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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.

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

Annual ESG Review 2023

Fairlight’s primary objective is to deliver our investors superior long-term investment returns by owning a portfolio of high quality, value creating businesses. As a signatory to the UN PRI, we believe environmental, social and corporate governance (ESG) issues can directly impact company level performance and portfolio returns.

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ESG Reports

Analysing Fairlight’s Carbon Risks

Whilst Fairlight’s primary objective is to deliver superior investment returns to clients, we believe this can be achieved in an environmentally and ethically aware manner. We do not market ourselves as an ESG Fund, however the outcome of our pragmatic, research driven approach to ESG is a portfolio 95% less carbon intensive than the benchmark.

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Learn more
about Fairlight

Read our Investment Strategy