Our ESG approach
ESG is foundational to how we invest.
EXPLORE
A fully integrated approach
At Capital Group, ESG is part of our investment process. ESG issues are woven into The Capital SystemSM, as well as our fundamental research, due diligence and engagement. We believe our approach can help you achieve better results over time.
See how the three elements of our approach integrate ESG into our investment decisions.
How it works
We designed our ESG approach to identify the issues that can matter most to investors. It is built on three tightly woven components: proprietary ESG investment frameworks, a multilayered monitoring process, and engagement and proxy voting. Each element reinforces the others, which makes the system smarter over time.
Investment frameworks
Monitoring process
Engagement & proxy voting
Investment frameworks
Analysts identify the ESG issues that are material to each sector.
30+
30+
Investment
frameworks
Investment frameworks
200+
200+
Analysts
14
14
Years of
experience
Years of tenure
Annual data as of December 31, 2021.
We look beyond third-party data and spend thousands of hours on our own research. With an average 14 years of experience, our analysts understand the challenges of each industry they cover. They know the right questions to ask. Our sector-specific frameworks focus on the most important ESG issues when evaluating a potential investment.
Frank Beaudry, Capital Group analyst, explains how he identifies ESG issues that influence his investment decisions in the mining industry.
Monitoring process
We carefully screen securities for key ESG considerations.
We gather data from industry-leading third-party data providers, news reports and company statements, but that's just the start. To decide which investments raise potential ESG concerns, we overlay our own proprietary frameworks and deep research. Low-rated holdings are flagged for review, and analysts provide detailed insights on the particular issues.
The breadth and depth of our on-the-ground research coverage mean we dig deeper and don't always agree with conventional ratings.
Our monitoring process has four steps
STEP 1
ESG data
aggregation
ESG data aggregation
One database combines our own ESG research and third-party ratings, e.g., MSCI, Sustainalytics, and UN Global Compact assessments.
STEP 2
Identifying and
flagging risks
Identifying and flagging risks
Our system flags key ESG issues based on our sector-specific investment frameworks, as well as third-party data and standards.
STEP 3
Evaluation and documentation
Flagged holdings require enhanced research and review. Insights and engagement are recorded.
STEP 4
Assessment
and review
Assessment and review
If there are outstanding concerns, the Issuer Oversight Committee provides an additional layer of review.
Monitoring our
New Perspective Fund®
Portfolio holdings are subjected to ESG screens using multiple leading data providers and risk methodologies. Click the chart below to see the percentages of flagged and non-flagged holdings.
Data as of December 31, 2021.
Source: Capital Group. Figures may not total 100 due to rounding. Donut chart reflects the total of all covered holdings at the issuer level. In other words, multiple issues by a company have been rolled up into that single entity and are aggregated at the asset level. Monitoring process comprises equity securities and corporate bonds. Certain holdings are currently not covered by third-party monitoring providers. Rank in overall portfolio is based on weight. Our process for equities and corporate bonds draws on six indicators from MSCI and Sustainalytics and flags issuers that present potentially higher ESG risk. These indicators capture materially lower ESG performance relative to peers, heightened governance risk and potential violations of international norms via the UN Global Compact.
Engagement & proxy voting
We gather more information with each new engagement.
We believe ongoing dialogue and engagement with companies and issuers are stronger tools than exclusion when seeking long-term, sustainable results. Based on learnings from our monitoring process, our investment professionals engage with management teams to understand their goals. Building long-standing relationships gives us an opportunity to positively shape and lead industry standards. And as a large, active asset manager, we can adjust our investment decisions based on our findings.
Proxy voting is an integral part of our investment stewardship process. Our investment professionals are directly involved in determining our votes, supported by a specialist Global Stewardship & Engagement (GSE) team. Read our proxy voting policies and procedures to learn more.
Beyond our direct engagement with individual companies, we support various industry initiatives that address ESG themes. Our approach to investment stewardship also applies to our own business practices, with focus on improving our communities and environment.
20,000+
20,000+
20,000+
annual meetings
annual meetings
annual meetings
can provide powerful leverage with management teams.
Annual data as of December 31, 2021.
2,100+
1,850+
1,850+
shareholder meetings
shareholder meetings
shareholder meetings
at which we voted keep us engaged and influential on behalf of our investors.
Annual data as of December 31, 2021.
13
17
17
specialists
specialists
specialists
dedicated to governance and proxy issues. In 2021, our investment professionals had 965 ESG-specific engagements with more than 500 organizations in which we hold shares.
As of December 31, 2021.
Download ESG at Capital Group (PDF) to learn more.
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ESG at Capital Group
ESG AT CAPITAL GROUP
We incorporate environmental, social and governance issues into our investment process.
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Global citizenship
GLOBAL CITIZENSHIP
We live the same high standards we expect of the organizations in which we invest.
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Our beliefs
OUR BELIEFS
We believe we can help investors succeed by remaining true to our core values.
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Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
Investing outside the United States involves risks, such as currency fluctuations, periods of illiquidity and price volatility. These risks may be heightened in connection with investments in developing countries.
Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and should not be considered advice, an endorsement or a recommendation.
Capital Group manages equity assets through three investment groups. These groups make investment and proxy voting decisions independently. Fixed income investment professionals provide fixed income research and investment management across the Capital organization; however, for securities with equity characteristics, they act solely on behalf of one of the three equity investment groups.
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This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.