Active Insights

The Importance and Impact of Sustainable Investing with Katherine Collins

August 09, 2021 Putnam Investments
Active Insights
The Importance and Impact of Sustainable Investing with Katherine Collins
Show Notes Transcript

In this episode, Chris speaks with Katherine Collins, CFA, MTS.  A recognized thought leader, Ms. Collins provides analysis on current and emerging trends in sustainable investing. She is the author of The Nature of Investing: Resilient Investment Strategies through Biomimicry.  

Katherine is Head of Sustainable Investing at Putnam. She is responsible for leading Putnam's investment research, strategy implementation, and thought leadership on environmental, social, and governance (ESG) issues.  Katherine collaborates with portfolio managers and analysts on ESG integration, assessing the fundamental relevance of ESG issues at a security level, and the potential for alpha generation and risk mitigation at a portfolio level. In addition, she is a portfolio manager of Putnam Sustainable Future Fund and Putnam Sustainable Leaders Fund. 

During the conversation, they touch on many topics, including: 

  • The definition of sustainable investing
  • How to incorporate sustainable investing in portfolio management
  • A look back at ESG investing and how it has developed
  • The opportunity for alpha generation
  • New themes emerging in the ESG landscape 
  • The future of ESG investing

You should consider the fund’s investment objectives, risks, charges, and expenses carefully before you invest. This and other important information is contained in the fund’s prospectus available on Putnam.com or by calling 1-833-228-5577. Please read carefully before you invest.

Putnam ETFs are distributed by Foreside Fund Services, LLC. Foreside is not affiliated with Putnam Investments.

Putnam Retail Management AD2557752 11/22

Active Insights

Putnam Investments

Episode 6
Patrick Laffin
: Welcome to Putnam Investments Active Insights, a podcast series hosted by Chris Galipeau. Chris is the Senior Market Strategist in the Capital Market Strategies Group at Putnam Investments. Each episode, Chris has an in-depth conversation with a different Putnam portfolio manager to share timely insights on the markets and global economy.

 

Chris Galipeau: Thanks for joining us folks on the Putnam Active Insights Podcast, this is Chris Galipeau, Senior Market Strategist, and today our guest is Katherine Collins. Katherine is the Head of Sustainable Investing at Putnam where she’s responsible for leading Putnam’s investment research, strategy implementation and thought leadership on environmental, social, and governance issues; you know that as ESG. Katherine collaborates with Putnam’s Portfolio Managers right across the firm and the analyst as well on ESG integration, assessing the fundamental relevance of ESG issues at the security level and the potential, and this I think this is critical, for alpha generation and risk mitigation at the portfolio level. Katherine is the Lead Portfolio Manager for the Putnam Sustainable Futures Fund and Putnam Sustainable Leaders Fund with a combined AUM approximately of about $7 billion. Katherine is a recognized thought leader in sustainable investing. She’s also the author of The Nature of Investing: Resilient Investment Strategies Through Biomimicry and she is a wildly sought speaker in the industry. Katherine is the Chair of Putnam’s ESG Committee which leads ESG initiatives across the firm and because she isn’t busy enough, Katherine serves on the boards of Last Mile Health, the Santa Fe Institute, the Omega Institute and Harvard Divinity School Dean's Council. Katherine is a CFA, she’s been with Putnam for five years and been in the investment business for 31 years. So, as you can clearly see, Katherine is an undisputed expert in the field of sustainable investing and we are thrilled to have her on the Putnam team. Katherine, thanks for joining us on the podcast.

 

Katherine Collins: I am so glad to be here. Thanks for having me.

 

Chris Galipeau: Yeah, we are happy to have you. So, one of the things that we like to do when we start the podcast is have our guest just walk us through your journey from where you went to college, all the way through to present day. We’d love to hear.

 

Katherine Collins: Okay, great! Well, it’s a long journey so I’ll condense a little bit. In some ways, I think everything I’ve done has prepared me for this work that we’re doing right now here at Putnam and I’ll tell you why. The thread that I can see if I look back over my 30 years as an investor and even before that looking at some of my early academic experience, is this idea that I just love putting puzzles together. Any situation where there are a lot of unknowns where you can dig in and do more creative research to get a more complete understanding of something is inherently interesting to me. So I went to college right down the road at Wellesley College. I had a dual degree in economics and Japanese studies. It was the late ‘80s, Japan was in the headlines everyday, I grew up in rural Pennsylvania, so Japan was about as far away as anything I could imagine literally. I ended up studying in Japan and my real life was just curiosity, like what is it, that’s so important and what could I do to understand it better. That’s the same thing that led me to my early work. My first long stage in my career as you referenced was at Fidelity down the street. I spent almost 18 years deep, deep in the weeds of becoming a good long-term, thoughtful fundamental investor. I was an analyst there, portfolio manager and the head of equity research for a long time and in each of those roles, it was that same thread of curiosity, like wow! What is happening in the world that’s interesting, what can I learn about it that would help me to make better decisions on behalf of the people that are counting on me to manage their money effectively. That same curiosity led me to the second long chapter of my career which was sustainability focused. I was seeing the growing relevance of sustainability issues everywhere I looked and yet in traditional investment practice at that stage, we were still kind of setting them off to the side. We called a lot of things externality still. They were kind of considered outside the realm of conventional financial analysis, and yet, as far as I could tell they were becoming more and more acute, more and more relevant. So, I did a deep dive for almost 10 years in a more independent perch. That’s when I went to Divinity School, as you referenced. I wrote a book on biology and how biological systems were better ways to think about the market than more of mechanized models that we often are trained on. And I had my own research firm which took a deep dive into long-term sustainability issues. And now finally, this role at Putnam brings all of that together in one place. So that thread of curiosity has pulled me along the way.

 

Chris Galipeau: Right. To me, what’s one of the most interesting things about what you’re doing in ESG in general is — so for me as a longtime analyst and PM, I didn’t spend a lot of time frankly and this is going back into the early ‘90s and right through probably to the mid 2000s. But I didn’t spend a ton of time really thinking about it, but maybe think about this as your point there about, if people thought about it but was off on the side, and of course we use the [GPAR] a lot, right management compensation and how they’re paid and gives you a good idea if you’re investing behind a team and with shareholder interest. But I can tell you and tell the audience and listeners that from the moment you joined and formed the team here and I watched that morph and spread across the organization, and we’re going to talk about that, and the examples that you’ve given in the past five years where I’ve listened, have absolutely made me a believer and probably why it’s important. And when I went through the intro there, I was thinking about that. The ability to tie in all of the concepts that are important to you as an investor and to have that be accretive to performance and generate alpha and may even mitigate risk at the same time, I think is something that the listeners probably don’t appreciate as much. And today we’re going to draw that out and talk about that, but thanks for educating me on that because after seeing it for a while I though she’s actually right on this and it really does matter and the attribution of performance really shows that. And I think that’s a very, very valuable understood more probably on the timeline here of educating FAs and investors about it. And in the last five years, the ESG business has exploded in terms of interest in AUM. So, let’s just start, I guess, maybe from a high level and I’d like to hear you talk about how you define sustainable investing and maybe a little bit about how we incorporate that across the firm. This is not just Katherine Collins and your team in a silo. This is across the firm.

 

Katherine Collins: Yeah, it’s an important backdrop Chris and you just referenced what I think makes Putnam’s approach really stand out. To their credit, the leadership team at Putnam long before I arrived, long before the team was formed, took the time to step back and say okay if we’re going to do something in sustainable investing, what can we do that is additive that makes our existing investment processes even stronger that opens up opportunity to build product that is really unique and differentiated in the market place and beneficial for clients who are relying on it. That’s not a universal starting point. So, it’s a really big deal that we have kept this true north question of how can we do this in an investment-centric way, how can we do it in an additive way that really plays to our strength as active managers. It’s interesting to me because as you look at the broader field and its emerging, some of the back and forth that you read about ESG considerations and different ways of implementing are due to the fact that not everyone does have that investment-centric view of how they’re using this information. So, you can use ESG information for purely compliance-oriented function, you can use it for risk-oriented functions or you can use it for alpha generation either, so all of those three are valuable, all of those three are needed. But the fact that my team is an investment team, not a team that it’s down the hall, not the team that sits under the legal operation, but we are fundamental investors ourselves has really distinguished the tools that we built at Putnam, the way that we’ve integrated these issues into the broader research process and the way that we’ve built product in that sits on top of that research.

 

Chris Galipeau: It’s been incredible to watch this in the last five years and move at a rapid pace and to your point, be embraced by the senior management, your colleagues right across the firm. It made me think that you’ve been working on this for decades and clearly it’s changed, more than changed, and so I’d love to hear you talk about and you did a little bit, I guess, earlier. What it was like when you started and what it’s like now and maybe even where you thinks it’s going here.

 

Katherine Collins: For sure. So, there have been a couple key evolutions. A lot of folks who have been familiar with the field for a long time, we remember, the starting point for the field which I’m usually was starting with a not that kind of conversation and for a lot of advisors I still hear that this is the beginning of many client conversations they have. So, sort of an exclusionary approach, folks coming in that concern about a certain type of business or product or business practice, wanting to just secede and not be involved with that kind of business. Perfectly fine starting point, inherently though a little bit limiting in terms of its investment potential and a little bit limiting in terms of its impact potential as well. The sort of a finite boundary if the only tool you have is to cross something out of your portfolio. What we’ve seen the last 10 years or so is a really important shift. We have a lot more information to work with, we have a lot more standards to measure that information against. If you are researcher, it is a dream come true. There is a sea of growing sustainability, relevant information out there. It’s not yet fully processed or standardized or tidied up, and so if you’re willing to do the work, this is a fantastic time to be an investor focused on sustainability. So, we moved from sort of a reactive set of tools to a much more proactive set of tools and again as an active manger, like that’s what you live for, you’ve seen a something you can add to the process.

 

Chris Galipeau: Absolutely! So a good segue. So, one of the questions that we get from our clients. I get this, maybe not everyday but at least a few times a week, is — and I feel like the premise of the question is sell me on how is she actually works and that it matters, and so I want to see if we can talk a little bit about the concept of using ESG to generate alpha which again, I keep coming back to that because that is critical, but I would love to hear you talk about, maybe run us through a company or a couple of examples of how their business model change and how their focus on ESG principles help them prove the business.

 

Katherine Collins: Yeah, absolutely! I think it’s funny. I’m not sure all of the labels and nomenclature actually help us here in some ways that we’re talking about is just smart business and it’s smart business in our current context which has a sustainability at the top of the list in terms of issues that are relevant for companies. So, as I mentioned before, there are lot of different ways to use ESG analysis and information. When we think about what are the ingredients that are necessary to use this information and link it to long-term investment performance. There are really two ingredients we think our key; one is that the research has to be context-specific, looking at particular issues in particular companies and thinking through what is relevant for this exact company in this time and place. Not a cookie-cutter, sort of report card, approach to ESG analysis. So, contact specificity is ingredient number one and then ingredient number two is that the work needs to be forward-looking, that kind of goes without saying for anyone to use an investment practitioner. But like a lot of data we use in finance, most standardized ESG data and even most company reporting by definition it’s backward-looking, and so your job as an investor is to understand that history but also to understand the direction of travel and try to interpret what it might mean for the future. So, those are the two ingredients that our research is centered upon. We have a materiality map that focuses on that contact specific nature and this fantastic idea map that looks at key sustainability themes that address is that forward-looking piece. Those are the two key tools that we look at and then that translates really directly to our core fundamental research process which has all the strength that thoughtful long-term fundamentals would naturally have. Maybe to give a couple of examples just to bring it to life because as soon as I get stuck talking in theory it doesn’t quite bring at home. So, I’ll give you a couple of companies, some of which are really familiar to folks to maybe just bring it home. So, everyone knows Chipotle and most people love Chipotle food, why do you love Chipotle food is because they have invested meaningfully in their supplier network and in their in-store capabilities over the couple of decades now that the company has been in existence. So, they had not made the investments in smallholder farmers and fresh ingredients and how to operationalize all of that, they would not have the business franchise that they do today. Ball Corporation maybe not as much a household name as it once was by Ball makes almost all the aluminum can. So, look around, there’s probably one with insight. Ball Corporation has really doubled down on having aluminum at the center of their product lineup over the last more than a decade now and one of the key reasons for that is the inherent recyclability of aluminum. So, their customers are increasingly looking for product packaging that has this recyclability and Ball has accelerated their own growth from low single digits to high single digits because of this increase customer demand. I could go on, but those are just two.

 

Chris Galipeau: Yeah. First of all I need to say to the listeners. Katherine giving examples of the principles and the things that she looks for as she evaluates a potential company and an investment is in no way, shape or form a recommendation for you listeners.

 

Katherine Collins: Thank you!

 

Chris Galipeau: [Think] about run out and buy that stock as we do fundamental analysis, the opinion’s changed, they may change and so in no way, shape or form a recommendation. One of the things about Chipotle, so obviously they’re everywhere. Can you tell me why they stopped or at least in the Boston store here, stopped the cauliflower rice because they just came out with that and I loved that and they stopped it.

 

Katherine Collins: I didn’t have a specific answer on our local Chipotle for, but one thing that’s really impressive with Chipotle and it’s accelerated over these last few years under a new management team, is that they have a really clear internal process, a stage-gate process for making decisions. This is a key element for any company that has a really huge distribution, really complicated supply network, and so I don’t know the specific answer but what I do know is that it almost certainly was related to analyzing the availability of high-quality supply and the demand for that product and so very specific internal threshold set. Again, really thoughtful decision-making that is linking some of the key sustainability issues with the key issues that are important to their customers and the financials that tie all that together.

 

Chris Galipeau: Yeah, that’s a great answer. It’s funny you use Ball Corp. as one of the examples because it must have been a few years ago, but you were on stage with Stephanie Dobson (works on Katherine’s team) and you walked us through Ball and you walked us through how they changed their business model and how that ended up being accretive to revenues and maybe margins ultimately earnings. And it was that moment, that was crystalizing moment for me as an analyst in PM. I thought, okay, now, I get it.

 

Katherine Collins: Oh good. I’m so glad.

 

Chris Galipeau: Now I get it and that’s the honest truth. That was the moment for me and I thought  no had ever explained it to me like that like you just did with Chipotle and Ball. One of the things that, to me, makes your approach maybe different from competitors and you mentioned this a few minutes ago, is putting things in context in different industries and not cookie-cutter, not a straight framework, which I guess is brilliant sense but did it take a while to get there to think like that? Maybe not for you but the industry?

 

Katherine Collins: Oh! It’s an interesting question. You know, being a fundamental investor for my whole life, I can’t unseparate these things.

 

Chris Galipeau: Yeah.

 

Katherine Collins: I can’t think of the ESG considerations that were incorporating as something other than part of the businesses that we’re analyzing. I do think that that’s relatively unique though and again, it’s a really important backdrop for Putnam that our team is in the core investment research team, not down the hall, not a boutique into ourselves. When some folks talk about ESG integration, what they mean is they have a terrific team that’s focused on ESG. They have a terrific conventional investment team and once in a while they get together, where they add a bunch of scores together in a spreadsheet and call that integration. That’s not necessarily a bad approach but again, if your goal is to further your understanding of long-term fundamentals, that’s not the way you do it.

 

Chris Galipeau: And that’s not the way we do it, right?

 

Katherine Collins: Right.

 

Chris Galipeau: So, one of the things that we all have to do as investors and you’re thinking about evaluating a company and their ability to grow their business and ultimately grow their earnings, we’re looking forward, right? We’re building pro forma income statement, we’re talking to management, we’re talking to the street, we’re talking to competitors and that’s all part of rigorous fundamental bottom up stock picking. Are there new themes emerging? Are there things that are catching your attention now that might not be on the radar of people? Right? And you’re smiling because the answer of this is yes, I think, I’d love to hear that and I think the listeners would love to hear what might be around the corner.

 

Katherine Collins: Yeah, this forward-looking question is such a fascinating one and it’s always fascinating if you’re a fundamental investor trying to think like, “Hmm...what might be rising in importance and how can I incorporate that into my investment process?” So for us, this question of what might be rising in importance is really crystallized in this map I referenced earlier, this thematic idea map, we just had a big publication out on this called the “Investing to Thrive”.

 

Chris Galipeau: I read it, I read it.

 

Katherine Collins: Which I love the title of and it really does have that question at the heart. So, we’re not trying to map all innovation, we’re not trying to map every trend that we see that’s emerging in the world. We’re starting with this central question, What is needed for thriving across the board? Thriving individuals, thriving planet, thriving systems and society that kind of connect those two together in the middle. So, it’s a really particular question that’s informing the map and from that, you get all kinds of amazing themes that come forward and these are such a great compliment and extension of our company-specific fundamental research. So, I love the idea that you have company and sector research that is sort of vertically focused in terms of its depth and then you have this connective tissue of this thematic work that often cuts across a lot of different individual companies or different sectors. So, some of the themes that are highlighted in the report and on the map really, really fit in that definition of cutting across a lot of different arenas. One theme is circular economy, which Ball Corp. is definitely part of but we also have some really innovative consumer models that are coming to the fore. Looking at things like resale and recycling as opposed to every single thing we do being de novo. So, circular economy is a big theme. The theme of biological innovation, not only for pharmaceuticals but biological solutions to all kinds of different materials-oriented issues in the world is definitely a big theme that we see going forward. And then there are a lot of themes within the S arena. We talked a little bit in preparation for this about how the S of ESG, in a lot of settings, is one that gives researchers a lot of challenge. The data is not quite as tidy, even the questions are a little bit open-ended but when we look at issues like diversity, equity and inclusion, what does that mean at a company level? How does that vary? Depending on the type of company and the type of employee population that they have, the type of business objectives that relate to that. Those are the areas where thoughtful fundamental research can really add a lot.

 

Chris Galipeau: Yeah, that’s great. I have a question I just thought about coming out of you talked about recycling and so I can clearly see how Ball fits into that, what about what Lululemon just talked about a month or two ago?

 

Katherine Collins: Yeah.

 

Chris Galipeau: You can bring clothing back in and I don’t know if they’ll recycle it or maybe just resell it but would that fit in that context?

 

Katherine Collins: For sure, we’ve seen from Lululemon, from Levi, from a lot of really premier brands that that folks might follow some newer efforts. In most cases, their newer efforts to create their own circular economy essentially, bring in their own materials back in-house. To be honest, Apple was one of the first companies to start this, the whole resale trade in program in part is to kind of keep consumers engaged with the product overtime but it’s also to control the supply of those materials which are increasing scarce and so again, we see this across a lot of different product types. So, Lululemon and Levi are two great examples where they’ve got a couple options once they bring things back into their own loop. They can use the raw material and kind of disassemble and reassemble depending on the materials that are being used or they can have their own sort of mini resale and loop going within the company and so there’s a lot of experimentation on this firm right now.  Huge interest particularly for next gen consumers and buying through resale and reuse as opposed to buying de novo. It’s really interesting trend.

 

Chris Galipeau: It sounds like when the Patagonia to be public for they would probably be the poster child for that which is [seeming it]. I remember studying Patagonia’s business model management team in graduate school. I was amaze at least, I could be wrong on this, so correct me if I’m wrong, but it would seem like exceptionally Patagonia might be well ahead of other names that folks would know, right? In terms of recycling and using, interesting. 

 

Katherine Collins: Yeah, well in Patagonia, I mean they have post such an important question for every company I think that sell stuff which is can you thrive as a company, can you grow without just increasing the volume of stuff that you are putting out into the world, day in and day out. That’s a fascinating question for any type of company.

 

Chris Galipeau: We're running up against the time clock here, but actually I have one more question before I get to the final one. If we can put this in baseball context, in terms of innings, are we in the first inning of ESG? Are we in the fifth inning? Where do you think we are? And then I’ll give you where I think we are.

 

Katherine Collins: Oh, gosh! Well, I guess it depends what you call a win or a conclusion of the game. I think we are definitely — the game has started at least in terms of overall awareness, development of tools, data information, all the things that we’ve talked about through this meeting. But I think the game has not even started in terms of the actual relevance of these issues both on our lives and the businesses we’re investing in.

 

Chris Galipeau: I was going to say no through my lens and talking with our clients all day long, I would say that in my mind it’s probably a first inning, we are in the first inning and I think conversations like this bring out how we approach it as a firm under your leadership and why it’s important on many, many levels and I can feel that conversations that is more important. It is gaining steam. Certainly, even in the last two or three years, right? We’ve covered a lot of ground but I want to give you the opportunity to talk about anything that maybe we didn’t bring up, thoughts that may have come to mind as we walk through this, anything that you like our listeners to know.

 

Katherine Collins: Well, I think we’ve talked a lot about what active managers like Putnam can bring to these essential questions of sustainability, so that’s probably the key message. Very early in my career, I had my first stock blow up in it. It’s always a humbling experiences as a young analyst and one of my mentor said, “Katherine, when something changes, that is an opportunity, like, you get to rethink. Does this change your mind? Does it make you want to buy it more? Does it make you want to give up|? Like, this is your chance to change this opportunity”. And so, I will say a lot of the sustainability issues that we’re working on have a glass half empty element like these are pressing and the rising in acuteness the issues in our world. So you think about things like the risks of climate change, the risks of having in equitable societies, they’re really pressing but the flip side of that is that there is increasing opportunity at the same time, and so I think for folks who are willing to do the hard work, it’s not effortless, it’s not without doing the thoughtful research that I just mentioned that you can incorporate these issues in a thoughtful way but if you do, well it’s quite a time. 

 

Chris Galipeau: Well said. We’re going to shift here to the end and wrap it up and get to know Katherine a little bit more here. So, a couple quick questions for you. So, we’ll start with your favorite food. What do you have to have?

 

Katherine Collins: Oh, gosh! Well, one thing we haven’t talk about this is I’m a beekeeper and so one thing that is fascinating, if you want to get to know a place, find honey that is truly local that is made in the place and I guarantee you, you will be able to taste the place, the specific flowers and the trees of that environment. So, I love exploring through honey when I travel.

 

Chris Galipeau: Nice! Don’t be afraid to bring any honey [in front of us]. Alright, you’re doing research, you’re reading reports, you’re thinking — what’s your favorite type of music?

 

Katherine Collins: Oh, gosh! I love all type of music. A very early crosswords for me was whether to try to be a professional musician or not. So, probably best that I did not. But my brother has lived in Nashville for many years and he introduced me to the music of Gillian Welch and Dave Rawlings and every time I hear them, I just feel like I’m home.

 

Chris Galipeau: A musician? Really?

 

Katherine Collins: Yeah. 

 

Chris Galipeau: Interesting! Okay. The final question is and I think I know that the listeners will usually go out and grab this book. So, I want to ask you about of all the things you’ve read and you perhaps probably one of the most well-read people I know. One or two books that you’ve read in the course of your career that may have impacted the way you think, impacted the way you approach your job as a fiduciary and portfolio manager?

 

Katherine Collins: Oh, so many. It’s like picking your favorite child, picking your favorite book. I actually do book list a couple of times a year. So, if anyone wants those, we can get those out more into public domain. A few come to mind, the top two would be a book called “Expectations Investing” by Al Rappaport and Michael Mauboussin. There is a new version coming out this fall that I cannot wait to see. It really helped me to increase my sophistication as an investor, understanding my point of view on a given investment decision with respect to the broader consensus point of view which is obviously a key element for all of us in our practice. And then, I have to admit I go back usually about once a year and reread Peter Lynch’s “One Up on Wall Street.” I read it before I started in my career in this field and it reminds me time and time again that this is a profession that is inherently linked to the world that we live in and if you are an acute observer of the world we live in, you have the chance to really put those observations to bear in your practice.

 

Chris Galipeau: That’s [unintelligible].

 

Katherine Collins: Yeah, for sure.

 

Chris Galipeau: Alright, same thing.  Alright, Katherine, thanks for hopping on the podcast with us. We’re going to wrap it up. This is Chris Galipeau, thanks everybody for listening. We’ll be back shortly with another Putnam Portfolio Manager.

 

Patrick Laffin:

Thank you for listening to Active Insights. For more information on Putnam, please visit Putnam.com. All opinions expressed by the podcast hosts or podcast guests are solely their own opinions and do not represent the opinions or views of Putnam Investments or any affiliates. This podcast is not investment advice and is not intended as a recommendation to buy or sell any type of securities. This production is for informational purposes only.

 

Title

The Importance and Impact of Sustainable Investing with Katherine Collins

 

Online Description:

In this episode, Chris speaks with Katherine Collins, CFA, MTS.  A recognized thought leader, Ms. Collins provides analysis on current and emerging trends in sustainable investing. She is the author of The Nature of Investing: Resilient Investment Strategies through Biomimicry.  

Katherine is Head of Sustainable Investing at Putnam. She is responsible for leading Putnam's investment research, strategy implementation, and thought leadership on environmental, social, and governance (ESG) issues.  Katherine collaborates with portfolio managers and analysts on ESG integration, assessing the fundamental relevance of ESG issues at a security level, and the potential for alpha generation and risk mitigation at a portfolio level. In addition, she is a portfolio manager of Putnam Sustainable Future Fund and Putnam Sustainable Leaders Fund. 

During the conversation, they touch on many topics, including: 

·              The definition of sustainable investing

·              How to incorporate sustainable investing in portfolio management

·              A look back at ESG investing and how it has developed

·              The opportunity for alpha generation

·              New themes emerging in the ESG landscape 

·              The future of ESG investing

 

 

This material is for informational and educational purposes only. It is not a recommendation of

any specific investment product, strategy, or decision, and is not intended to suggest taking or

refraining from any course of action. It is not intended to address the needs, circumstances, and

objectives of any specific investor. This information is not meant as tax or legal advice. Investors

should consult a professional advisor before making investment and financial decisions and for

more information on tax rules and other laws, which are complex and subject to change.

 

Consider these risks before investing: The value of investments in the fund’s portfolio may fall or fail to rise over extended periods of time for a variety of reasons, including general economic, political or financial market conditions, investor sentiment and market perceptions, government actions, geopolitical events or changes, and factors related to a specific issuer, geography, industry or sector. These and other factors may lead to increased volatility and reduced liquidity in the fund’s portfolio holdings. 

 

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The fund's investment strategy of investing in companies that exhibit a commitment to sustainable business practices may result in the fund investing in securities or industry sectors that underperform the market as a whole or underperform other funds that do not invest with a sustainable focus.  From time to time, the fund may invest a significant portion of its assets in companies in one or more related industries or sectors, which would make the fund more vulnerable to adverse developments affecting those industries or sectors. In evaluating an investment opportunity, we may make investment decisions based on information and data that is incomplete or inaccurate. 

 

Due to changes in the products or services of the companies in which the fund invests, the fund may temporarily hold securities that are inconsistent with its sustainable investment criteria. Our investment techniques, analyses, and judgments may not produce the outcome we intend. The investments we select for the fund may not perform as well as other securities that we do not select for the fund. We, or the fund’s other service providers, may experience disruptions or operating errors that could have a negative effect on the fund. You can lose money by investing in the fund.

 

To view additional information including performance and complete fund holdings, please visit the pages found on the Putnam Sustainable Future Fund and Putnam Sustainable Leaders Fund pages at putnam.com. 

 

Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund

before investing. For a prospectus, or a summary prospectus if available, containing this and other

information for any Putnam fund or product, call your financial representative or call Putnam at 1-

800-225-1581. Please read the prospectus carefully before investing.

 

Putnam Retail Management                                                                                       AD1751510 8/21