Sustainability analysis and corporate engagement

As long-term investors, the notion of sustainability is fundamental to our company research. In our view, sustainability analysis is simply the consideration of investment issues beyond the immediate term. Understanding and evaluating a company’s approach to sustainability is therefore part of how we aim to reduce risk. 

We focus on the people leading the businesses we own, as we believe that having good managers in place should ensure that sustainability matters are addressed appropriately. In the long run, we believe companies will need to account for its business costs by considering how it affects the environment and its impact on society. As such, our sustainability analysis – incorporating both the challenges and the opportunities – has a significant impact on our views of a company’s quality.

We start our analysis by looking at the issues from the perspective of owners, employees, suppliers, customers and society at large. Using this framework, we compare each company with other companies in its industry and assess how well they fare on a range of environmental, social and governance metrics. This assessment forms the baseline for our sustainability analysis and highlights any gaps which may require further engagement.

Importantly, we believe that there is no such thing as a perfect company. Sustainability matters are complex, and we invest in countries that are at different stages of development. As such, we focus on the direction of travel and partner with companies to encourage them to improve.