Responsible Investing (RI) is an investment approach that has expanded in broader appeal over the past three decades, with investors showing greater awareness of and willingness to consider Environmental, Social and Governance (ESG) factors as a part of their investment process. While there is no uniform consensus or standardization in approach, the Global Sustainable Investment Alliance1 has identified seven classifications to help define the investment approach taken:
- 1ESG Integration
- 2Active Ownership
- 3Thematic Investing
- 4Positive Screening
- 5Negative Screening
- 6Norms-based Screening
- 7Impact Investing
AN EMPHASIS ON ESG INTEGRATION AND THE POWER OF DIALOGUE
Guardian Capital LP (Guardian Capital) incorporates two RI approaches – ESG Integration and Active Ownership – across all our portfolios, and have actively formalized this process in recent years. With a clear objective of enhancing long-term investment performance, Guardian Capital’s highly experienced investment teams conduct holistic ESG-related assessments on the individual companies in our portfolios as a part of their investment process.
We embed ESG Integration throughout our proprietary research methods. Portfolio managers do not apply any preset exclusions; instead, they assess the impact ESG factors have on a company’s valuation and outlook when determining its long-term sustainability. Responsibility for implementing ESG integration rests with the investment team, with the process unique to the investment mandate.
We focus on dialogue with companies to influence their approach to
ESG factors that are material and relevant for their specific
circumstances. We recognize that change for a large organization,
with its built-in infrastructure and entrenched industry practices
takes time, however we aim to raise awareness and consideration of
ESG factors with corporate leadership as they make decisions. Our
portfolio managers’ use their meetings with companies as an
opportunity to raise ESG issues with the aim of encouraging
companies to explore solutions to effect the desired change.
> NEGATIVE SCREENING
Our Guardian Ethical Management (GEM)2 Pools utilize Negative ESG Screening in conjunction with an extensive Active Ownership program through their ESG partner, NEI Investments.3 Learn more about GEM.
> THEMATIC INVESTING
Guardian Capital offers a carbon-constrained version4 of our Guardian Canadian Equity strategy. The strategy applies careful consideration in eliminating companies based on energy production, fossil fuel distribution and other factors.
2 GEM Pools are a private offerings available to qualified investors only.
3 Northwest & Ethical Investments LP (NEI) provides the Environmental, Social, and Governance (ESG) screening and engagement while Guardian Capital LP provides the investment fund management portfolio.
4 The Canadian Equity Carbon Constrained strategy is currently only offered as a segregated account mandate.
Issues with the potential to affect the natural environment, such as climate change, greenhouse gas emissions, biodiversity and deforestation.
The issues affecting people: human rights, working conditions including slavery and child labour, diversity and inclusion, health and safety, conflict zones and local communities.
How companies ‘govern’ themselves can include the composition and skillset of its board members, executive remuneration, bribery and corruption policies, and tax and audit practices