Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.
At Royce, our ultimate goal in all of our activities is to deliver the best investment outcomes for our clients. As fiduciaries of our client’s assets, we have always had exacting standards around principles of governance and sustainability in the evaluation of the companies in which we invest as they have proven to have a material impact on business risk and corporate performance. Importantly, evaluating and incorporating ESG factors in investment analysis offers crucial insights into the opportunities and risks for long term, fundamental investors such as us and inherently provides for better informed decision making.
Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]
Historically ESG integration has been focused on exclusionary or negative screening, which aims to avoid securities based on ESG criteria. We believe a better way to invest is to take a holistic view that seeks to fully integrate ESG factors into the investment research process. We do not look to exclude companies or sectors from our universe, but rather aim to analyze and monitor the ESG issues that may have material impact on the financial performance of our portfolio companies in the near and long term. By identifying and incorporating relevant ESG factors into our research process, we can potentially minimize the impact of negative ESG related developments and uncover investment opportunities that may benefit from ESG related trends.