Responsible
Investing

The Role of ESG
in the Portfolio

When it comes to responsible investment, the lack of common definitions and metrics in environmental, social and governance (ESG) assessments can make it difficult to compare ESG practices between companies.

However, at Fairlight, we believe the way a company manages ESG issues is often a good indicator of their overall risk levels and general management quality. We consider the management of ESG to be a key determinant of a company's long-term success.

Companies with better ESG performance can increase shareholder value by better managing risks related to emerging ESG issues. ESG is becoming an increasingly important part of company value and how a company protects their brand and reputation.

Download Responsible Investing Policy

Investment Process

We have incorporated ESG into the Fairlight investment process through a few different mechanisms:

  • Industry exclusion screens, which eliminate the more obvious sources of ESG risk found in industries such as:
  • Each of the companies we research is scored across a range of ESG metrics, which generates a cost of capital charge that is an input into company valuation. Companies with relatively poor ESG practices are penalised and as a result are unlikely to be owned within the portfolio.
  • Fairlight practices active ownership by engaging with companies on ESG issues (including disclosure) and voting our proxy rights.

Fairlight is also a signatory to the UN Principles for Responsible Investment.

ESG Insights

ESG Reports

Boohoo making greenwashing fashionable

Whilst Fairlight’s primary objective is to deliver superior investment returns to clients, we believe this can be achieved in an ethically aware manner. Consequently, Environmental Social Governance (ESG) considerations represent an important part of our process.

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ESG Reports

How carbon intensive is the Fairlight portfolio?

Whilst Fairlight doesn’t market itself as a specialist ESG (Environmental, Social & Governance) asset manager, we are a signatory to the UN Principles for Responsible Investment and ESG considerations form an important part of our risk management process.

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Learn more
about Fairlight

Read our Investment Strategy