Responsible Investing

“Publicly listed companies have a responsibility to all stakeholders, including employees, investors and the world they operate in. At Anchor, we believe that it is possible to not only run businesses profitably but also run them in a sustainable manner.”

—William P. Rice Jr., CEO

Our Approach and Philosophy

Anchor Capital has been managing money for almost forty years by looking for high-quality companies early in their life cycle and holding them for long periods of time.  We believe we can generate competitive risk-adjusted returns over a market cycle through a portfolio of companies that combines financial strength, a sustainable competitive moat and attractive valuations.

Throughout Anchor’s history we have excluded certain industries or companies that we feel have a negative contribution to social and environmental good such as alcohol, tobacco, gambling, firearms, and global sanctions. Therefore, full ESG integration was a natural extension to our fundamental research process. ESG risks and opportunities are analyzed throughout all phases of our investment process.

Our investment philosophy puts equal emphasis on the fundamental (including ESG risk management), sustainable and valuation picture for any company we consider for Anchor portfolios.

ESG Research and Integration

ESG analysis is fully embedded in our research process, with the same fundamental analyst undertaking both financial and ESG analysis.

Our goal is to maintain internal research coverage and an ESG rating system of our portfolio holdings.  We have the data and analytical resources to measure progress and performance over time.  We track a number of ESG factors and measure our portfolios against relevant benchmarks.

Part of our process includes allocating our portfolio to align with several of the UN Sustainable Development Goals (SDGs).

On the fundamental investment side, Anchor’s in-house research team looks for high quality companies at attractive valuations.  Next, as we go through the bottom up review of a company, we add the element of our ESG research.  It involves assessing the ESG risks and opportunities for each company and the long term potential impact on the company.

Once a stock is approved, we carry that ESG assessment to the portfolio construction and risk management process, where we make inclusion and sizing decisions.

Our boutique structure allows us to provide fully customized portfolio solutions.  As such, we welcome and encourage dialogue with our clients who may need customized portfolios based on ESG factors.

Our Perspectives on Climate Change

Climate change is one of the world’s most pressing environmental issues.  It has become a focus of global attention in the last few years with the Paris Agreement, which aims to strengthen the response by countries working to keep the global temperature rise this century well below 2 degrees Celsius, above pre-industrial levels, and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius.1

Many companies are increasing reporting of their carbon output and our preference is to identify companies are that focused on pursuing a path towards a carbon neutral future.  We would like to see companies set greenhouse gas (GHG) emissions reduction targets.  Furthermore, our investment approach seeks more asset light business models that are less impacted by GHG exposure.

In analyzing companies and how they can potentially be affected by climate change, we look at both transition risks and physical risks.  Potential materiality of climate related issues depends on a company’s sector/industry and its own operating model.

1 https://unfccc.int/process-and-meetings/the-paris-agreement/what-is-the-paris-agreement

Our Perspectives on Diversity, Inclusion and Equality

We believe an area of good governance includes management of human capital, a protective labor environment and anti-corruption policies.  Many of these principles are outlined in the United Nations Global Compact and we look for our portfolio companies to be signatories of the Global Compact.

We believe those companies with policies in place to promote and foster an environment of diversity and inclusion are important not only to increased worker satisfaction and productivity, an ability to attract and retain top talent and reduce employee turnover, but also contribute to long term success.

Engagement and Proxy Voting

Anchor has a long history of engaging with company’s management and their boards of directors on governance issues, recognizing that companies that have effective and transparent leadership are more likely to have better ESG policies and practices and more successful operations.

We have always felt that our in-depth bottom-up fundamental research process led to better engagement opportunities with management teams of portfolio holdings.  In many cases we have actively engaged with company’s management and boards of directors in order to foster change and improve the outcome for all stakeholders.

We also vote proxies for companies we own, in a manner that we believe should maximize the economic value of our clients’ holdings.  Importantly, we evaluate each proposal on its merits and vote according to our own Proxy Voting Guidelines, which sets forth general guidance.  We do not automatically vote proxies either with management or in accordance with the recommendations of third-party proxy providers.

Collaboration with Industry Initiatives

We are a signatory to the UN Principles for Responsible Investing, CDP’s Environmental Disclosure Platform and the Statement of Support for the Task Force for Climate-Related Financial Disclosures (TCFD).

We will continue to participate in educational and training opportunities to enhance the collective intelligence and best practices of the firm with regard to ESG research, standards, integration, and voluntary disclosure reporting practices.

In addition, we partner with other asset management firms and broader industry organizations to share insights on corporate governance trends and local market considerations.

Transparency

We believe that transparency is a critical element in creating meaningful dialogue among stakeholders, asset owners, investment managers, and companies, and so we provide the following information detailing our efforts.

PRI-Sig-Web-V1
image007