We believe businesses that are successful over the long-term incorporate and manage all relevant factors whether they be economic, financial, operational, sustainability, or governance related.
Where material to an investment opportunity and consistent with an investment strategy’s goals, we consider sustainability and/or governance factors that we believe may influence risks and rewards as part of our research and decision-making process.
While sustainability and governance insights inform our view of a business, they are considered alongside other factors and are not the sole determinants of an investment decision.
Research Framework
Sustainability research is conducted by each member of the investment team with specialist support from a dedicated Governance & Sustainabilitv Research Analyst.
We utilize Sustainability Accounting Standards Board (“SASB”) Standards as a framework to help identify the most financially material risks and opportunities that should be considered based on the company’s industry and operational footprint.
We assess both the company’s exposure to issues and the company’s management or response, rating each on a 1 to 5 scale.
Rating System
We analyze each of the SASB key issues and aggregate an overall score.
A Rating: we view the company as leading in how they are addressing sustainability risks facing their business and have taken significant steps to mitigate or manage potential risks/opportunities.
B Rating: we view the company neutrally with respect to their exposure and/or management of sustainability risks they are exposed to.
C Rating: we view the company as lagging their peers and potentially under-allocating in their response to financially material sustainability risks.
Ongoing Monitoring
Individual risk ratings help us monitor exposures to specific sustainability issues within a portfolio.
Overall company risk ratings help us target where our engagement efforts should be best spent.
Ratings are updated annually or as frequentlv as necessary as new information becomes available.
The Governance & Sustainability team updates in coordination with the relevant Research Analyst.
