We believe responsible corporate behavior can lead to positive and sustainable long-term financial performance. In addition to contributing to an entity’s positive competitive positioning, we believe that the incorporation of environmental, social, and governance factors can help to mitigate risk and provide downside protection.
Integrating ESG into our investment process
We are meticulous in our research approach to make well informed investment decisions. By incorporating ESG considerations into our investment selection process, we aim to improve the performance of our investment strategies while achieving the best possible risk-adjusted return for our clients.
GW&K takes a pragmatic approach in applying ESG factors into the firm’s investment analysis processes, and may adjust our assessment of an investment based on a number of considerations. Our approach is to integrate ESG factors among many other fundamental, technical and valuation factors we analyze. Each GW&K investment team considers ESG factors as they evaluate potential investments for their strategies. To supplement other research sources, they may leverage ESG research data and reports from third-party providers, including MSCI ESG Research, and Sustainalytics, a global leader in ESG and Corporate Governance research and ratings.
Some investors choose to align their investment portfolios with their personal values. We often work with clients to customize portfolios in a variety of ways, from excluding specific companies or industries (such as tobacco or weapons manufacturers), to targeting specific issues. One example would include monitoring adherence to specific principals, such as Catholic Values screening. We monitor MSCI’s Catholic Values screens which follow the United States Conference of Catholic Bishops (USCCB) guidelines designed to ensure faithful, compliant and socially responsible stewardship in the management of client accounts. These guidelines and screens seek to avoid investments in companies whose products or policies are counter to the values of Catholic teachings, to use shareholder rights for social stewardship and to promote the common good.
Speaking to, and visiting with, company management teams is an integral part of our research process. It allows us to communicate with them directly on their business strategies, current market conditions, competitive positioning, business outlook, plans for sustaining future growth, and their views and commitment to ESG issues.
Please visit GW&K’s Shareholder Engagement Policy for additional information.
Oversight and Review
GW&K’s ESG Committee provides additional governance and oversight over ESG issues and factors and how they are incorporated into investment analysis, decision-making processes, and ongoing monitoring of our ESG policies and practices. The ESG Committee generally meets quarterly and more frequently as needed, to review the firm’s ESG practices, including GW&K’s policies and procedures, third-party services, and any issues that have arisen relating to ESG.
GW&K and the Principals for Responsible Investing (PRI) Initiative
Our commitment to developing thoughtful ESG practices remains at the forefront of our investment approach and we take environmental, social, governance and other responsible investing principles seriously within the management of the firm’s business and operations, as well as in managing client accounts. GW&K has been is a signatory to the Principles for Responsible Investment (PRI) since 2011.