COPPIN COLLINGS LTD does not run a quantitative evaluation of ESG factors on the investment results of the fund. However, ESG factors play an overriding role in both asset allocation decisions (political/regulatory issues) and in stock selection decisions (corporate governance issues and other ESG factors). Furthermore, COPPIN COLLINGS LTD is known to zero weight some of the largest stocks in the benchmark due to ESG concerns despite potential impact on performance. This can happen when a stock with a large weight in the index is prohibited by COPPIN COLLINGS LTD ESG investment guidelines but is favored by other investors in the peer group. One example could be alcohol/brewery producers. These stocks are considered “defensive” due to typically high dividend yield and stable profit margins and they attract large inflows especially during economic down cycles.
Also, it is worth mentioning that the COPPIN COLLINGS LTD team, both at COPPIN COLLINGS LTD and previously, had never had a loss of investment due to ESG issues (e.g. the team avoided the Yukos disaster in Russia) and are always cognizant of the ethical aspect of investing. COPPIN COLLINGS LTD voluntarily became a signatory to UN PRI.
ESG is not merely about performance. COPPIN COLLINGS LTD’s view is also a question of morality which sometimes may lead to underperformance against the index or peer group over time, albeit short periods.