Yes, ESG considerations are a standard part of our investment process. A cornerstone of this is the understanding that governance and responsible investment issues have a fundamental impact on long-term investment returns, and we leverage our investment processes to engage with companies and encourage them to change their behaviour where appropriate or necessary. The transparency and integrity of our approach enables us to provide clarity and assurance to our clients.
We believe that understanding how ESG matters are managed at the companies in which we invest enhances our understanding of the broader management capabilities of these companies. We therefore consider financial performance and sustainable ESG practices to be complementary, and our active ESG engagement approach contributes to a greater understanding of the financial future of these companies. Our investment teams and our central ESG team work closely together and regularly co-attend company meetings in order to form a comprehensive view of the company based on analysis from both a financial and ESG perspective. Our regional equity teams also benefit from specialist ESG analysts embedded in their team to continuously raise ESG issues round the desk and at portfolio discussions.
Using the universally-accepted United Nations’ 17 Sustainable Development Goals, we have developed a unique impact ratings system and reporting methodology for our impact funds. To make the goals more applicable to companies, our measurement framework centres on eight ‘pillars’ of impact, covering everything from sustainable energy to financial inclusion. This allows us to assess and measure a company’s ability to affect positive change.
In support of our investment philosophy, we have an active ESG Investment team, as well as regional ESG equity analysts, who engage with investee companies on environmental, social and governance topics. The central ESG Investment team also routinely engage with companies on matters that are subject to a shareholder vote.
We believe that the main component of a successful engagement on stewardship is a purposeful dialogue on the oversight of strategy, performance, relations with stakeholders and the management of risk. More specifically, as part of our monitoring, our investment analysts undertake a significant number of company meetings per year across the globe allowing them ideal opportunities to monitor the performance of companies and their management. The supporting activities of the ESG Investment team include a regular engagement programme to discuss a range of relevant ESG topics including but not limited to board balance and composition, remuneration policies, audit and risk issues, human rights, the environment and labour practices.