Using ESG to Prepare Your Portfolio for Climate Change

Tuesday, November 30, 2021

Using ESG to Prepare Your Portfolio for Climate Change

Science suggests, with increasing confidence, that climate change will impact each person, each company, and each country—albeit in different ways.

At Miller/Howard, we ask these questions of the companies we invest in, and of ourselves:

  • How does a company identify its risks?
  • What are its blind spots?
  • What are its strategies for the short and long term?

We are committed to managing the risks we see to ensure that our portfolios’ risk exposures suit our clients’ risk appetites.

Miller/Howard’s Climate Change Risk Management Approach

We assess and manage our climate-related risks and opportunities through a multi-level approach:

  1. Firm-level —Our strategy encompasses and benefits all of Miller/Howard, from executive and board oversight to participation from each department.
  2. Portfolio-level —Using quantitative and qualitative analysis, we ensure that our portfolios have suitable levels of risk for our philosophy and goals.
  3. Company-level —Once a company enters our portfolios, we vote all proxy ballots according to our ESG Policy. We also become “active owners” through our shareholder advocacy program, in which we engage company management on topics such as disclosure of emissions and science-based emissions reduction targets, Paris Accord-aligned lobbying activities, and analyze how a company might fare under various future climate scenarios.

We strive to provide Sustainable Income Opportunities®  using our Guiding Values as our compass.

Miller/Howard's Guiding Values
Exemplary Governance & Corporate Citizenship
Sustainability, Equity & Inclusion
Strong Disclosure & Resource Management
Responsible Climate Change Approach

Just as we push companies to be better—positioning for long-term profitability and accountability to their investors—we constantly assess our own process. To this end, in 2021, we updated our Guiding Values to include 'responsible climate change approach' as a fourth pillar. Previously, we considered a company's climate change strategy within the context of resource management, disclosure, environmental risks, and sustainability. However, we feel the time has come to prioritize this commitment and recognize it as a unique pillar.

The Miller/Howard Climate Change Working Group launched in 2020

In recognition of the systemic risks posed by climate change, Miller/Howard launched an internal Climate Change Working Group (CCWG) in 2020. CCWG is a cross-departmental initiative that reports directly to Miller/Howard’s president, and is comprised of representatives from all departments. The group considers physical and transition risks associated with climate change, takes an expansive and critical look at Miller/Howard’s existing policies and practices, and provides forward-looking insights that can support us in our goals.

Miller/Howard’s multi-decade commitment to ESG provided a solid foundation, from which we could refine a more fulsome program and build on existing capacities, successes, and talents. We chose to distinguish “climate change” as a unique consideration that, while closely tied to environment, is not equivalent in concept or implications.

Additionally, the CCWG has worked to:

  • Consolidate existing policies and practices that relate to climate change into one cogent, clear strategy, to reduce redundancies and increase the efficiency and efficacy.
  • Look for gaps, opportunities, and blind spots.
  • Support greater risk assessment as well as new insights, ideas, and adaptations.

We encourage all to use this information to reflect on your own strategy and preparation, whether it’s in service of your clients or your own investments and financial goals. Miller/Howard stands at the ready to partner with those seeking our Sustainable Income Opportunities®.

Read Miller/Howard’s full Climate Change Risk Management Strategy ►


Nicole Lee provides operational and strategic leadership to Miller/Howard’s ESG team. Nicole’s ESG research on portfolio holdings and candidates is integral to the firm’s investment process. Prior to joining the firm in 2014, she worked for several years as a clinic coordinator and educator for a nonprofit health organization, during which time she also developed and conducted training programs at two local universities. Nicole received a BS in Sociology from Southern Utah University, after which she studied public health at Westminster College in Utah.

INVESTMENT PRODUCTS: ARE NOT FDIC INSURED - MAY LOSE VALUE - ARE NOT BANK GUARANTEED

Opinions and estimates offered constitute Miller/Howard Investments' judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. Nothing stated herein, including the mention of specific company names, should be construed as a recommendation to buy, hold, or sell any security, sector, or MLPs in general. To receive a list of all recommendations for the previous year, please email compliance@mhinvest.com. All investments carry a certain degree of risk, including possible loss of principal. It is important to note that there are risks inherent in any investment and there can be no assurance that any asset class will provide positive performance over any period of time. The material may also contain forward-looking statements that involve risk and uncertainty, and there is no guarantee they will come to pass.

Common stocks do not assure dividend payments. Dividends are paid only when declared by an issuer’s board of directors, and the amount of any dividend may vary over time. Dividend yield is one component of performance and should not be the only consideration for investment.

The information above is from sources deemed to be reliable and is provided strictly for the convenience of our investors and their advisors. These materials are solely informational. Legal, accounting and tax restrictions, transaction costs, and changes to any assumptions may significantly affect the economics of any transaction.

The information and analyses contained herein are not intended as tax, legal, or investment advice and may not be appropriate for your specific circumstances; accordingly, you should consult your own tax, legal, investment, or other advisors, at both the outset of any transaction and on an ongoing basis, to determine such appropriateness. Any investment returns — past, hypothetical, or otherwise — are not indicative of future performance.

Investment Decisions: Do not use this report as the sole basis for investment decisions. Do not select an allocation, investment discipline, or investment manager based on performance alone. Consider, in addition to performance results, other relevant information about each investment manager, as well as matters such as your investment objectives, risk tolerance, and investment time horizon.

The returns on a portfolio that utilizes environmental, social, or governance (ESG) criteria for stock selection may be lower or higher than portfolios where ESG factors are not considered, and the investment opportunities available to such portfolios may differ.

Past performance does not guarantee future results.

© 2022 Miller/Howard Investments.

DISCLOSURE

INVESTMENT PRODUCTS: ARE NOT FDIC INSURED - MAY LOSE VALUE - ARE NOT BANK GUARANTEED

Opinions and estimates offered constitute Miller/Howard Investments' judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. Nothing stated herein, including the mention of specific company names, should be construed as a recommendation to buy, hold, or sell any security, sector, or MLPs in general. To receive a list of all recommendations for the previous year, please email compliance@mhinvest.com. All investments carry a certain degree of risk, including possible loss of principal. It is important to note that there are risks inherent in any investment and there can be no assurance that any asset class will provide positive performance over any period of time. The material may also contain forward-looking statements that involve risk and uncertainty, and there is no guarantee they will come to pass.

Common stocks do not assure dividend payments. Dividends are paid only when declared by an issuer’s board of directors, and the amount of any dividend may vary over time. Dividend yield is one component of performance and should not be the only consideration for investment.

The information above is from sources deemed to be reliable and is provided strictly for the convenience of our investors and their advisors. These materials are solely informational. Legal, accounting and tax restrictions, transaction costs, and changes to any assumptions may significantly affect the economics of any transaction.

The information and analyses contained herein are not intended as tax, legal, or investment advice and may not be appropriate for your specific circumstances; accordingly, you should consult your own tax, legal, investment, or other advisors, at both the outset of any transaction and on an ongoing basis, to determine such appropriateness. Any investment returns — past, hypothetical, or otherwise — are not indicative of future performance.

Investment Decisions: Do not use this report as the sole basis for investment decisions. Do not select an allocation, investment discipline, or investment manager based on performance alone. Consider, in addition to performance results, other relevant information about each investment manager, as well as matters such as your investment objectives, risk tolerance, and investment time horizon.

The returns on a portfolio that utilizes environmental, social, or governance (ESG) criteria for stock selection may be lower or higher than portfolios where ESG factors are not considered, and the investment opportunities available to such portfolios may differ.

Past performance does not guarantee future results.

© 2022 Miller/Howard Investments.