ESG Integration – US Multi-Cap Income

We address environmental, social, and governance factors using qualitative and quantitative measures.


One of the key aspects of our due diligence when analysing a company has always been a thorough review of company management.  In addition to assessing their managerial skills, we look to invest behind trusted partners that have the utmost integrity.  Wherever possible, we speak to management to understand them as both managers and people.  If we have reason to believe we can’t trust a management team, we will not invest.  When we uncover signs of wrongdoing at companies we already own, we exit existing positions.  We want management teams to treat all stakeholders (shareholders, customers, and employees) like partners.  We also look for companies that that promote cultures of independence and accountability.  We review compensation terms to make sure they are rational and just and are aligned with those values.  We believe these steps not only find companies with admirable social and governance attributes, but also identify companies doing good business, that grow long term shareholder value.  Understanding these factors is now and has always been a component of basic risk assessment.

With respect to environmental issues, our portfolio looks attractive by understanding the types of companies we omit.  We invest in companies with durable competitive advantages that earn high returns on capital.  Commodity producers rarely fit this criteria, nor do Utility operators that may or may not have poor records with pollution.  When we assess risk, this often leads us away from companies with environmental liabilities that could be a drag on profitability.  While we follow no official mandate to exclude these types of companies, the bar is set much higher for inclusion in the portfolio.


A quantitative ESG analysis has been integrated into our investment process.  Utilizing Bloomberg data, we have built out internally generated scores for each category using industry standard factors.  We do not exclude companies based on any specific score, but do review the portfolio from the top down to ensure we have no outsized risks facing the portfolio at large.  This evaluation is new to our process and will continue to evolve to ensure we have the proper data, the proper weightings to the individual factors, and is delivering a fair assessment over time.