We believe that ESG is simply part of good business practice and we look at the regard a company’s management team has for it.
The main areas that we cover within our research process include:
- Environment – sustainability management practices and carbon emission policies
- Social – this depends on the company but will include occupational health and safety standards, and labour practices
- Governance – board structure, operational risk management, and directors and executive remuneration.
In the same way that there will be negative economic consequences for those businesses that cut corners around ESG issues, we also believe that there are positive economic benefits for those businesses that are proactive and progressive when it comes to ESG.
Not having a strong focus on ESG is, in our view, simply bad business, which leads to poor outcomes for investors.