more efficiently and decrease waste. We also are seeing innovation across many sectors of the economy that may help reduce climate change risks. These range from the continued rise of electric vehicles to carbon capture technology and the prospects of green hydrogen as an energy source.

Climate change, public health and safety, social inequality—these are key opportunities and risks that we cannot ignore from an investment perspective. We believe integrating these factors into our investment process leads to better decision-making and improved outcomes for our investors.

Looking ahead, we are encouraged by the commitments that businesses are making at many levels. And we highlight several in this report. While ESG investing continues to evolve, our core beliefs remain:

  • Companies with both improving business fundamentals and risk management of material ESG issues will likely outperform their peers over time.
  • ESG analysis complements traditional financial analysis and results in a more comprehensive understanding of risk.
  • ESG integration, rather than exclusionary screening, leads to better diversification and a more robust opportunity set.

We take the trust you have placed with us seriously. Thank you for investing with us.

The Sustainable Equity Team 



How We Invest for Sustainability

Ideal portfolio candidates may lie at the intersection of improving business fundamentals and attractive ESG characteristics.

We believe integrating ESG analysis alongside traditional financial evaluation creates a more robust portfolio that may offer the potential to deliver excess returns over time.

We focus on strong, sustainable companies that we believe exhibit both attractive business characteristics and strong ESG profiles. In addition to applying rigorous fundamental research, we seek to identify ESG leaders within each sector and industry based on their management of ESG risks and opportunities. Our goal is to deliver a sustainable large-cap core portfolio and drive performance through security selection.


 

Seek to deliver competitive long-term financial returns while integrating material ESG factors into the investment process

Consider ESG issues alongside traditional financial information to provide a more comprehensive view of the value, risk and return potential of a security

Construct a sustainable large-cap core portfolio driven by security selection, with minimal cash and non-U.S. exposure




Environmental

Environmental metrics reflect how a company affects nature. The companies in which we invest have less impact on the environment and use fewer resources.
Download the PDF report for our full Environmental Policy.


Our portfolio holdings compared to the S&P 500 index:

Produce 67% lower green house gas emissions

Use 36% less energy
 

Use 40% less water
 

Generate 97% less waste
 

This equates to:

Icon of a car.

38,149
fewer cars on the road

Icon of lightening bolt.

44,748
fewer homes annual energy use

Icon of water droplets.

28 million
fewer gallons of annual water consumption

Icon of garbage truck.

50,658
fewer homes annual waste generation


Based on portfolio assets under management of $3.3 billion. Data as of 12/31/2020. Source: FactSet, MSCI, Refinitiv.

Typical passenger vehicle carbon dioxide emissions per year (www.epa.gov)    4.6 metric tonnes
Average energy use in the U.S. per home per year 10.65 megawatt-hours
Average water use in the U.S. per home per year 414.50 cubic meters
Average waste generation in the U.S. per home per year 2.980 tons



Social

Social metrics help shine a light on a company’s relationship with its stakeholders. This may include reviews of human rights, employee relations, working conditions and the use of child labor among customers, suppliers, employees and their community or region.
Download the PDF report to see all of our Social Policies.


Employee Safety.

Employee Safety

 

95%
of portfolio holdings have a health and safety policy
 

Down Arrow.

76%
fewer workplace injuries and fatalities
 

Customer Safety.

Customer Safety

 

18%
more companies than benchmark have a policy on customer health and safety

Down Arrow.

70%
fewer product quality controversies
 

Workplace Diversity.

Workplace Diversity

 

7%
higher percentage of female employees than benchmark
 

Down Arrow.

15%
more companies offer flexible working hours


Sources: FactSet, Refinitiv as of 12/31/2020. Comparisons are based on the S&P 500 Index®, a measure of 500 selected common stocks most of which are listed on the New York Stock Exchange. The index is not an investment product available for purchase.



Governance

Governance relates to policies and practices that encourage corporate board and management diversity and independence, reporting on sustainability and social responsibility and engagement with employees, customers and other key stakeholders.
Download the PDF report to review our Corporate Governance Policies.


Percentage of Portfolio With 3+ Female Board Members

Percentage of Portfolio With 3+ Female Board Members.

Percentage of Portfolio With Minority Board Members

Percentage of Portfolio With Minority Board Members.

Sources: FactSet, Refinitiv as of 12/31/2020. 


Download the Full Report

Learn more about our unique ownership structure, read about leaders in the ESG space, review our Proxy Voting Policies, and meet our investment team.

You should consider the fund's investment objectives, risks, charges and expenses carefully before you invest. Each fund's prospectus or summary prospectus, which can be obtained by visiting americancentury.com, contains this and other information about the fund, and should be read carefully before investing. Investments are subject to market risk.

Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

A strategy or emphasis on environmental, social and governance factors ("ESG") may limit the investment opportunities available to a portfolio. Therefore, the portfolio may underperform or perform differently than other portfolios that do not have an ESG investment focus. A portfolio's ESG investment focus may also result in the portfolio investing in securities or industry sectors that perform differently or maintain a different risk profile than the market generally or compared to underlying holdings that are not screened for ESG standards.

The information is not intended as a personalized recommendation or fiduciary advice and should not be relied upon for, investment, accounting, legal or tax advice.

The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.