Our primary consideration of ESG issues takes place within our investment process by our sector-focused research analysts. Our research team is organized by areas of industry sector specialization and our analysts are responsible for providing essential insights into industry trends and company-specific considerations, which may include certain ESG issues deemed material and relevant to the evaluation of sustainable earnings trends, sentiment, and valuation. Our analysts are also expected to provide timely insights on key risk considerations at a company-specific and industry level which may also include ESG-related considerations and events. ESG is factored into the “Fundamentals” component of our Financials, Technicals, and Valuations framework, which runs throughout our investment process. It is based on independent internal research and provides a consistent, comparative framework to evaluate all investment opportunities. To ensure they appropriately integrate ESG factors into their investment theses, the analysts of our largest boutique, supplement their own fundamental research with insights from third-party ESG research providers.
We conduct frequent discussions with corporate management teams for both current and prospective investments. Where appropriate, analysts will raise any concerns about ESG issues (along with any other fundamental concerns) during meetings with management. The company responses impact our opinion of the company's outlook.
Prior to issuance, the focus of our research is more focused on identifying potential ESG issues and evaluating how they impact the investment case for a particular company. If ESG issues are discovered, we determine the extent to which we will be compensated for the risks created by these issues or if we would avoid the investment. Following issuance and our investment, the focus of our monitoring shifts to ensuring the issuer is fulfilling the terms of the agreement and not engaging in any activities (ESG or otherwise) that could jeopardize the value of our investment.
Our analysts obtain the information necessary for his/her independent analysis from a variety of sources, including, but not limited to company information available on websites and through regulatory filings, meetings and calls with management teams, industry conferences and publications, media reports, formal and informal research from and dialogue with sell-side analysts, direct dialogue with and publications from the credit rating agencies, industry contacts, and various internal resources (economic team, legal counsel, analysts in other asset classes, etc.). In addition, analysts have access to MSCI Research and ISS-Ethix reports, from which ESG related data can be extracted. Over 6,000 companies are covered in the MSCI universe and ISS-Ethix researches and screens more than 20,000 debt and equity issuers worldwide. A sizable portion of our research data and information is available at no cost through disclosures from the company or as part of the service package provided by sell-side firms. Information from MSCI and the credit rating agencies is paid for directly as part of a service contract.