The Top Eco-Brands

Financial Services: Portfolio 21

To Investment Company, Environmental Risks Just as Bad as Economic Risks

By Published on .

The idea of investing only in the stocks of companies with positive environmental policies came to Portfolio 21 founder Carsten Henningsen when he was a boy growing up in Berkeley, Calif., and his parents gave him some Mattel stock for his birthday.

Portfolio 21 portfolio
Leading the way
  • Considers only environmentally responsible companies
  • Uses investment process to 'influence corporate behavior'
  • Cites 'biocapacity limits' in promoting dialogue for change
His interest in the stock market, combined with a love of nature and travel, led him in 1982 at the age of 22 to launch Progressive Securities, a Portland, Ore.-based investment advisory firm that sinks money only into companies that have passed a strict test of environmentally responsible practices. The company's mutual fund, with $290 million in assets, regularly outperforms the S&P 500 and other major stock indexes.

"Our philosophy is that companies applying higher environmental standards ultimately gain a competitive advantage," Mr. Henningsen says. "Companies that began lowering their dependence on fossil fuels 10 years ago are in better shape today, and this is true for many environmental issues."

Mr. Henningsen was drawn to a green-oriented investment approach early on, he says, when he saw that multinational companies can sometimes be more powerful than governments. "I thought maybe I could use the investment process to influence corporate behavior," he says.

Starting the company on a shoestring in his home in Eugene, Ore., Mr. Henningsen did his own research on companies, cold-called potential investors and moonlighted as a jazz DJ on a local National Public Radio station.

Leader in field
Employees, including investment professionals and analysts, gradually came aboard, and in 1986 the company relocated to Portland, touting its commitment to stock investments in socially and environmentally friendly companies in local print ads.

Portfolio 21 launched its mutual fund in 1999, and today the 12-person Portfolio 21 Investments, with Mr. Henningsen as chairman, is one of the leaders in a field that includes more than 170 U.S. mutual funds that base investments on companies demonstrating environmental responsibility.

The Portfolio 21 mutual fund is invested in about 115 companies that pass its test, weighing factors such as minimizing environment impact from manufacturing, using resources efficiently, and smart use of packaging and recycling.

"We have never done much advertising, but we have had a lot of media exposure as people found us," says Mr. Henningsen, 48, a frequent guest on national TV and radio shows.

Two years ago, Portfolio 21 hired Gotomedia, San Francisco, to redesign its website and Egg, a Seattle-based ad agency specializing in clients with sustainable brands, to create all other advertising, collateral, and media planning and buying. Print ads run periodically in magazines with an environmental focus, such Mother Jones and Utne Reader.

Portfolio 21 has used Google AdSense to promote its brand online since 2006, with placement by Seattle-based Pointit. This year, the company added banner advertising on financial websites and 10- and 15-second national spots on NPR. A blog is also in development.

Overcoming economy
Investments come through financial institutions, so it's impossible to track individual investors, but e-mail traffic suggests that a growing number of consumers support the company, as well as many portfolio managers, Mr. Henningsen says.

The stock market's performance may have been sluggish lately, but he says Portfolio 21's investing principles are solid in any economy.

"We don't see a difference between risk as defined by the economy and environmental risk. ... Companies that contribute to climate destabilization and greenhouse-gas emissions are liabilities," he says.

By his yardstick, Apple is at great risk, despite the cachet of its brand and its high-flying stock price. Apple has never made Portfolio 21's cut because its products don't meet the investment company's recycling standards, Mr. Henningsen says.

"It doesn't matter how fashionable they are," he says. "Companies that don't support environmental responsibility do not earn our investment."
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