ESG – Environmental, social and governance criteria underpin how we assess the impact of an investment and the way companies we invest in are run.
“ESG, and in particular, climate change, are more important than ever in how we consider investment returns.”
We integrate ESG considerations both before and after we invest. This means we assess how the companies we invest in manage ESG factors, for example, the potential impact of climate change, or their relationships with their employees, suppliers, customers and the wider community.
But what does it really mean?
E
Environmental criteria consider how a company performs as a steward of our natural environment. This would include things such as:
- Climate change
- Waste management
- Pollution
- Energy use
S
Social criteria examine how relationships are managed with employees, suppliers, customers and the wider community. This covers a huge range of factors, including:
- Diversity and inclusion
- Human rights
- Fair pay
- Health and safety
G
Governance broadly looks at a company’s leadership and how the business is run. This considers many aspects, such as:
- Board composition
- Executive pay
- Bribery
- Corruption
We really believe that the way a company manages its ESG risks will impact the long-term financial returns that it’ll generate. We also believe that better managed companies will generate better returns.
For more information on how we integrate ESG factors into our investment decisions, visit our Responsible Investments page, or view our latest Stewardship Code or TCFD reports.
Published: 26 July 2022
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