At Walter Graham, we understand the positive consequences of responsible investing and its importance in driving constructive change, so during the analysis of any potential investment, all material considerations are examined through the lens of responsible investing.
Responsible investing means that when we are researching companies that we may be interested in, we also look at environmental, social, and governance (ESG) issues. At Walter Graham, responsible investing is growing in popularity and becoming a more significant part of our research process.
We consider the bigger picture and investigate long-term themes that can transform economies, businesses, and societies, drive innovation, and bring about new ideas and ways of doing things that will change how we approach the future. By identifying these megatrends, we are able to seize new opportunities and mitigate risk. A current example of a megatrend is the emergence of AI and its effect on production capabilities and the job market.
As long-term investors, we look at more than financial statements and include non-financial factors in our analysis to ensure we see the whole picture from the perspective of responsible investment and ensure all relevant ESG factors are carefully considered during the investment selection process.
We have pinpointed three areas that we incorporate in our responsible investment process as priorities:
We scrutinize a company's business model, including its environmental footprint, the plans it has in place to take on future challenges, risk mitigation, and revenue generation from climate-related issues.
We look into companies' operational conditions and supply chain standards because we believe that fair and equitable policies form the foundation for ongoing productivity and success.
We expect a competent, independent, inclusive, and committed board that aligns strategies with goals and reasonable, long-term remuneration terms.
We identify and assess key ESG risks using the widely adopted SASB standards and regularly review controversies for equities and bonds. To improve our analysis, we also use external services through third-party providers, such as MSCI, who provide us with data for equity holdings, and we also screen mutual funds and ETFs.
It's important to understand that some ethical funds have a limited investment universe, which could potentially restrict returns. However, our commitment to responsible investing ensures that your portfolio remains aligned with your values while still generating optimal returns.
