ESG

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 are committed to caring for our environment and ensuring that our carbon footprint is minimised.  One of our main policies to achieve this is the encouragement of the use of electronic communication with shareholders, in order to save paper, printing consumables and energy;
  • The portfolio holds no exposure to Mining or Oil & Gas Exploration companies;
  • We have donated close to £10,000 to www.clientearth.org.  Please visit and donate too.
  • Mark owns and farms close to 80 acres in Cheshire on an Organic basis that also utilises self generated solar power.
  • The Fund Manger’s Senior Investment Team only own cars which are Electric Vehicles; and
  • The Fund Manager’s Investment Team travel to work and maximise their use of public transport.

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;
  • Company engagement;
  • Active ownership; and
  • Collaboration within the investment industry.

 

In-depth research and training programms

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:

  • Changes to regulation (e.g. competition and taxation regulations);
  • Physical threats (e.g. extreme weather, climate change);
  • Cost implications (e.g. product harm, fines);
  • Brand and reputational issues (e.g. poor data privacy practices);
  • Supply chain management (e.g. redundancy of human labourers);
  • Gaining access to raw materials (e.g. China USA Trade War);
  • Product evolution (e.g. low energy products, renewable energy);
  • Shareholder rights (e.g. fair pay for Boards v Employees, capital distributions);
  • Corporate governance (e.g. Board structure, executive remuneration); and
  • Environmental performance and footprint (e.g. energy and water consumption, GHG emissions and waste).

Training programms 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.

 

Active Ownership

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.

 

Engagement

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.

Conclusion

MLCM is a forward facing business who believes that good ESG will lead to good investment returns.

‘M&L Capital Management Limited (“MLCM”) is authorised and regulated by the Financial Conduct Authority under firm reference number 672181. MLCM is registered in England & Wales under number 04089418, with its registered address at 12a Princes Gate Mews, London, SW7 2PS.

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