Stance Capital Launches New Democracy Screen

Filter Will Penalize Consideration of Companies That Donate to 2020 Presidential Election-Denying Politicians

BOSTON--(BUSINESS WIRE)--Stance Capital, LLC (Stance), an investment firm specializing in quantitative environmental, social, and governance (ESG) asset management and research, announced today it has launched an additional screening process reducing the likelihood of consideration of publicly traded companies from its portfolio that make corporate donations to 2020 presidential election-denying politicians. This screen applies to Stance’s flagship SMA strategy and to the Hennessy Stance ESG Large Cap ETF (STNC).

The screen allows Stance Capital to identify companies that make donations directly to election-denying politicians or political action committees (PACs) based on a scoring system. Politicians are categorized as “anti-democracy” depending on how they voted to certify or responded to the election. PACs are computed by weighing the politicians they have contributed money to.

“We at Stance believe it's not in shareholders’ best interests to have corporate money fund election-denying politicians,” said Portfolio Manager Bill Davis. “We think a healthy and functioning democracy is good for shareholders. Therefore, we are introducing these red-flag screens that will identify and reduce the likelihood of being in our portfolio, members of the S&P 500 Index that are significant donors to election denying politicians.”

A company’s score is calculated by reviewing the proportion of its total donations going to election denying candidates. Companies with more than 5% of their total election spending going to election deniers receive a red flag. Red flags in the Stance investment process reduce the score of a given company. Companies on the red flag list are less likely to be considered for the portfolio.

“Our goal is to align capital with our shareholder’s values,” said Portfolio Manager Kyle Balkissoon. “As ESG investors, we’re looking at this from a governance standpoint. The rule of law is the foundation of capitalism and not having democracy subverts all of that. So, the institutions which modern capitalism is built upon would fail, and that's why we think this is essential. Companies that are effectively allocating their political dollars to dispose of democracy, we believe, are doing a disservice to investors.”

The data in the screening process is supplied by OpenSecrets. The list of red flag companies will be reevaluated every six months as the data is updated.

About Stance Capital, LLC

Stance Capital was formed in July of 2016 with a track record that predates firm launch. Founding partners Bill Davis and Kyle Balkissoon strive to prove the point that with proper portfolio construction, values alignment can be a free option for investors. Stance has accomplished this through a three-part approach to portfolio construction: ESG factor assembly, machine learning model, and risk optimization. Learn more at stancecap.com.