ESG. The pillars. The process. | Mackenzie Investments

ESG. The pillars. The process.

ESG. The pillars. The process.

Meredith Block, Head ESG analyst at Rockefeller, introduces the process and the four pillars that Rockefeller focuses on when considering a holding for their portfolio.

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Meredith Block: In order to capture all of the ESG risks and opportunities that our companies might face, we have essentially developed a number of key performance indicators across our four pillars of the environment, governance, human capital management and products and services.

At Rockefeller, we consider environmental, social and governance information to be fundamental information when considering a stock.  As a result, the conventional analysts and the ESG analysts work together in a very integrated fashion to develop research on any given name.

What this has evolved to is about 30 sector- and sub-sector-specific templates for ESG information that all include between 60 to 80 key performance indicators that were developed jointly between the ESG analysts and the conventional analysts.

When we look at a company's corporate governance, what we are doing is taking a deep dive into the expertise on the board of directors, how independent the board may be; we're looking at the executive management team, how qualified they might be, how they get compensated.  And we're also looking to see how transparent and accountable the company is to its shareholders.

For the environment, we tend to look at our key performance indicators among three themes.  One being climate change, one being natural resources management and the other being the environmental performance throughout a company's supply chain.

When we look at a company's products and services, we are looking at the company's business model.  We're also looking at the value chain of those products, how are they manufactured and what is the end of their life cycle.  We're also looking at how a company's relationship is to its customers. 

When we're looking at a company's human management capital practices, we are looking at a variety of indicators, focused on everything from diversity to labour management across the supply chain.  Occupational health and safety is also incredibly important because we want to make sure that a company's environmental and occupational health and safety standards are the same, say, in their manufacturing in Germany as they are, maybe, for their manufacturing in Indonesia.

The ESG research is done in tandem with our equity analysts as they are building their models and doing fundamental equity research, and when both processes are complete, they are presented together so that we can make the best decision on a name for the portfolio.