At M&L Capital Management Limited (“MLCM”), we believe that high standards of corporate responsibility make good business sense and have the potential to protect and enhance investment returns. Consequently, our investment process takes ESG issues very seriously.
ESG in practice
We have detailed some examples of our ESG policy in practice below:
We truly believe in the importance of the Environment and our responsibilities towards it.
Materiality of ESG factors in our investment approach
MLCM is dedicated to achieving the best possible risk-adjusted returns for our investors and we believe that responsible investment is essential in maximising returns to our clients. We strive to gain an in-depth understanding of the relevant ESG issues applicable to all our investments through our internal research process and we seek to identify these issues as part of the ongoing investment decision making process before they escalate into events that may potentially threaten the value of our investment.
ESG Integration into our Investment Process
MLCM’s approach via it’s Fund Managers to integrating ESG factors into our investment analysis includes the following activities:
In-depth research and training programmes
The cornerstone of our investment approach is bottom-up research. As well as studying financial results, our portfolio managers and analysts are dedicated to carrying out additional qualitative analysis of potential investments.
Examples of ESG factors that our investment teams may consider as part of their company and industry analysis include:
Training programmes have been undertaken by the investment team in London include the CFA and CISI courses which generally include a module on ESG issues and the broad range of topics that fall under this heading.
MLCM pursues an active investment style through portfolio management decisions, voting on resolutions at general meetings and maintaining an ongoing dialogue with a company’s management.
Quite often our views will differ from those of a company’s management and where this is accompanied by a failure to achieve our reasonable expectations for shareholder returns, we will consider promoting change.
Our specific response will be determined on a case-by-case basis, after weighing up the relative merit of intervention or a sale of the shares. Typically, we will choose to intervene to promote change when the expected benefits of intervention (through increased returns to our investors) outweigh the anticipated cost.
We do screen out companies from our investment universe purely on the grounds of poor ESG performance and we do adopt a positive engagement approach whereby we discuss these issues with the management of the companies in which we invest or are considering investing on behalf of our clients. We believe it is an advantage to us and our clients to build positive relationships with our investee companies as this enhances our ability to introduce constructive change where required.
MLCM is a forward-facing business who believes that good ESG will lead to good investment returns.