The first measure of success at EdgePoint is achieving investment results at or near the top of our peer group over a 10-year period. Investors look to us to build wealth for them over the long term, and we believe that investing responsibly helps us meet that expectation.
ESG integration approach
Assessing environmental, social and governance (ESG) factors has been a part of our investment approach since day 1. Overlooking ESG issues would interfere with our ability to compound wealth for our investors over the long term. We believe good companies often have a well-constructed approach to business sustainability and make strong considerations towards ESG issues.
As investors, we do not view our jobs as buying pieces of paper to be traded. Instead, we are taking ownership stakes in businesses that will be held for the long term. Before taking an ownership stake in a business, a tremendous amount of research and analysis is performed. We often follow a company for years before investing in it. Throughout this rigorous due diligence process, we look for any signs that ESG issues could pose material long-term implications to our potential investment (e.g., exploitation of workers, management character, environmental contagion, unsafe working conditions, excessive remuneration, allocation of capital, conflicts of interest, etc.). There have been times when we chose not to invest in a business because of potential ESG concerns.
Information collected during our due diligence helps us shape our investment decisions and hold the businesses we own accountable for upholding their corporate ESG principles. We also encourage management teams to enhance their procedures and policies as required. In our view, this ongoing engagement and scrutiny of company leadership is an effective way to maintain and improve corporate responsibility within the businesses we invest in. We also defend our investors’ interests when necessary. This includes voting proxies to reflect our views on management compensation and board composition, while also ensuring responsible capital allocation.
Business owners buying businesses
Our main goal is to build wealth for our investors over the long term, and we believe the best way to do this is to invest like a rational business owner would. A rational business owner understands that minimizing pollution, limiting their environmental footprint and avoiding exploitation of workers are actions that not only make good sense for the future of our planet, but also make good business sense. Sustainability is interlinked with financial results. We believe this is evident in many of the businesses we own, and is reflected in their efforts to increase their positive impact environmentally, socially and economically. While we believe strongly in the importance of ethical and responsible corporate behaviour, and recognize that these factors impact performance over time, we also consider many other factors prior to making an investment.
EdgePoint’s Responsible Investing Policy can be found here.
EdgePoint’s Active Ownership Policy can be found here.
EdgePoint’s Proxy Voting Policy can be found here.
In January of 2020, EdgePoint became a signatory of the United Nations-supported Principles for Responsible Investment (PRI).
The PRI is the world’s leading proponent of responsible investment. As an independent organization, it promotes a sustainable global financial system by fostering good governance, integrity and accountability.
The PRI align well with EdgePoint’s approach to ESG integration. As a signatory of the PRI, we commit to the following six principles:
- To incorporate ESG issues into investment analysis and decision-making processes
- To be an active owner and incorporate ESG issues into our ownership policies and practices
- To seek appropriate disclosures on ESG issues by entities in which we invest
- To promote acceptance and implementation of the Principles within the investment industry
- To work with the PRI Secretariat and other signatories to enhance their effectiveness in implementing the Principles
- To report on our activities and progress towards implementing the Principles
EdgePoint is a member of the International Corporate Governance Network (ICGN), an investor-led organization with the mission to promote highest standards of corporate governance and investor stewardship in the pursuit of long-term value creation, sustainable economies, social prosperity and a healthy environment.
EdgePoint supports the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), which aim to provide guidelines for companies to consistently disclose on climate-related risks and opportunities, resulting in meaningful information to their stakeholders.