We approach responsible investing and Environmental, Social and Governance (ESG) factors as more than just buzzwords. Investing responsibly is of critical importance in the small and microcap sector in which many companies do not face the same level of scrutiny than that of their large cap peers.
Spheria’s ESG process has been embedded within the investment process since day one and is continually evolving. Our integrated approach to ESG involves formally engaging with companies on the themes highlighted in their ESG scoring system. Both our stock analysts and ESG specialists participate in the engagement meetings with the results of our discussions informing investment decisions.
In early 2020, we expanded our approach to ESG to incorporate the outcomes of a 34-point ESG questionnaire into our valuations to form a broader view on ESG risk. We also made a commitment to not conduct business with any involvement in human slavery, human trafficking or child labour.
We believe our ESG research and proactive corporate engagement strategy positions our portfolios for long-term success. Our close relationship with management teams thanks to long holding periods, coupled with an array of substantial holdings, gives us a competitive advantage when it comes to corporate engagement. Through corporate engagement, we have been successful in challenging management to achieve best practice and drive positive ESG outcomes.