We believe that ESG issues play an important role in the global economy, both from a business and investment perspective. Loomis Sayles embraces its duty to act at all times in our clients' best interests, and we believe that ESG issues impact our goal of achieving superior, risk-adjusted returns. We understand that environmental, social, and corporate governance practices may present risks that need to be evaluated, and we analyze these risks as part of our fundamental research process. With respect to integration, we expect our investment professionals to consider all available macro, fundamental and quantitative research insights, including those related to ESG. With respect to screening, Loomis Sayles does not impose any ESG restrictions or exclusions on the investment process. Any screening is mandated by our clients' guidelines or by regulation.
Our research analysts take into account a wide range of investment criteria, including potential ESG-related risks and opportunities that could impact the desirability and suitability of investments. The analysts strive to develop a thorough understanding of the risks and opportunities associated with an issuer’s management strength and strategy, governance, and use of human and natural resources, as well as regulatory and political risks. These factors are critical to evaluating the long-term sustainability of an issuer, its profitability and, ultimately, its expected contribution to client portfolios.
Investment risk (including ESG related issues) is continuously monitored by the portfolio managers ("PMs") and the Chief Investment Officer ("CIO") through the various reports and analysis, as well as through the reports and stress test scenarios produced by Quantitative Research and Risk Analysis and the research teams. The reports generated by these risk measurements are used by the CIO for the overall oversight of the active investment strategies offered by Loomis Sayles. The CIO oversight also forms the basis for discussions during the Investment Risk Review Committee meetings.
The Investment Risk Management Group (“IRM Group”) was created to aid the CIO in oversight of the numerous products we currently offer. This group is led by the Chief Investment Risk Officer ("CIRO"), who has eight team members. Reporting directly to the CIO, it is the responsibility of the CIRO to independently monitor the contributions to risk and return from various sources such as: market risk, credit risk, sector risk, interest rate risk, currencies, liquidity, counterparty exposure and securities, ESG exposures and is now integrating climate data, on both an absolute and relative basis. In addition, the CIRO will lead the CIO & Investment Risk Review effort, in understanding strategy, risks, implementation, processes, and sources of dispersion for each product.
In addition, Loomis Sayles has designed and implemented a proxy voting policy in the best interests of its clients, and that policy takes into consideration ESG matters.