See how ESG can affect long-term value and financial performance
Our stewardship investing team aims to identify and invest in ESG leaders and/or companies measurably improving their ESG practices. They believe companies focused on ESG in conjunction with financial fundamentals have the potential to develop competitive advantages and increase their value.
CREATING A FLYWHEEL EFFECT
Data-driven, fundamental research
The goal is to identify ESG leaders or companies measurably improving their ESG practices. We use analytical frameworks and proprietary rating systems, in addition to fundamental research and engagement.
Seeking sustainable returns and stewardship
Our stewardship investment team believes companies that sustain attractive returns on capital can focus on positive ESG outcomes, leading to sustainable and steady investment returns and enabling further investments in stewardship. This may help generate a virtuous cycle, or flywheel effect, improving both profitability and stewardship over time.
Constructive dialogue and engagement
This investment team believes that working with companies to improve practices and focusing on the full set of stakeholder considerations helps them better assess management depth, risk controls, and innovation potential.
FAQs
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1 What does stewardship investing mean?
- In this context, the definition of stewardship includes the ways in which companies balance the interests of multiple investors and stakeholders, including employees, consumers, vendors and suppliers, local communities, and the environment, in their pursuit of profits. How a company incorporates ESG risks and opportunities into its corporate strategy also matters.
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2 What are material ESG issues?
- In our view, any ESG issue that has the potential to affect the financial outcomes of a company or other issuer may be considered “material.” In general, we see ESG risks as strategic business issues that can affect the long-term value of the securities we invest in on behalf of clients. Material ESG issues vary by sector. Our ESG Research Team has developed materiality frameworks and models to help our investment teams more accurately understand which ESG issues are likely to be most material to value creation at the security and portfolio level.
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3 How does the stewardship investment team access a company’s stewardship?
- The team assesses stewardship by watching how successfully company boards and management teams balance the interests of people and the environment as they do business.
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4 What is the role of ESG ratings and research?
- ESG ratings and research are integral to the ESG Research Team’s processes and function. Shared via a central collaboration tool, the ESG ratings, rationales, and commentaries help our investment teams assess the risks and opportunities they believe are most relevant to their investment process and to the individual issuers they may hold.
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5 How can integrating ESG considerations potentially reduce risk?
- We believe that ESG issues are strategic business issues that can affect the long-term value of a security. Therefore, as with any other form of risk analysis, integrating ESG analysis into the investment process may help investors identify both opportunities and sources of material financial risks, which may alter their investment thesis about a given security. Companies or issuers with high degrees of ESG risk can potentially face higher costs associated with regulation, litigation, consumer preference, or investor behavior.
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