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Fairpointe Capital, LLC

PRI reporting framework 2020

You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities

ESG incorporation in actively managed listed equities

Implementation processes

LEI 01. Percentage of each incorporation strategy

01.1. Indicate which ESG incorporation strategy and/or combination of strategies you apply to your actively managed listed equities; and the breakdown of your actively managed listed equities by strategy or combination of strategies.

ESG incorporation strategy (select all that apply)

Percentage of active listed equity to which the strategy is applied — you may estimate +/- 5%
100 %
Total actively managed listed equities 100%

01.2. Describe your organisation’s approach to ESG incorporation and the reasons for choosing the particular strategy/strategies.

Fairpointe Capital integrates structured ESG analysis with a bottom-up, fundamental valuation-based approach to investing.  

 

01.3. If assets are managed using a combination of ESG incorporation strategies, briefly describe how these combinations are used. [Optional]

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LEI 02. Type of ESG information used in investment decision (Private)


LEI 03. Information from engagement and/or voting used in investment decision-making (Not Completed)


(A) Implementation: Screening

LEI 04. Types of screening applied

04.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by

Description

Negative screening is one aspect of our ESG research process.  We utilize negative screening to exclude certain indusries and products from our portfolio.  For instance, energy is a sector we avoid.   We also avoid gun manufacturers, tobacco and gambling products.  

Screened by

Description

We use positive screening methods to focus on U.S quality companies then conduct qualitative research on a company's product, activity and ESG practices.

Screened by

          We utilize MSCI's screens from time to time.
        

Description

Occasionally, we will use a MSCI screen for idea generation.  However, a company must have a favorable rating from MSCI.  We then conduct our own ESG analytical research to be sure that we agree with MSCI's assessment

04.2. Describe how you notify clients and/or beneficiaries when changes are made to your screening criteria.

Fairpointe's ESG Equity Strategy's composite was created on January 1, 2018.  In our view, the process is still evolving and we are constantly improving our criteria.  We have not made significant changes to the process, which would warrant notifying clients.  In the event that a material change is made, we would notify clients in writing.


LEI 05. Processes to ensure screening is based on robust analysis

05.1. Indicate which processes your organisation uses to ensure ESG screening is based on robust analysis.

05.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your ESG screening strategy.

05.3. Indicate how frequently third party ESG ratings are updated for screening purposes.

05.4. Indicate how frequently you review internal research that builds your ESG screens.

05.5. Additional information. [Optional]

Fairpointe's investment professionals meet weekly to review existing holdings and  discuss potential new holdings for the portfolio.  There is a ESG sub-committee, which also meets separately on a weekly basis, and sometimes more often, to discuss ESG factors for portfolio holdings.  


LEI 06. Processes to ensure fund criteria are not breached (Not Completed)


(B) Implementation: Thematic

LEI 07. Types of sustainability thematic funds/mandates

07.1. Indicate the type of sustainability thematic funds or mandates your organisation manages.

07.2. Describe your organisation’s processes relating to sustainability themed funds. [Optional]

We do not manage a specific themed strategy.  However, we incorporate numerous themes into our portfolio including climate change, diversity and socially responsible company.  For instance, we exclude gun manufacturers, tobacco and fossil fuel companies. While we engage with company management teams regarding all aspects of their sustainability work, as a firm, Fairpointe is especially passionate about diversity on boards and the C-Suite, independence and pay for performance.


(C) Implementation: Integration of ESG factors

LEI 08. Review ESG issues while researching companies/sectors

08.1. Indicate the proportion of actively managed listed equity portfolios where E, S and G factors are systematically researched as part of your investment analysis.

ESG issues

Proportion impacted by analysis
Environmental

Environmental

Social

Social

Corporate Governance

Corporate Governance

08.2. Additional information. [Optional]

Today, we look at all new ideas from an ESG lens.  We look at ESG factors from a bottom-up perspective, incorporating both outside sources and our own due diligence.  We utilize services such as SEC filings and third party ESG services to aid in our research process.     


LEI 09. Processes to ensure integration is based on robust analysis

09.1. Indicate which processes your organisation uses to ensure ESG integration is based on robust analysis.

09.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your integration strategy.

09.3. Indicate how frequently third party ESG ratings that inform your ESG integration strategy are updated.

09.4. Indicate how frequently you review internal research that builds your ESG integration strategy.

09.5. Describe how ESG information is held and used by your portfolio managers.

09.6. Additional information. [Optional]


LEI 10. Aspects of analysis ESG information is integrated into (Private)


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