We understand that Environmental, Social and Governance (ESG) factors have a meaningful impact on a company’s ability to generate long-term sustainable growth.
We integrate these factors into our bottom-up fundamental research process, and seek to invest in companies that can sustainably grow and compound their earnings over the long-term.
We have a fiduciary responsibility to consider all factors relevant to an investment and believe incorporation of ESG factors serves our objective of generating optimal risk-adjusted long-term portfolio returns for our clients.
SGA has been a proud signatory to the PRI since 2014, and has monitored our Qualified Company List versus the Norges Bank Exclusionary List since 2016.
SGA’s Three Areas of Focus
SGA's Integrated Approach to ESG Research
- Environmental, social and governance factors inherently impact a company’s brand equity, employee satisfaction, competitive position, financial performance and ultimately long-term shareholder value.
- These factors provide both risks and opportunities and our process has been designed to capture both.
- Our investment process utilizes a four-step framework to process the key risks and opportunities:
- Identify: Which ESG issues are likely to impact the company’s main value drivers?
- Assess: What is the company’s ability to manage the risks and opportunities appropriately?
- Model: How can these risks and opportunities impact the financial model?
- Engage: How will SGA engage with management to raise concerns and encourage them to better manage the risks and opportunities identified?
- In addition to our own proprietary research, we incorporate ESG analyses and rankings from third party ESG data and research provider MSCI for all Qualified Company List companies.
- We are focused on identifying ESG related risks and opportunities that we expect to influence the ability of companies to grow over the long term in a predictable, consistent and responsible manner.
- As responsible long-term shareholders, we have the unique opportunity to exert influence on management teams to improve transparency and become agents of positive change.
- We place a high priority on encouraging companies to enhance their disclosure and transparency around key issues including GHG emissions, modern slavery, and corporate governance and incentives.
- We follow up on our engagements with ongoing monitoring to measure progress and re-engage company managements as necessary.
- While SGA does not invest in companies on the pretext of implementing activist positions, we have found that managements tend to value our longer-term perspective compared to those of shorter-term investors less concerned with strategic business direction and long-term wealth creation.
- SGA’s proxy voting policy is intended to support standards-based ESG proposals that we expect to enhance long-term shareholder value while aligning the interests of the company with those of society at large.
- Based on our proprietary research and analysis by proxy research partner ISS, SGA’s primary research analyst is responsible for determining the best course of action for our clients and voting recommendations.
- Recommendations are subsequently reviewed by a designated investment committee member and the firm’s General Counsel and Chief Compliance Officer to ensure consistent application of our policies.