Responsible investment
Management of environmental, social and governance issues
At OC we believe that companies with best practice ESG policies and appropriate risk management practices may outperform peers in similar industries.
Our aim is to:
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be aware of and monitor the key ESG issues for investments in the portfolio;
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be aware of and monitor the key ESG issues for investments suitable for future inclusion in the portfolio;
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voice our opinion to management and board members through our voting and active engagement in any instance where we see a company requiring change in relation to an ESG issue. We also continuously evaluate ESG issues for investments suitable for future inclusion in the portfolio;
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encourage the disclosure by companies of ESG and sustainability issues.
What is ESG?
ESG stands for Environmental, Social, and Governance — three key factors used to evaluate the sustainability and ethical impact of an investment.
Environmental
Environmental factors focus on issues like climate change, waste management, pollution, conservation of natural resources, sustainable land use, the circular economy, and biodiversity.
Social
Social criteria assess a company's impact on society. This can include human rights, equality, health and safety, working conditions, diversity, and its effect on local communities.
Governance
Governance evaluates how a company is managed. This involves looking at board structure, executive pay, cybersecurity, privacy policies, anti-corruption measures, and how conflicts of interest are handled.
Responsible investment at OC
At OC, we have integrated ESG (Environmental, Social, and Governance) considerations into our investment process. These factors play a key role in our standard risk assessments and company analysis.
Our portfolios are focused on delivering optimal investment performance and minimising risks including those associated with ESG. In constructing our portfolios, we will consider how ESG issues may impact a companies’ ability to achieve their financial and strategic goals.
We aim to evaluate all material ESG issues when considering potential investments and managing existing stock holdings. In some cases, these considerations may lead us to exclude certain companies from our investment universe or adjust our position size within the portfolio.
Companies are judged by their past actions as well as tangible evidence of their intentions.
ESG considerations are also considered in valuation parameters and in portfolio construction.
Topical issues are discussed at the monthly Risk Management Committee meetings.
Analysts endeavour to keep abreast of current and emerging issues that may be relevant to their areas of coverage.
We take a forward looking view of ESG assessments, acknowledging that companies’ positions may change over time.
Our Operational Risk Assessment also evaluates specific ESG issues. Key focus areas include:
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Ethical leadership: Does management act ethically and in the best interest of stakeholders?
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ESG transparency: How openly does the company communicate its ESG measures including its approach to modern slavery and climate change?
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Industry sustainability: Is the industry viable in the long term (e.g., thermal coal exports)?
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corporate governance: What is the company’s track record in governance?
At OC, we strive to make responsible investment decisions that align with both financial performance and sustainability.
