Beyond ESG ratings: How we evaluate responsible investments
Understanding our responsible investing process
Responsible investing has become an increasingly important part of the investment landscape. As environmental, social, and governance (ESG) investing has become more widely adopted, many investors are surprised to learn that different ESG research organizations often assign different ratings to the same company.
Rather than viewing these differences as a weakness, we believe they reflect the complexity of evaluating corporate sustainability. No single research provider captures every dimension equally well.
For this reason, we developed a proprietary ESG assessment methodology that combines multiple independent sources of research into one disciplined and consistent investment framework.
Why this matters
Responsible investing is about more than simply selecting companies with favourable ESG ratings. It requires a disciplined investment process that balances sustainability considerations with sound financial analysis.
Our methodology is designed to identify companies that demonstrate responsible corporate behaviour while continuing to meet the financial characteristics we believe are important for long-term investment success.
Our layers of ESG due diligence
Sustainalytics: Measuring ESG risk
Sustainalytics evaluates the degree to which companies are exposed to material environmental, social, and governance risks and, more importantly, how effectively those risks are managed.
This helps us understand not only the risks companies face, but also how well management is addressing them.
ISS ESG: Governance and sustainability standards
ISS ESG evaluates the strength of a company’s corporate governance and its commitment to internationally recognized sustainability standards.
This helps us assess areas such as board oversight, shareholder rights, executive compensation, business ethics, and corporate transparency to better understand how companies are governed and managed.
Truvalue Labs: AI-powered ESG intelligence
Truvalue Labs uses artificial intelligence (AI) to analyze millions of publicly available sources, including news articles, regulatory filings, and stakeholder reports.
This helps identify emerging ESG risks, controversies, and positive developments as they occur, providing timely insight into changes that may not yet be reflected in traditional ESG ratings.
Financial Exclusions tracker: Independent ESG oversight
The Financial Exclusions tracker monitors companies that have been excluded by leading institutional investors for significant environmental, social, or governance concerns.
This provides an additional layer of independent oversight and helps us identify potential ESG risks that warrant further review before making an investment decision.
Our proprietary ESG assessment
No single source determines whether a company qualifies for investment. Instead, our proprietary assessment methodology combines independent ESG research from multiple providers to produce a balanced and consistent overall assessment.
Companies must demonstrate strong environmental, social, and governance practices before they are considered for inclusion within our responsible investing portfolios. Our methodology is reviewed regularly to reflect changes in ESG research, evolving sustainability risks, and industry best practices.
ESG is one part of our investment process
Although ESG is an important component of our investment philosophy, it is not the sole determinant of an investment decision.
Every company must also satisfy our financial investment criteria, including business quality, valuation, earnings growth, dividend sustainability and portfolio diversification. We believe that combining responsible investing principles with rigorous fundamental analysis provides a stronger framework for identifying high-quality long-term investments.
Our goal is not simply to invest in companies with strong ESG characteristics, but to invest in financially sound businesses that demonstrate responsible corporate behaviour over the long term.
Investing responsibly for the long term
Responsible investing is not about finding perfect companies. It is about identifying companies that are committed to managing ESG risks responsibly while creating long-term value for shareholders.
By combining multiple independent sources of ESG research with rigorous financial analysis, we believe we are better positioned to identify high-quality companies capable of creating sustainable long-term value for our clients.
As ESG research continues to evolve, so too will our investment process. Our commitment is to continually refine our methodology to ensure it remains objective, transparent and aligned with both responsible investing principles and long-term investment success.
Learn more
If you would like to learn more about our responsible investing approach or discuss whether an ESG portfolio is appropriate for your investment objectives, we invite you to contact our office.
We would welcome the opportunity to discuss our responsible investing philosophy and how our disciplined investment process can help support your long-term financial goals.