Our Sustainable Investing Philosophy
Society is faced with multiple global threats including climate change and biodiversity loss, acute levels of social inequality, and growing doubts over business resilience, exacerbated by the Covid-19 pandemic. During these unprecedented times, attitudes and perceptions around the management of our valuable resources, including people, are radically shifting. Shared challenges require a collective response and we believe that growing recognition of this will catalyze society, consumers, businesses, and governments to favor products, services and policies that promote a more sustainable future.
At Lazard we believe that a more holistic assessment of value creation across multiple stakeholders (employees, customers, suppliers, communities and the environment) will ultimately help to enhance long-term financial returns.
Our sustainable investment approach rests of the following three pillars:
- Collective Responsibility for Integrated research: as a research-driven organization, we believe our biggest strength is our ability to cross-pollinate the knowledge of our subject matter experts across the firm to ensure we optimize the value of their industry and regional insights.
- Impactful ownership: as active managers, we are committed to fully exercising our role as stewards of capital. We believe this entails purposeful engagements with companies and sovereigns, intentional proxy voting, and providing clients with customized solutions that meet their evolving needs.
- Commitment to Continuous Innovation: the pace of change in this space is fast moving and we believe it is also important to ensure that we are contributing to the wider adoption and advancement of more sustainable practices across the industry.
At Lazard, we see the integration of sustainability considerations as everybody’s job. All of our 250+ investment professionals are responsible for incorporating sustainability related risk and opportunity assessments into their work. We also strive to embed sustainability in our governance, our research, portfolio management, risk, compliance, technology and client facing functions.
Our Co-Heads of Sustainable Investment are responsible for setting the over-arching strategy and updating Lazard’s Investment Council1, Oversight Committee2 and Management Committee on implementation and progress across the firm.
1The Investment Council is designed to ensure the effectiveness of LAM’s research and investment platforms.
2The Oversight Committee oversees LAM’s strategies and establishes reporting lines for investment professionals on portfolio management teams.
ESG case studies
Research from the Investor Forum’s in the UK suggests that Chairmen find it difficult navigating the different and often conflicting investor perspectives. Boards look to investors to set a proactive agenda for engagement. In November 2019 Lazard Asset Management participated in Cairn Energy’s annual board workshop to lead a discussion on investor expectations of energy companies in the context of a transition to a low carbon economy. The objective of the workshop was to provide the Board with insights as to how the investor agenda is being influenced by both clients and regulators and also to consider initiatives to strengthen the governance of risks and opportunities associated with the energy transition, such as the TCFD.
The discussion was led by our global energy analyst, Neil Millar and our Co-Head of Sustainable Investment & ESG, Jennifer Anderson. The Lazard team gave an investment perspective on how the evolving dynamics of the energy transition are impacting the cost of capital for companies in the sector, the frameworks we use to factor in a price for climate change through carbon pricing and the risk of stranded assets under different carbon pricing scenarios. The key outcome of the board’s workshop was the Board’s decision to elevate energy transition policy from an emerging risk to a principal risk to the business. This change will require senior managers to develop short-medium and long-term actions to this address this risk appropriately. Further details are available in Cairn’s Annual Report 2019.
Please find see the following link for a recent case study on the COVID-19 virus’s impact on: