At Equitile, we are optimists. We see that the world is becoming a better place; poverty is declining, and longevity is rising. On average, people are living longer healthier lives than their parents, and generally doing so with improved rights and freedoms. We recognise that the generation of long-term sustainable returns is dependent on stable, well-functioning and well-governed environmental, social and economic systems.
Collectively, our portfolio companies have a significant impact on how the world is shaped and so we like to understand, as best we can, the impacts and influences these companies have on the environment and society, for better and for worse.
A good governance structure is of prime importance for us. Additionally, we place emphasis on analysing environmental and social criteria that will facilitate top-line growth, reduce costs, minimise regulatory and legal risks, and increase high quality employee retention and productivity.
We see innovation as a prerequisite of sustainable growth, permitting improved productivity and allowing companies to add more economic value using fewer resources. We therefore search for companies which make the economy more efficient while also, proportionately, striving to reduce their own environmental impact.
All companies exist within a wider ecosystem encompassing their workers, customers, suppliers, and society at large. We believe the most resilient and successful companies are ones which consider all these respective stakeholders’ interests. This means we only invest in companies providing a product or service which is beneficial to society and doing so in a responsible manner, with healthy relationships between itself and its customers, workers and suppliers. If our research process raises concerns of an ethical nature these are referred to our governance committee consisting of three Equitile board members.
In the long run, no company can prosper without high quality governance and a healthy corporate culture. It must treat all its employees fairly and without discrimination, it must conduct its business legally, and it must compensate its management and staff appropriately, fostering an alignment of interests with shareholders. We do not tolerate companies whose management endanger both the capital of their shareholders and the jobs of their workers by using risky financial engineering. The financial management of the firm must be conducted in a responsible manner, allowing it to invest for future growth while surviving inevitable business setbacks.
Our E, S and G data is largely drawn from regularly reported primary sources. We map material E, S and G risks and opportunities as part of our fundamental research, using a combination of ESG frameworks, risk measurement tools and red flag indicators. Our ESG appraisal system is both quantitative and qualitative and complements bottom-up financial analysis to reinforce the thesis behind each investment.
We review sustainable business practices and assess the development of each company's operational efficiency through better management of natural resources such as water and energy, efforts to minimise waste, and cost reduction strategies which enhance productivity.
To discern the ESG credentials of a prospective investment we ask three questions;
Rather than rely on third-party data providers, which are often inconsistent, we use our Proprietary Investment Sustainability Mapping (PrISM) system, which draws from organisations that expend considerable resources developing and setting comprehensive global standards, which identifies and evaluates financially important ESG risk factors.
Specifically, we draw on the work of the Task Force on Climate-related Financial Disclosures (TCFD), the Sustainability Accounting Standards Board (SASB), the Greenhouse Gas (GHG) Protocol Standards, and other sustainability reporting standards specific to certain businesses. We adopt a reporting framework, developed from these standards, and use international accounting tools (e.g IFC, WWF, GRI) to assess disclosed climate change risks and opportunities affecting our investee companies. We then apply our own scores to each investee company, based on this analysis, which we use to rank their ESG performance.
Our ESG investment process is governed by a disciplined approach to ESG risk factor assessment and analysis. Collaborative discussions help integrate individual views in establishing a cohesive set of guidelines, designed to remove subjectivity wherever possible, allowing Equitile’s Investment team to remain faithful to the core tenets of our investment philosophy. The definition of what is material is dynamic, it is not uncommon for an immaterial factor to become material and so consistency and systematic tracking of historic ESG data and trend analysis is fundamental to our approach.
We admit no company onto our list of approved investments without it having already met our ESG standards. Once on our approved list, companies are monitored on an ongoing basis.
We exercise proxy voting obligations as an important right of shareholders. We utilise our voting rights to hold company boards to account on the extent to which they are protecting the interests of shareholders and growing their businesses in a responsible and sustainable manner. Our goal is to reduce risks and enhance corporate governance practices.
Exclusive of unethical conduct
We especially seek to avoid companies causing unnecessary environmental and social damage such as those engaged in pornography and exploitative financial practices such as payday lending, gambling, the manufacture and sale of controversial weapons, civilian firearms and tobacco. Whilst we do not opt for full-fledged fossil fuel divestment, we place emphasis on an ESG momentum approach such as investments driving innovation.
For further details on our investment approach, please contact firstname.lastname@example.org