ESG Investing
Investing in Energy, Social, & Governance Issues
The securities we manage in our ‘ESG portfolio’ are screened for a wide range of social criteria and are selected in a conscientious way. We carry out in-house research on environmental, social, and governance issues (ESG), as well as use various third-party research and reporting services.
Primarily:
We endeavor to avoid holdings in industries that are intrinsically unacceptable, such as tobacco, weapons of war/handguns, fossil fuels, mining, companies promoting unhealthy eating, those engaged in heavy manufacturing, etc.
Instead, we select sustainable companies based on how well they respect all of their stakeholders, direct and indirect. This list includes their employees, vendors, customers, communities, and (of course) the natural environment.
No company is perfect. No company can function with wholly untarnished operations and a pristine track record on all (or even any single) ESG issues. But high quality companies that have ESG firmly in their view, and are, within reason, adopting these items as vital guiding principles in how they conduct themselves and run their business are good candidates for the portfolio.
ESG-focused companies report and update investors regularly on a broad array of metrics, including:
- Emissions
- Carbon footprint
- Water consumption
- Labor and diversity standards
- Human rights practices
- Philanthropy
- Product safety matters
- Customer satisfaction
- Employee fulfillment
- Other issues linked to ESG goals
Not only are we interested in a company’s core attitude on sustainability, but we are consistently evaluating them on these reported metrics. What their goals are; how and when they achieve them; and new targets set in order to promote continued progress in pushing the ESG movement forward.
Companies that appear in our ESG portfolios as a result of these positive screens and evaluation must still meet our high financial standards and business analysis requirements that underscore good long-term investing. We respect our clients’ ability to reject any investments we select for moral reasons of their own.
How Albion Does ESG with Jason Ware
The idea is to invest in companies that believe in more than the bottom line. Companies can and should do more within a broader mandate taking into account all stakeholders, not just shareholders. At Albion, we have taken a unique approach using this philosophy in constructing our ESG portfolio.
Albion Senior Portfolio Manager Michael Kessler delivers our ongoing thinking on ESG investing. He shares observations on the growing popularity of this investment style, from millennial investors to institutions and hedge funds.