As an active responsible manager, ESG considerations provide another lens through which to understand a company and provide additional insights into the potential risks and opportunities inherent in the security and its sector. We believe proactive use of the various ESG tools (ESG Dashboard, QESG score, Portfolio Snapshot, Carbon Tool, Governance Tool) in combination with EOS active engagement results in a more comprehensive fundamental assessment. By integrating financially material ESG factors most relevant in each industry as a natural extension of their primary research, our teams enhance their judgment of relative sector positioning, stock selection and investment decision-making.
For example, proprietary ESG research has been incorporated into our Federated Hermes Strategic Value Dividend fund's long-standing investment process as a complement to their fundamental cash-flow and balance-sheet focused analysis. Direct fundamental and ESG engagement with corporate issuers has helped them understand a broader array of the risks a company must navigate in order to sustain its business and dividend stream over the long run. Advanced Federated Hermes portfolio analytics measure engagement progress based on quantifiable milestones providing a proof statement of forward looking and intentional ESG integration which aids their search for sustainable dividends.