Environmental, Social & Governance (ESG) Awareness
ESG Investing Adds Value on Many Levels
In recent years there has been an increased awareness regarding public companies and their ESG track record. In our own work, we have also been witness to this trend. We often hear CEOs and research partners weighing in on enhancing their corporate culture as it relates to issues of governance, society and sustainability. Moreover, there is a growing movement of “smart money” investing in companies that have a strong history of these pertinent issues and we see this as something that adds value for shareholders. Over the years, we have included ESG components in our research process to avoid investing in companies that have flagrantly poor environmental, social and governance track records.
Investing in companies that cultivate ESG best practices just makes good investing sense. In the “old days” one might argue that to invest with a social conscious might mitigate performance – but today that is just not so. There are an increasing number of large institutional investors who appreciate companies with high ESG marks and their hefty investment dollars can go a long way in supporting both higher stock prices and industry standards.
For many, investing with a social conscious is a challenge since most mutual funds – especially the index funds – invest in a wide array of companies without regard or ability to be ESG sensitive. This invariably exposes investors to companies that may have egregious violations, which hurts these index shareholders in the long run. As you know, at Main Street Research the bulk of our work is with individual securities, which allows us to screen out companies with poor ESG standards.
We recognize that ESG investing means different things to different people. In our research process we search for companies with certain characteristics that show the promise of accelerated growth – with a bias towards those with positive governance, environmental and social awareness. However, if you feel that you would like your portfolio to be more sensitive to specific ESG constraints, just let us know. Since we manage each client account separately we are able to make these adjustments.
When you began working with us, you may have indicated an interest in avoiding certain types of companies or industries. If you would like to update this information please let us know and we will be happy to discuss and tailor your portfolio to reflect those interests. Otherwise, keep in mind that we will continue to invest in great growth companies using ESG as one component of our work for you.
Your Team at Main Street Research
If you have a friend or family member who may have an interest in investing with an ESG bias, we would be happy to offer a no-cost introductory meeting.