Sycomore AM integrates ESG criteria across all its investments, according to the following 3-step approach:
1. Each company’s beta is automatically adjusted in our valuation model according to the stock’s ESG and fundamental analysis. It can be adjusted from -20% to +20% depending on the risks and opportunities we identify in our analysis.
2. If a company has a poor ESG and fundamental analysis score, we will require a higher margin of safety.
3. ESG and fundamental analysis has a direct impact on portfolio construction as it adjusts the target weight of each stock in the portfolio.
For our SRI funds, a specific portfolio construction tool allows us to screen companies in our initial investment universe that respect all our exclusion and selection criteria.