Avenir became a signatory to the UN Principles of Responsible Investment (PRI) in 2017 and has adopted an Environmental, Social and Governance (ESG) policy. Avenir recognises that ESG issues have the potential to impact investment risks and returns and that considering these issues alongside traditional factors in investment decision making can improve long term risk-adjusted returns.
Avenir follows a long-term and concentrated investment strategy which increases the impact that ESG issues are likely to have on a company’s underlying value, both positive and negative. Consequently, Avenir believes that ESG considerations are integral to the investment process to effectively manage investments for the long-term and deliver superior long-term investment results for our clients. ESG factors are explicitly considered and assessed as part of the Avenir investment decision-making process.
In addition to ESG issues forming a core component of Avenir’s investment process, Avenir is also able to draw on a dedicated ESG Specialist within the Fidante Partners business. Fidante’s ESG Specialist provides Avenir with access to knowledge and expertise in ESG integration and active ownership practices. As ESG integration continues to evolve, access to this specialist knowledge enables the Avenir investment team to continuously strive towards best-practice.
Avenir recognises that ESG issues are not necessarily static and are likely to change over time and maintains a log of ESG issues for companies in the portfolio, adverse change in which can result in removal from the portfolio. The team member assigned to the portfolio company closely monitors ESG issues that arise via weekly alerts that scrape web pages, company filings, newspaper articles or blogs relative to that company. Issues that have the potential to affect the investment thesis are captured and rated by materiality in a database (‘Avenir ESG Log’). Avenir is guided by the Sustainability Accounting Standards Board (SASB) Materiality Map® to determine issues that are likely to affect the financial condition or operating performance of companies within an industry.
Material issues are discussed with the team, and, if deemed sufficiently important, raised with the company directly and this engagement is documented in the ‘Avenir ESG Log’ and ISS Engagement module. ESG issues are discussed at least quarterly alongside the portfolio companies' quarterly results to determine to what degree they may affect the investment thesis and what action, if any, Avenir should take.