ESG Principles

ESG Factors

We believe that environmental, social and governance (‘ESG’) factors can have a meaningful impact on business and equity performance. Analysing the relevant ESG factors for prospective investments can also help us understand long-term opportunities and risks for our investee companies and their industries. We also believe that this aligns us with our client objectives of ‘doing well by doing good’ while managing risk appropriately.

 Our investment process aims to identify the most relevant ESG risks for each company we own and analyse. We assess the most material ESG risks through a combination of negative screening, third party data, and company engagement. This is incorporated into our investment decisions, portfolio construction and informs our voting activities.

Environment

Climate change, pollution, resource depletion, land impact and biodiversity

Social

Labour management, modern slavery, product safety and quality, diversity and inclusion, data privacy and security, occupational health and safety, community relations.

Governance

Leadership structures, incentives, executive remuneration, board composition, shareholder rights, financial and operational transparency.

How we integrate ESG into our investment process

The portfolio manager is responsible for assessing the most relevant ESG factors for each company’s investment case, from initial research through to ongoing monitoring for existing investments.

 We use an internally developed matrix to score investment candidates, which is then used to inform areas for further research or disqualify a company from investment. This work is also incorporated into our discussions with management and the board, where necessary.

Exclusions and Negative Screening

Companies with revenue derived from controversial activities over a specified threshold are eliminated from investment.

ESG Risk Identification

We use our internal framework and third-party data to identify material ESG risks not captured by our screening process.

Company Engagement

Where possible, we engage with company management and the board on material ESG issues, in addition to general corporate strategy.

Divestment

Where an investee ceases to meet our ESG criteria, we will divest our shares in the company.

Governance is an oft-overlooked aspect of ESG, and we view it as having a critical role in shareholder value creation as well as delivering positive ESG contributions. Where possible, we engage with company management and the board on material ESG issues. Our stewardship policy dictates our approach to company and collaborative engagement and proxy voting.

Why we work on ESG

We believe that there is an opportunity to support companies making positive ESG contributions without compromising on returns. We deploy capital with a long-term mindset, and believe that environmental, social and governance factors can have a meaningful impact on businesses and their equity returns.

We avoid companies with material involvement in controversial activities (see our Responsible Investment Policy) and are harmful to society. Where possible, we are seeking to invest in companies that are contributing positively to ESG issues and the United Nations Sustainable Development Goals (‘UN SDGs’). This aligns us with our client objectives of delivering superior long-term returns, as well as their values.

Our Fund

The Value Earth Fund will donate 5% of our management fees to the Foundation for National Parks & Wildlife (‘FNPW’), which will be used to plant trees in Australia.