ESG criteria have the same relevance to investment analysis as traditional financial criteria, and are incorporated into the investment decision to the extent that an investor believes that they will have an impact on financial returns. Where appropriate, our investment professionals integrate analysis on both “fields” simultaneously.
Given the impact that issues like these can have on financial performance, we believe it is our fiduciary duty to integrate ESG analysis into our investment process to help pursue better investment results for our clients.
Due to the way the firm has organized its research and portfolio management functions, we don't have a chief investment officer. Instead, our investment capabilities are organized as a community of teams — each functioning as an entrepreneurial entity within an established organization. Each of our portfolio managers develops their own investment approach whereby ESG considerations are integrated into their research and decision-making processes to the extent that they believe these issues may affect the long-term success of a company and investment returns. This can manifest itself within the investment thesis or portfolio weighting for a particular security, as well as within our proxy voting and company engagement efforts.
In recent years, we have further developed our specialized, in-house ESG Research team to help our portfolio managers and analysts gather deeper intelligence on ESG topics and integrate these considerations in to the investment process. Core to our ESG integration philosophy is the belief that material ESG issues are strategic business issues, so we focus on understanding these material issues so that we can make more informed investment decisions for our clients.
We provide central ESG integration resources to portfolio teams firm-wide, and approach ESG integration as a tailored process, applied to all asset classes. We analyze ESG risks and opportunities in client portfolios, engage with companies in which we invest to discuss material ESG issues, and vote proxies on clients’ behalf to support decisions we believe will maximize the long-term value of securities. Our culture is built to support collaboration and our open-architecture “community of investors” naturally lends itself to the integration of ESG considerations.
Our ESG Research team, part of the central Investment Research function, helps portfolio managers and analysts gather deeper intelligence on ESG topics and integrate these considerations into the investment process. We believe a holistic understanding of how companies deploy capital — financial, physical, and human — is helpful in framing an investment thesis, and examining ESG issues gives us a more complete picture. ESG analysts are responsible for conducting in-depth analysis of the ESG factors most relevant to the sectors within their coverage area. They are also responsible for coordinating the proxy voting and ESG engagement strategies for the companies in their sectors with equity and fixed income analysts and portfolio managers. Our ESG team works closely with investment teams to incorporate our research into the investment process — regularly conducting in-depth portfolio reviews with investment teams to discuss holdings with the greatest ESG risks and strengths.