When analyzing the risk/reward profile of a security, we evaluate the impact of ESG risks on enterprise value and, as with any other risks, we ensure that the expected return for every investment is commensurate with those risks. We also expect that consideration of ESG factors will lead to alpha opportunities, as we believe that companies that provide solutions to some of the largest and most pressing ESG issues have the potential to offer higher risk-adjusted returns. Our pursuit of managing risk effectively is also naturally aligned with active ownership, as we seek to identify companies with strong corporate governance and to avoid the adverse effects associated with poor environmental and social practices.
To the extent that individual client investment guidelines for a separate account include a screening/exclusion policy, we will seek to implement such an approach in accordance with guidelines. We currently manage approximately 20 accounts that include guidelines related to environmental, social or governance factors.