Auscap Asset Management Limited (Auscap) recognises that ESG issues can affect the long-term profitability of companies which can in turn affect their share price and the performance of Auscap’s funds. Accordingly, Auscap believes that considering ESG factors within investment decision-making and ownership practices provides insight into prospective investments from both a risk and opportunity perspective. We think this is also consistent with our fiduciary duty. Auscap includes an assessment of ESG factors for the purpose of selecting, retaining or realising any investments in our funds.
ESG issues are incorporated into investment analysis and decision-making for Auscap’s funds, which may involve the analysis of:
- ESG factors (including risks) the investment is exposed to;
- the materiality of ESG factors, taking into account the relevant industry and individual company exposure;
- the impact material ESG factors may have on the value, earnings and future prospects of the investment; and
- how well the ESG factors are being managed, and therefore how likely the possible impacts are to occur.
As a value-based, long short equities manager, with the aim of preserving capital and generating long-term compounding returns for investors, Auscap takes the view that ESG factors are relevant to the investment process as they:
- may be considered as part of an overall assessment of a company’s risk management framework; and
- impact the intrinsic value of a company.
Such factors form part of the fundamental analysis undertaken by the Company when identifying investment opportunities.