Positive Alignment: Demonstrating Care for Creation through Environmental Stewardship

Beyond our biblical mandate to steward creation, there are reasons that wise investors should care about how companies are using and impacting our natural resources.

In our May 2023 update, Beacon Wealth Consultants’ Chief Investment Officer Hillary Sunderland, CFA®, CKA® discusses one of our areas of positive alignment: care for creation.

Using several examples from agriculture and pharmaceuticals, Hillary explains why care for creation is one of the things we assess as part of our investment due diligence and why seeking out companies that model good environmental stewardship is not only good for investors but can have a positive impact on some of the world’s poorest communities.

Watch this month’s video to learn more!

As always, if you have any questions about your financial situation, please reach out to your wealth advisor and we would be glad to address them for you. Thank you for being a valued client of ours.


Interested in other ways we look for positive alignment? Check out these previous commentaries!


Full transcript below.


Hi, my name is Hillary Sunderland and I’m the Chief Investment Officer of Beacon Wealth Consultants and LightPoint Portfolios. This is your May 2023 monthly update.

When you invest with us, we seek to invest your assets in companies that you can be proud to own, those that are in alignment with your faith values. And while this means that we often talk about what we don’t invest in, or our exclusionary screens, it’s equally important to talk about the positive screens on our portfolios as well. This year I’ve been walking through the five different areas we emphasize in terms of positive alignment, and this month I want to address what we mean by demonstrating care for creation.

From a faith perspective, we believe that from the beginning, God placed humans in a position of responsibility over his creation, we’re to be stewards of all that he’s entrusted to us. And as such, we are to manage resources in a way that sustains, protects, and enhances the lives of others.

Now, in some circles when you talk about caring for the environment, it can quickly dissolve into political flashpoints or be construed as worshiping creation instead of the creator. However, when I say we are investing with the environment in mind, I’m really speaking about how we can manage resources in such a way that the value of assets is enhanced over time, or at least does not deteriorate through neglect or mismanagement. And as much as people may want to separate the economy from the environment and say that one shouldn’t be relevant to the other, it’s important to remember that by definition, economics is the study of how individuals, businesses, and governments choose to allocate resources.

And because we are dealing with finite resources, economics and the environment are inextricably linked. So as you’re going to see in this short video, a company’s environmental impact can be financially material, and that is why we believe it is important to consider environmental factors as part of the investment process.

So I’m going to start with an example from the agricultural industry. Modern agriculture uses fertilizer extensively in the production of food and is heavily dependent on phosphorus, which is a key component of fertilizer. Now, phosphorus is derived from phosphate rock and is a non-renewable resource. According to scientists at M.I.T., the world’s phosphate production is projected to reach its maximum sometime before the year 2040. However, the demand for fertilizer is projected to continue to rise as the global population increases. And this is going to create your classic supply-demand and balance and will likely lead to pressures in food.

Over the last year, given Russia’s invasion of Ukraine, we’ve been living through a period of significant food inflation worldwide. And some of these inflationary pressures resulted from a supply and demand imbalance in fertilizer because Russia was a key exporter of fertilizer. So we have already had a foretaste of the food security issues that can result.

I think this example helps to illustrate why we should be asking companies about their environmental sustainability programs. This isn’t about advancing a political agenda. It is about asking good questions that are highly likely to affect a company’s bottom line.

So the questions we should be asking when investing in companies related to the agricultural sector are things like, if a company doesn’t have an adequate environmental sustaining program in place, how will it be able to defend its profit margins as fertilizer prices rise? Or what steps is the company taking to reduce its dependence on mined phosphates or to use fewer natural resources?

And even from the innovation side, what companies are working to develop new technologies to secure the global food supply and are these good investment opportunities as we look to the future for a solution. Overall, we view these as fundamental questions that could significantly impact a company’s operations and profits in the future, which is a key reason why we seek to tilt our portfolios toward companies who are managing environmental risks like this better than industry peers.

Let’s consider another sector: healthcare. Well, why would it be important to assess the environmental sustainability of a pharmaceutical company? Medicinal plants and fungi are fundamental to modern pharmacology. Biodiversity, which is the variability among living organisms is important for the development of new medicines. More than one third of modern drugs are derived either directly or indirectly from natural products such as plants, animals, and microorganisms. And between 60% to 80% of antibiotics and anti-cancer drugs originate from chemical compounds found in the natural world.

So for example, the most well-known natural source chemotherapy drug in the United States, Paclitaxel, is derived from the Pacific yew tree, which is shown here on the left. And then on the right is a picture of Madagascar Periwinkle, a plant found only on the island of Madagascar, and it contains two alkaloids that are used to treat leukemia and Hodgkin’s disease.

The issue here is that biodiversity is in dramatic decline. Around 1 million animal and plant species are threatened with extinction, many within decades due to factors such as pollution and habitat destruction. And this presents a real challenge to the pharmaceutical industry because the pharmaceutical industry relies on access to natural compounds to create drugs and to discover new treatments or cures for diseases. So to reduce the risks this presents to their operations, some pharmaceutical companies have been putting practices into place to minimize their potential negative impacts on biodiversity within their supply chain and are sourcing their materials in a sustainable way.

So overall, this is just another example of when we talk about tilting our portfolios toward companies whose practices are considered more sustainable than those of industry peers or are on the path to a more sustainable practices. It is because we believe it’s a way to reduce risks for our investors and also to gain access to companies who are seeking to invest in solutions for the future.

Lastly, but certainly not least, when we fail to care for the environment in which we live, human suffering is often the result, and it’s tends to affect the poorest people in the world. So just to give you a few statistics here, consider that air pollution is so bad in parts of India that in 2021, breathing Delhi’s air for a single day was equivalent to smoking 10 to 15 cigarettes in a single day.

Also, consider that billions of people worldwide, especially the world’s poorest, rely on healthy oceans as a source of jobs and food. As of 2021, there are at least 363 billion pounds of plastic pollution in the world’s oceans. And it’s estimated there will be more plastic in the ocean than fish by weight by the year 2050. And I talked about clean water on webinars before, but again, just to reiterate that one in four people in the world do not have access to safe drinking water.

So while statistics like these on the environmental impact of companies can be sobering, it also presents us with an opportunity to use investors’ capital to be part of the solution and set a part of the problem as we seek to earn profits in a way that does not harm others. So in addition to some of the themes I spoke about earlier, additional positive alignment themes in our LightPoint Portfolios from an environmental perspective include managing water scarcity, ensuring efficient and equitable access to clean water sources, responsibly disposing of waste, exhibiting sustainable use of natural resources, and the use and/or production of more efficient or clean energy sources.

So overall, I hope these examples gave you a better understanding of one of our positive alignment screens. And as always, please reach out to us with any questions you may have.


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