Assessing environmental, social and governance (ESG) factors has been a part of our investment approach since day 1. Overlooking ESG issues would interfere with our ability to compound wealth for our investors over the long term.
Responsible investing at EdgePoint
The first measure of success at EdgePoint is achieving investment results at or near the top of our peer group over a 10-year period. Investors look to us to build wealth for them over the long term, and we believe that investing responsibly helps us meet that expectation.
ESG integration approach
Assessing environmental, social and governance (ESG) factors has been a part of our investment approach since day 1. Overlooking ESG issues would interfere with our ability to compound wealth for our investors over the long term. We believe good companies often have a well-constructed approach to business sustainability and make strong considerations towards ESG issues.
When we think of ESG, we think about how a company is making the world a better place. Making the world a better place means the future, not the past. The companies that are going to do the best for the world are those that are making improvements to the state of the world.
Throughout our due diligence process, we look for any issues that pose material long-term risks to our potential investment (e.g., exploitation of workers, management character, environmental contagion, unsafe working conditions, excessive remuneration, allocation of capital, conflicts of interest, etc.). There were many times we decided not to invest in a business due to issues that would be defined today as “ESG issues”.
Information collected during our due diligence helps us shape our investment decisions and hold the businesses we own accountable for upholding their corporate ESG principles. We also encourage management teams to enhance their procedures and policies as required. In our view, this ongoing engagement with company leadership is an effective way to maintain and improve corporate responsibility within the businesses we invest in. After all, improving corporate responsibility is good business.
We also defend our investors’ interests when necessary. This includes voting proxies to reflect our views on management compensation and board composition, while also ensuring responsible capital allocation.
Business owners buying businesses
Our main goal is to build wealth for our investors over the long term, and we believe the best way to do this is to invest like a rational business owner would. A rational business owner understands that minimizing pollution, limiting their environmental footprint and avoiding exploitation of workers are actions that not only make good sense for the future of our planet, but also make good business sense. Again, we believe this because it's good business for a company to make the world a better place. It's not good business to pollute more. It's not good business to ignore the benefits of a diverse workforce or diverse leadership.
Sustainability is interlinked with financial results. We see this evidence in the businesses we own, and in the ones we avoid. A company's efforts to increase their positive impact environmentally, socially and economically are undeniably positive for the owners of the business – and for the world.
The PRI is the world’s leading proponent of responsible investment. As an independent organization, it promotes a sustainable global financial system by fostering good governance, integrity and accountability.
The PRI align well with EdgePoint’s approach to ESG integration. As a signatory of the PRI, we commit to the following six principles:
View the Six PRI Commitments
To incorporate ESG issues into investment analysis and decision-making processes
To be an active owner and incorporate ESG issues into our ownership policies and practices
To seek appropriate disclosures on ESG issues by entities in which we invest
To promote acceptance and implementation of the Principles within the investment industry
To work with the PRI Secretariat and other signatories to enhance their effectiveness in implementing the Principles
To report on our activities and progress towards implementing the Principles
EdgePoint is a member of the International Corporate Governance Network (ICGN), an investor-led organization with the mission to promote highest standards of corporate governance and investor stewardship in the pursuit of long-term value creation, sustainable economies, social prosperity and a healthy environment.
EdgePoint supports the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), which aim to provide guidelines for companies to consistently disclose on climate-related risks and opportunities, resulting in meaningful information to their stakeholders.
EdgePoint is an Associate Member of the RIA. The Responsible Investment Association (RIA) is Canada’s membership association for responsible investment (RI). RI refers to the integration of environmental, social and governance (ESG) criteria into the selection and management of investments. We are a national, membership-based organization composed of financial institutions, mutual fund companies, asset management firms, financial advisors, ESG research firms, and various organizations and individuals who practice and support responsible investing.