As stewards of our client’s funds, we are mandated to deliver returns that will enable our clients to achieve their long-term investment objectives. We believe that companies with sound business practices, including strong corporate governance and responsible management of material environmental and social issues, have better success and deliver stronger financial performance over time. Conversely, companies that have poor environmental, social or corporate governance practices present risks and controversies that may hinder their financial performance.
Our industry analysts investigate these ESG risks and opportunities through our in-house research process, which is complemented by independent third-party research. Conclusions are integrated into the investment decision-making process. The timing of investments is subsequently made based on fair value, pricing and timing considerations.
Through in-depth knowledge and research of an industry’s competitive landscape and regulatory context, along with management dialogue, we evaluate a company’s adherence to environmental restrictions and regulations and determine whether they are acting responsibly. We are alert to significant polluters or those creating large environmental liabilities. Companies that innovatively leverage their existing research platforms to develop new, sustainable technologies and solutions are favored.
We are drawn to companies that create real sustainable value for their clients and where the benefits are shared equitably between stakeholders. With a primary focus on large high-profile companies around the world, we gain comfort that the social issues of these firms are continuously monitored and scrutinized by the market and that their labor policies are highly visible. As a firm, we have never invested in companies with significant revenues coming from the tobacco industry. In addition to the ethical aspects, our fear is that these companies could at some point incur significant health-related liabilities. We have not wished to profit from the gaming industry and have hence avoided all investment in this sector. We are committed to shareholder advocacy in order to proactively influence corporate decisions to ensure that companies improve their labor practices and policies.
Oversight of ESG integration resides with Letko Brosseau's management committee, and ultimately with its Board of Directors. Furthermore, the firm's investment committee, comprised of all our investment analysts and portfolio managers, is responsible for ensuring that every material ESG consideration is incorporated into the analysis and selection of each investment.
We believe the voting right is one of the most important rights inherent to shareholding. Letko Brosseau takes very seriously its responsibility of ensuring that proxies received are voted and that the decisions taken represent the long-term interests of shareholders. In general, we promote equal treatment of all shareholders and vote against restricting the composition or conduct of the Board of Directors. We also seek to ensure that executive compensation and option plans are fair, reasonable, and minimize shareholder dilution.
Subscribe to Letko Brosseau’s newsletter and other publications: