The positions taken by the fund are based on fundamental equity research (bottom-up) coupled with macroeconomic research (top-down) and a time horizon of 12 months or more. This research includes ESG analysis of potential investments alongside traditional indicators of risk and opportunity.
An important part of the research process is the opportunity to meet with company representatives. Carve not only holds frequent meetings prior to initial investments are made but also over the period it is invested. When interacting with companies Carve is explicit in that it sees ESG-factors as important value drivers and as a key determinant of a comany's fundamental value. ESG issues identified could form the basis of a decision to short a certain stock.
Most meetings take place in Scandinavia where Carve has greatest influence and opportunity to engage in dialogue.
Examples of where ESG factors have influenced the fund's investment decisions and prevented it from going long and/or made it short a stock are:
- Deforestation in China
- The risk of child labour in Pakistan
- Large remuneration packages for management
- Not allowing staff to organise/prohibiting labour unions
- Inappropriate governance practices