We believe that companies with better environmental, social and governance ("ESG") standards typically manage their operations better and often record stronger financial performance as a result.
We have developed a quantitative framework to identify and measure relevant environmental, social and governance risks. Our methodology is used to assess risks at the point of investment and regularly after investment. The analysis is fully embedded within our credit research, and shared with the Portfolio Management team. Rather than managing a standalone ESG mandate , we believe the analysis is important enough to incorporate into the investment decision-making process for every portfolio we manage.
“There are three very simple reasons why we take ESG seriously - to minimize risk, to improve the quality of our returns, and to fulfil our duty to our investors” – Mike Quinn, Chief Investment Officer
The ESG landscape has evolved in recent years. Early on, the principal tools used by investment managers were negative screens – client-driven, definitive restrictions on certain types of investments. For example a typical restriction would be, a restriction prohibiting a manager from investing in petroleum exploration companies or munitions manufacturers. Responsible investing has since evolved beyond negative, passive screening to a more active approach of dynamic analysis that aims to accurately quantify and assess the risks that arise from a company’s approach to ESG related issues.
To demonstrate and formalize our commitment to ESG, RPIA became a signatory to UN Principles for Responsible Investment in August 2018. Within the field of socially responsible investing, this is the gold standard and solidifies our commitment to incorporate ESG factors in our investment process, to engage issuers on ESG matters, and to advance ESG through peer collaboration and public action.
For more information, please download our ESG policy.