The Impact of ESG Criteria on Financial Performance

By evaluating companies on the basis of strict Environmental, Social and Governance (ESG) criteria, we derive added insight that we believe can influence the performance of their stocks either positively or negatively.

Environmental Factors Social Factors Governance Factors
  • Resource management and pollution prevention
  • Climate change/emissions reduction
  • Environmental reporting/disclosure
Workplace
  • Diversity
  • Health and safety
  • Labor-Management relations
  • Human rights

Product Integrity

  • Safety
  • Product quality
  • Emerging technology issues

Community Impact

  • Community relations
  • Responsible lending
  • Corporate philanthropy
  • Executive compensation
  • Reporting and disclosure
  • Board structure and accountability

Impact on Performance Impact on Performance Impact on Performance
  • Avoid or minimize environmental liabilities
  • Lower costs/increase profitability through energy and other efficiencies
  • Reduce regulatory, litigation and reputational risk

Workplace

  • Improved productivity and morale
  • Reduce turnover and absenteeism
  • Openness to new ideas and innovation
  • Reduce potential for litigation and reputational risk
Product Integrity
  • Create brand loyalty
  • Improve product safety and excellence
  • Reduce potential for litigation
  • Reduce reputational risk

Community Impact

  • Improve brand loyalty
  • Protect license to operate
  • Align interests of shareowners and management
  • Avoid unpleasant financial surprises or “blow-ups”
  • Reduce reputational risk