ESG/RI strategy, oversight, and implementation is a shared responsibility at Boston Trust Walden.
The Board of Directors oversees all investment activities of Boston Trust Walden, including responsible investment strategy and implementation. Three Executive Managing Directors comprise the Executive Committee (EC), including the CIO. The Director of ESG Investing reports to and meets regularly with the CIO to establish, monitor, review, and revise RI objectives and priorities. The Director of ESG Investing oversees a seven-person in-house ESG team and is responsible for overseeing ESG research, ESG integration, ESG engagement, and proxy voting. In addition to the Director of ESG Investing, dedicated ESG staff include two senior professionals, three ESG analysts, and one ESG associate.
ESG professionals are responsible for performing ESG factor research and analysis, which is distinct from the work of traditional securities analysts. ESG research and traditional research are concurrent, often iterative, and mutually informative. Together, ESG analysts and securities analysts review a company's ESG performance and assess its financial materiality with respect to a range of possible financial outcomes (license to operate, risk reduction, operational efficiencies, competitive positioning, and new market opportunities).
This ESG materiality assessment is reviewed and affirmed by designated members of the Investment Committee, usually including the CIO or the leader of the relevant investment strategy. The recommendation is presented to members of the Investment Committee by the securities analyst, and, as needed, the ESG analyst. The Investment Committee, comprised of all portfolio managers and analysts, assesses all material factors, including ESG considerations, in its review of individual securities. The Investment Committee is ultimately responsible for ESG factor integration. Most of our investment professionals on the Investment Committee have some cross-functional experience in traditional and ESG factor research. The work of the Investment Committee results in a thorough assessment of a company's appropriateness for client portfolios.
Individual portfolio managers are responsible for constructing portfolios from the approved list, taking into consideration client-specific objectives, including ESG objectives. All Boston Trust Walden portfolio managers incorporate ESG objectives.
ESG professionals lead Boston Trust Walden's active ownership initiatives, which are detailed in the LEA section of this report.
The ESG Research and Engagement Committee (REC) also plays an important role. Chaired by the Director of ESG Shareowner Engagement, REC includes various members of the Executive Committee and Boston Trust Walden board of directors, as well as portfolio managers, securities analysts, and ESG team members. The committee reviews and discusses active ownership efforts, including company engagements and public policy priorities, and provides input on emerging or complex ESG research issues.
With respect to proxy voting, the Chair of the Proxy Voting and Shareholder Engagement Committee oversees the process from the creation of proxy voting guidelines to the casting of votes. We rely on an external proxy advisor, ISS, to provide proxy research and implement our custom proxy voting guidelines via electronic voting (which includes referring certain proxy items back to our attention). Boston Trust Walden reviews the votes populated by ISS, and, as appropriate, overrides the ISS interpretation of our proxy voting policies.