Prosperity Capital Management seeks to consider all factors, including ESG issues, into its investment analysis and investment management. Within reason we employ all available methods to build a holistic and detailed view of the companies within our investment universe.
Negative: Prosperity excludes cluster munitions companies and those that are on relevant sanctions lists.
Positive: Prosperity believes that the quality of management is very variable in our investment universe and that this qualitative metric has a very significant impact on shareholder value. This is true anywhere, but it is our view that the variance and impact of management quality is greater in Russia than in many other markets. As a result, Prosperity places a considerable emphasis and importance on meetings with company management and core shareholders throughout the investment process in order to evaluate their quality. As such, Prosperity positively screens on corporate governance quality and E and S factors.
Norms-based: Prosperity conducts peer analysis of the companies in our investment universe and portfolios against equivalent and leading businesses around the world. We engage in such analysis not only to identify the strengths and weakness of our portfolio companies and of the companies in the broader investment universe, but also to assess the opportunities available to them to improve their operations and businesses – which we actively promote through our engagement with stakeholders.
Prosperity specifically includes the consideration of ESG factors, alongside other factors, to develop a holistic and detailed understanding of the businesses in our investment universe.
PCM believes that ESG monitoring, engagements and improvements reduce respective investment risks and provide for better returns. PCM also believes that good corporate governance, high environmental standards, responsible social policies and respective adequate risk-management are indicative of efficient and sustainable management. And, in the contrary, cases or risks of governance abuses, environmental or social disregard are signals of inefficient and non-sustainable management and should be taken into consideration during investment process and as a subject for engagements.
Thus, in particular, our investment decisions take into account governance factors, and our financial models include, when applicable, material effects of any industrial accidents/downtimes including staff costs, current and expected environmental regulations, environmental fines, environmental capital expenditure, social costs related to local communities etc.