Jackson Square Partners believes that a principles-based approach to evaluating material Environmental, Social and Governance, (“ESG”) factors for all investments enhances our stock selection, portfolio risk management, and, ultimately, returns for our clients. As active owners with a long history of enacting positive Governance changes, we also believe that influencing our companies to enhance their performance on ESG issues is a key source of sustainable alpha generation.
ESG issues require careful evaluation on a company-level. Our concentrated investment strategies ensure that Jackson Square’s investment analysts can perform deep, proprietary research on all material fundamental and ESG factors that are relevant to our investment decisions. As such, we eschew strict rules and rubrics in favor of a more time- and resource-intensive, principles-based approach to evaluating ESG factors.
Integration into the Investment Process
Analysis of ESG factors can heavily influence our Intrinsic Business Value (IBV) estimate for a company, both in our assessment of a company’s sustainable free cash flow growth rate, and in the cost of capital we apply. We believe that this integration of ESG analysis into our quantitative IBV-setting exercise is a simple and effective way to incorporate these issues into our investment process.