ESG Investment Process
The Ethical Funds mantra of “making money while making a difference” is guided by a firm belief that companies integrating the best environmental social and governance (ESG) practices will provide higher risk-adjusted returns to shareholders and contribute to the creation of long-term sustainable value for all stakeholders. Our proprietary ESG process consists of:
- Identify sector-specific material ESG risks to establish baseline expectations for companies.
- Exclude companies involved in activities that are not consistent with accepted norms and values (tobacco, nuclear) or that violate international treaties (weapons banned under international humanitarian law).
- Evaluate every company to ensure that it satisfies our baseline expectations.
Financial Analysis: Our independent portfolio managers begin by assessing companies through traditional financial analysis to identify the best investment opportunities.
ESG Analysis: Our proprietary evaluation process adds an extra layer of due diligence, identifying often overlooked risks.
Portfolio Construction: We build our portfolios with companies that fulfill both financial and ESG objectives.
Monitoring and Investigation: We continuously monitor all portfolio companies for headline risk. If a company has potentially committed a significant transgression of management ethics or responsible practices, we conduct a management breach investigation and take appropriate action.
Corporate Engagement: As shareholders, we then actively engage with many of the companies held in our funds to improve their ESG practices through dialogue, shareholder resolutions and proxy voting.