Over the last 30 years, we have built a comprehensive responsible investment approach consisting of three pillars:
- ESG integration
Incorporating financially material ESG factors into the investment decision-making process to help mitigate risk and potentially uncover opportunities.
- Active ownership
Addressing ESG issues by actively engaging with issuers and investee companies and exercising shareholder rights.
Providing focused responsible investment strategies including exclusions, best-in-class ESG, sustainability-themed and impact investments.
Our research framework:
ESG factors are systematically integrated into our bottom-up research process for fixed income and equity issuers. We aim to develop our own holistic house view of issuers’ ESG profiles. By integrating ESG considerations with economic factors, and drawing from specialized ESG research sources, the research teams seek to identify financially material ESG factors and arrive at an independent, comprehensive view of the investment.
We seek to answer three key questions:
- What are the potential economic impact of the ESG issue and its associated effect on the issuer’s long-term growth potential, profitability or creditworthiness?
- Are ESG risks and opportunities accurately reflected in valuations?
- Is engagement beneficial to generate long-term economic value?
We view ESG analysis as a risk management tool and a potential alpha source. By integrating ESG factors into the traditional financial analysis framework, we aim to identify financially material factors which could affect the issuer’s long-term growth potential, profitability, or creditworthiness, and to assess if they are appropriately priced.
Our ESG integration process focuses on managing financial risks and identifying opportunities by including additional information in investment analysis to help inform our decision making. ESG integration does not seek to make ethical judgements and imposes no ESG-related restrictions on the investment universe. It seeks to systematically uncover ESG risks and opportunities to ensure they are appropriately priced in the investment being considered.
For further details please download our Responsible Investment Report 2020 here.