Our Approach to ESG
As one of the world’s largest alternative asset managers, we are uniquely positioned to make a positive impact through our investments and to strengthen them.
We recognise that activities that support growth and development include involvement in interests outside of day-to-day employment activities. We view our philanthropic activities as an opportunity to engage our people, support their development and be of benefit to the local communities in which we operate.
Our two-pronged global approach includes a global matching program that provides each employee the ability to donate to a not-for-profit of their choice and receive a match from the Firm as well as a capital pool for each office to support philanthropic activities that are important to our people and facilitate relationship building in support of collaboration.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) FACTORS
We look at the following factors as a starting point for our responsible investment process:
Environmental:
A company's impact on the natural world:
- Climate change
- Biodiversity loss
- Resource scarcity
- Waste and pollution
Social:
The wellbeing and rights of people and communities:
- Human rights
- Labor standards
- Working conditions
- Data protection
Governance:
The standards for running a company:
- Bribery and corruption
- Executive pay
- Board structure
- Political contributions
Changing the Status Quo
We are always seeking a better approach – from better tools to better services – to the challenges that face our clients, our people and the communities we serve. A good company challenges the status quo; a great company changes it for the better.
Integrating ESG
Environmental, Social and Governance principles have been integral to Capitalsave Investment Partners corporate strategy since our founding. We are committed to responsible investing practices and incorporate them into everything we do.
Empowering Our People
It is not enough to help others in need. Social responsibility starts right at home with the thousands of people at Capitalsave Investment Partners, who are committed to giving back. That’s why we’re so dedicated to our people. The more we do for them, the more they can do for their communities.
Our ESG principles are embedded throughout our operations and help us ensure that our business model will be sustainable well into the future.
Mitigate the impact of our operations on the environment:
- Strive to minimize the environmental impact of our operations and improve our efficient use of resources over time.
- Support the goal of Net Zero GreenHouseGas (GHG) emissions by 2050 or sooner.
Uphold strong governance practices:
- Operate to the highest ethical standards by conducting business activities in accordance with our Code of Business Conduct and Ethics.
- Maintain strong stakeholder relationships through transparency and active engagement.
Ensure the well-being and safety of employees:
- Foster a positive work environment based on respect for human rights, valuing diversity, and zero tolerance for workplace discrimination, violence or harassment.
- Operate with leading health and safety practices to support the goal of zero serious safety incidents.
Be good corporate citizens:
- Ensure the interests, safety and well-being of the communities in which we operate are integrated into our business decisions.
- Support philanthropy and volunteerism by our employees.
CAPITALSAVE INVESTMENT PARTNERS NET ZERO COMMITMENT
We support the goal of the Net Zero GreenHouseGas (‘GHG’) emissions by 2050.
Over the past 8 years, Capitalsave Investment Partners has been actively involved in building one of the largest private renewable power businesses in the world. With installed renewable generating capacity of 20 GW, we now produce more than enough green energy to power Arizona and will more than double that amount once our development portfolio is brought online.
We recognise that further renewable power capacity must be rapidly scaled to replace fossil fuel generation and meet expanding global electricity demand so that the world can eliminate the over 70% of global emissions that come from final energy consumption as quickly as possible.
Capitalsave Investment Partners intends to build on this leading position in renewable power and do much more to contribute to the transition to net zero:
We will go further
In addition to continuing to make major investments in renewable energy globally, we will manage our investments to be consistent with the transition to a net zero economy. As a recent signatory to the Net Zero Capitalsave Investments Managers initiative, we have made a commitment to investing aligned with net zero emissions by 2050 and implementation of science based approaches and standardized methodologies through which to deliver these commitments.
We are committed to transparency
- We will track and report GHG emissions consistent with GHG Protocol and PCAF standards.
- We will publish decarbonisation plans every five years consistent with the Paris Agreement.
- We continue to align our business with the TCFD recommendations and are targeting to incorporate TCFD disclosures for the 2023 fiscal year.
We will help accelerate the transition to Net Zero
We will catalyse companies onto Paris-aligned net zero pathways through our new Global Transition investment strategy, focusing specifically on investments that will accelerate the transition to a net zero carbon economy.
We will continue to pursue industry-leading returns
We will continue to pursue industry-leading returns for our investors, consistent with our long track record of building the backbone of a more sustainable global economy.
We will collaborate
We will work with leading private sector initiatives to advance the role of finance in supporting the economy-wide transition, to accelerate capital flows consistent with the Paris Agreement, and to promote widespread adoption of decision-useful methodologies to support credible transition planning, analysis and investing.
Upon company acquisition, we create a tailored integration plan to ensure that all material matters, including ESG risks and opportunities are prioritised. ESG risks and opportunities are actively managed by the portfolio companies with guidance from our in-house investment teams, primarily through representation on company boards and equivalent oversight bodies where all financial, operational, and strategic elements of the business are reported, considered, and where appropriate, approved.
This allows us to draw on local expertise, which provides valuable insight given the wide range of asset types and locations in which we invest. Certain key performance indicators, such as serious safety incidents, are reported regularly to the applicable board or other oversight body.
A STRONG GOVERNANCE FRAMEWORK
We are always working to maintain sound governance practices to ensure ongoing investor confidence. This involves a continual review of how evolving legislation, guidelines and best practices should be reflected in our approach.
For example, we have a zero-tolerance approach to bribery, including facilitation payments, and all Capitalsave Investment Partners are mandated to complete an in-depth anti-bribery and corruption (ABC) training seminar annually. Capitalsave Investment Partners maintains an ethics hotline to report suspected unethical, illegal or unsafe behaviour.
The reporting website can be accessed through this link. Our reporting hotline is managed by an independent third party and is available 24 hours a day, 7 days a week. We also require all portfolio companies in which we have a controlling interest to adopt an ABC policy that is equally stringent to Capitalsave Investment Partners, which entails that portfolio companies install an ethics hotline within six months of acquisition.
Dedicated ESG Strategies
Capitalsave Investment Partners' firm-wide approach to integrating ESG factors is first and foremost a risk-based approach, but we also provide solutions for clients that would like to pursue principles-based capital allocation through our dedicated ESG products.
Capitalsave Investment Partners long-term, scenario-based approach to value investing is particularly well-suited to the integration of ESG factors, which are essential in understanding risk-adjusted returns.
Our International Equity and Global Equity ESG products build on this value approach by combining risk-adjusted returns with principles-based capital allocation decisions:
Holdings should normally meet or exceed a minimum threshold as assessed using Capitalsave Investment Partners proprietary ESG Summary Reports
Exposure to business involvements deemed unacceptable for the ESG mandate- presently fossil fuel extraction, weapons and tobacco- should be minimised.
Positive consideration would typically be given to stocks with more favorable ESG characteristics where two or more companies exhibit comparable valuations
Implemented in a systematic and consistent manner, ESG incorporation can be effectively integrated into a value investment philosophy.
A Strong Governance Framework
We are always working to maintain sound governance practices to ensure ongoing investor confidence. This involves a continual review of how evolving legislation, guidelines and best practices should be reflected in our approach.
For example, we have a zero-tolerance approach to bribery, including facilitation payments, and all Capitalsave Investment Partners are mandated to complete an in-depth anti-bribery and corruption (ABC) training seminar annually.
Capitalsave Investment Partners maintains an ethics hotline to report suspected unethical, illegal or unsafe behaviour. The reporting website can be accessed through this link. Our reporting hotline is managed by an independent third party and is available 24 hours a day, 7 days a week. We also require all portfolio companies in which we have a controlling interest to adopt an ABC policy that is equally stringent to Capitalsave Investment Partners, which entails that portfolio companies install an ethics hotline within six months of acquisition.
The willingness of value investors to take a position in a broad range of companies and industries – including those that typically score very poorly with regards to certain ESG characteristics – has been taken by some to mean that a value investment philosophy is incompatible with the incorporation of ESG factors.
This needn’t be the case as demonstrated by Capitalsave Investment Partners integrated approach to incorporation in our equity and fixed income strategies. In particular, Capitalsave Investment Partners recognises that climate change must be considered as a risk to the long-term future of economies and individual business, and addresses these concerns through its bottom-up analysis.
Analysts adopting a holistic approach, rather than ESG specialists operating in silos, create greater efficiency and context, focusing on the most material issues for a company.
Capitalsave Investment Partners has always believed it is the responsibility of all investment professionals to understand and incorporate the impact of environmental, social and governance factors on our present and potential investments, and their sustainable profitability.
In advocating for an integrated approach, we argue that all material factors that could influence a company’s valuation – as determined by its future cash generation and shareholder returns – should be rigorously analysed and incorporated as part of an in-depth research process. Considerations stemming from environmental, social, and governance concerns must, where material, be included in this process.
Taken not in aggregate but as individual concerns, they can be understood in the context of the company’s specific financial and operational situation.
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