Similar to our approach in fixed income, we evaluate equity securities from an impact and financial perspective. CCM supplements its in-house research with third-party data to determine where potential holdings fall in the following four categories:
Strong Positive Impact: companies that we believe are significant contributors to society such as those that generate more than 50 percent of their revenue from a product or service and that align with one ore more of our 18 impact themes.
Moderate Positive Impact: companies which have characteristics that align with one or more of our 18 impact themes and that we believe are a net benefit to society.
Neutral Impact: companies that do not fall within the two categories above but where there exists the potential to be included in the two categories in the future.
Negative Impact: companies with excessive ESG-related risk such as fossil fuel exploration and production or any activity related to coal, tobacco, chemical manufacturing, weapons, and prison management, among others. These securities are not eligible for investment.
We believe this approach allows for us to not only negative screen, but also incorporate positive impact into our selection process by evaluating securities based on positive behavior and outcomes. These impact and ESG factors not only define our opportunity set, but they provide us with a more robust way to evaluate the financial risks and opportunities present in each security we consider for the portfolio.