ESG issues are integrated in the investment process at all three levels: screening, analysis and portfolio construction.
By applying our "Castle, Moat and Goldmine" investment philosophy to the companies we research, we implicitly look at ESG issues:
- The Castle represents the strength and quality of business, and the integrity of the management team. We could not invest in a company unless we understood how well they comply with governance best practices.
- The Moat represents the quality of the business franchise, and its long term sustainability. Any research to this must automatically take into account the sustainability of that franchise in the face of changing global conditions, among others climate change, resources scarcity.
- The Goldmine (or cash generation) takes into account the risk of this cash flow being negatively impacted by ESG issues, such as fines, costly legislation, etc.
The Castle, Moat Goldmine philosophy is applied across all or our equity approaches.