Our rigorous research process draws upon information from both traditional and unconventional sources to form a holistic understanding of corporate performance. We integrate comprehensive ESG criteria with financial research to identify sustainable companies that possess long-term drivers of success:
We integrate ESG factors at every stage of our research and investment process: in the definition of the investable universe, through ruling out companies with the worst records; in the stock selection phase through detailed company research identifying leaders and laggards; and in the portfolio construction stage where our goal is to raise the portfolio’s ESG profiles.
Quantitative
We establish the initial investment universe, drawn from the equity universe, based on market capitalization, financial quality criteria, and ESG quality criteria by sector. Our screens exclude companies that have consistently lost money, taken on unsustainable levels of debt, or experienced such volatile operating performance that we would not be confident in projections about their future profitability.
Fundamental
We create a focus list, which includes companies with a favorable fundamental outlook versus market expectations, attractive sector-appropriate valuation relative to future earnings, cash flow, net asset value, ESG leadership and vision. We examine the material risks and opportunities that impact companies in the same sector and produce detailed financial and ESG research reports at the company and sector levels, highlighting emerging issues, best-in- class practices, risks, and opportunities.
Portfolio Construction
We select stocks and build diversified portfolios: long-term opportunity based on themes identified by global sector analysis, ESG research, and macroeconomic analysis using time-tested risk management disciplines. Some industries have few companies with both strong investment and ESG profiles. We raise the ESG profile of our holdings through active, engaged ownership.