At ClearBridge Investments, ESG is not merely a screen or an overlay; it is part of how we conduct fundamental research and it defines how we think about all companies considered for investment in all client portfolios.
We are proud to have achieved high scores for our investment practices from the United Nations Principles for Responsible Investing (“PRI”) in 2020. We have been a signatory since 2008.
The PRI is a voluntary framework for financial institutions who commit to integrate ESG factors into their investment analysis and decision-making practices. As a signatory, we adhere to the six guiding principles of the PRI (read further below).
We take our participation in the PRI very seriously and strive in all we do to be guided by the six PRI principles for the portfolios we manage.
We understand that while the SDGs are thematic rather than company-specific, they do help align sector and company-specific ESG considerations with broader societal goals.
Having regard to social and environmental considerations is a core aspect of our investment process. We therefore seek to align the targets and goals of the SDGs with our investment outcomes. As a committed advocate for ESG best practices, we believe the SDGs are a globally accepted roadmap to gauge progress that can benefit society and the environment while motivating companies to create long-term sustainable value.
Yes, our current policy is the 'Responsible Investment Policy'.
The primary motivation for adopting a responsible investment approach was to align our objectives as an institutional investor to those of society at large. Moreover, we believe that a responsible investment approach can lead to a comprehensive understanding of a range of material issues which should ultimately lead to lower risk, resulting in the improved long-term performance of our investment portfolios.
By integrating sustainability considerations such as ESG as well as other factors, such as disruption, into our investment process and approaching the ownership of equity from a long-term perspective, we are exercising our responsibility as an investment manager to act in the best interests of our clients.
Yes. Our current policy can be accessed here.
Our investment team are active participants in corporate governance matters that arise as a result of investments in securities. We think of ‘active ownership’ as the support of good corporate governance in companies and seeking to achieve change where we think that governance is poor or less than ideal.
We delegate proxy voting discretion to Portfolio Managers, as voting is a matter relating to the investment decision-making process. In voting proxies, we are guided by the law and our general fiduciary principles. Our goal is to act prudently, solely in the best interest of the beneficial owners of the accounts we manage. We attempt to consider all factors that could affect the value of the investment and will vote proxies in the manner that we believe will be consistent with efforts to maximise shareholder value.
Yes, as a signatory, our commitment to the six Principles for Responsible Investing is outlined below:
When we become a shareholder in a company, we expect to be so for some years, and the relationship with management is an important part of the process. We believe that meeting a company’s management is essential in gaining a deep understanding of the company’s strategy and operations, and to test our investment thesis. As a long-term investor, we have good access to management and company boards. Contact with companies is through:
Our investment team also engages with management on ESG and related issues in regular meetings and conversations. These discussions seek to provide feedback to companies on:
In addition to executive management, the investment team engages with the Chair where this is separate, and the supervisory board in a two-tier structure. Discussion topics include, among other issues:
Responsible investing is an integral part of our investment process, from both a fundamental research and portfolio construction perspective. As such, it is not the responsibility of one dedicated individual, but rather the responsibility of the entire investment team. Oversight of the sustainability investment process within the infrastructure investment team is the responsibility of our Sustainability Committee that comprises two Portfolio Managers and a Senior Portfolio Analyst.
Our specialist infrastructure investment team have continually evolved our responsible investing process, having incorporated sustainability into cash flows, and a governance factor into our hurdle rate since our inception. We have expanded this to broader ESG factors by engaging Sustainalytics (as their first Australian client) in 2012. We continue to evolve our approach to ESG through the current proprietary scorecard introduced in 2020.