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What is ESG forefront investing?
Some approaches may look for established ESG leaders. Others may focus on companies or issuers measurably improving their ESG practices and, therefore, their potential competitive advantage and relative value. Whether used as an alpha driver or risk management tool, ESG is seen as a key factor in helping to distinguish industry leaders from laggards.
ESG and stewardship inputs
Because we believe ESG factors are linked to a company’s long-term performance, we look for companies that:
Invest in people
- Prioritize talent and culture
- Promote diversity, equity, inclusion
- Improve customer satisfaction
- Take accountability for the supply chain
Positively impact the environment
- Adapt to and invest in the energy transition
- Reduce environmental footprint
- Contribute to a circular economy
- Are a vital partner to the local community
Build sustainable profit
- Allocate capital wisely
- Invest in innovation
- Run the business with a long-term orientation
- Ensure shareholders are compensated over the long term
Reason to invest
ESG forefront managers believe:
- The ability to distinguish potential ESG leaders from laggards is important for risk management and alpha generation
- By engaging with companies on ESG, we aim to hold leaders to account and inspire long-term thinking that includes ESG and stewardship consideration
The market tends to overlook ESG issues as material risks and potential sources of alpha
Prioritizing ESG in our analytical frameworks and investment process may help us make better investment decisions and deliver sustained risk-adjusted returns
- Understanding a company’s approach to ESG allows us to more accurately assess its management depth, risk controls, and innovation potential
Contact the sustainable investment team
For more information on our sustainable investment solutions, speak with a member of Wellington's sustainable investment team.
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