Sustainable investing involves an analysis beyond short-term profits, favoring instead factors that support long-term value creation. A company’s Environmental, Social and Governance (ESG) policies and track record are likely to be a helpful lens through which to gauge quality, furthering our ability to invest in the most sound and trusted companies.
Sustainable investing involves the following:
Integrating ESG risks and opportunities into investment decisions;
Taking a long-term view;
Being engaged investors and demanding high-quality business practices.
Ultimately, sustainability is about managing risk and delivering strong investment returns for the long term.
Consistent with our investment philosophy as long-term investors in high-quality businesses, we integrate ESG factors into fundamental investment analysis. ESG integration is intrinsic to our long-standing approach. This approach to investing in high-quality businesses is pragmatic, not ideological.
In essence, sustainable investing and the analysis of material ESG factors have always been core elements of our bottom-up, fundamental investment approach.
As the world around us changes and issues that impact it continue to evolve, we use the following principles to guide our investment process:
#1 - Integrate the analysis of material ESG factors in our investment decisions. At Jarislowsky Fraser, ESG information is integrated into our bottom up fundamental analysis. ESG factors that are material to the investment prospects are discussed in industry reviews, as well as covered in individual company reports. Proprietary tools, such as our Business Practice Scorecard and Portfolio ESG Scorecard, ensure this is done systematically.
#2 – Take an engaged ownership approach. Acting as long-term stewards is our fiduciary duty and can be an opportunity to add value for shareholders. We seek constructive engagement with company management, and in some cases with Boards of Directors, on material business concerns including ESG issues. We believe that Jarislowsky Fraser has historically been viewed as a credible shareholder from whom managements seek counsel. This is further reinforced in our proxy voting decision-making:
Proxy voting is fully integrated into our investment process;
Our global investment team meets to consider each proxy;
Decisions are made in-house by the investment professionals.
#3 - Encourage disclosure of information that is relevant to the analysis of material ESG factors by companies and stakeholders where commercially reasonable. We value management candor and believe that transparency and accountability contributes to the quality and ethics of a company and can drive excellence.
#4 - Collaborate with other organizations in order to advance sustainable investment practices for the benefit of all stakeholders. See below for a listing of key associations.
Click here for a copy of our Sustainable Investment Policy.
We incorporate ESG considerations into quality assessments across all of our mandates. For clients with specific values-based restrictions, or other investment policy considerations, Jarislowsky Fraser offers a tailored approach to meet their needs. We manage approximately $3 billion* on behalf of clients with a variety of unique values based restrictions. Illustrative mandates include “low carbon” and “religious values”.
(*in Canadian dollars, April 2016)
Core to our approach is a belief that accountability and transparency drive outperformance. Consistent with that philosophy, we would highlight the following:
You may also access our Proxy Voting Policy and Procedures.
We will work with clients to develop reporting according to their needs, which may include carbon footprint analysis as well as other ESG elements.
The firm has a Sustainable Investment Committee to assist with the coordination of sustainable investing activities and the development of ESG tools across the firm.
Principles for Responsible Investment – We are signatory to the PRI, an international network of investors working together to put the six Principles of Responsible Investment into practice. We were a featured speaker at the PRI 10-year Anniversary Series: Innovations for a Sustainable Financial System.
Canadian Coalition for Good Governance – In 2003, Stephen Jarislowsky co-founded the CCGG to promote good governance practices in the companies owned by its members. Currently, CCGG members together manage more than $2.5 trillion in assets on behalf of Canadian investors.
CDP (Formerly Carbon Disclosure Project) – In 2007, Jarislowsky Fraser became a CDP signatory to show support for increased corporate environmental public disclosure and behavior change. We believe that measuring, managing, and disclosing environmental indicators is essential to a company’s management of these as both material risks and opportunities.
International Corporate Governance Network (ICGN) – We are a member of the ICGN, an investor-led organisation that was founded in 1995 with the mission to promote effective standards of corporate governance and investor stewardship to advance efficient markets and sustainable economies worldwide.
Institute for Governance of Public and Private Organizations – In 2005, Jarislowsky Fraser was a founding member of the IGOPP. The IGOPP is committed to improving governance in the private and public sectors.
Sustainability Accounting Standards Board – Jarislowsky Fraser is a founding member of SASB's Investor Advisory Group. SASB’s objective is to establish industry-specific accounting standards for material sustainability issues for use by U.S. publicly listed corporations and their investors.
US Contact: Dario Mazzarello, CFA
Managing Director, Head of International Institutional & Private Wealth Management
Tel: 514.842.2727 | email@example.com
Canada Contact: Mark Fattedad, CFA
Director & Portfolio Manager, Institutional Management
T: 604.676.3612 | firstname.lastname@example.org
Insights & Articles
The ESG Files: Dual Class or Second Class?
Jarislowsky Fraser has a longstanding commitment to integrating Environmental, Social and Governance (ESG) factors throughout our research process. We firmly believe that good governance is the foundation for strong financial, social and environmental outcomes. In light of this and recent trends, we examine here the significant governance implications of dual class share structures.
The ESG Files: Sustainable Finance Bonds
Sustainable finance bonds (SF bonds) are a mechanism for financing the achievement of social or environmental goals, allowing individuals and institutions to invest in sustainable development and close this financing gap. The market for SF bonds has developed rapidly in Canada, with annual issuance growing from $1.2 billion in 2014 to $12.2 billion in 2019. The innovation of green, sustainability and social bond labels make the fixed income component of a portfolio a natural starting point for impact-oriented investors.
The ESG Files: Redefining the Purpose of a Corporation
In August 2019, 181 members of the Business Roundtable – a Washington, D.C.-based lobby group consisting of CEOs of the world’s most influential corporations – updated its Statement on the Purpose of a Corporation, for the first time acknowledging that business decisions should deliver value not just for shareholders, but for all stakeholders, including customers, employees, suppliers, communities and the environment.
How the Pandemic May be Accelerating the Shift to Sustainable Investing
The pandemic has exposed weaknesses in a world of just-in-time global supply chains, it has shone a bright light on the realities of global inequality, and it has demonstrated just how fast carbon emissions can fall when people stop travelling. For us, it also highlights the need and opportunities of investing in a more resilient and sustainable future.
Investing in the Time of COVID-19: An Analysis of Company Performance & Stakeholder Support
The COVID-19 pandemic has had a profound impact on people and societies. In the world of investments, we see a silver lining in the opportunity for corporations to distinguish themselves through their support for various stakeholders, going beyond shareholders, to create long-term value. (You will be re-directed to the RIA site where the article was published.)
European Responsible Invesment Conference, Virtual Conference | Nov. 19, 2020
ICGN Global Summit 2020, Virtual Conference | Nov. 4-5, 2020
ESG in Financial Analysis Part Two: Master Class, Virtual Conference | June 11, 2020
Assembly of First Nations National Climate Gathering, Whitehorse, Yukon | March 3, 2020
Cercle finance du Québec - Colloque Annuel - Investissement responsable, Montreal, Quebec | March 31, 2020
SASB Webinar - The role of corporate Boards in ESG integration, Montreal, Quebec | April 7, 2020
ICD Toronto - Directors' Symposium on Climate Change and Competitiveness in Canada, Toronto, Ontario | June 4, 2020
Ceres Blueprint for Sustainable Investing This article aims to guide the institutional investor along the path of sustainable investing.