Our approach to ESG and Stewardship | Capital Group

  • OUR STRATEGIES
  • HOW TO INVEST
  • INVESTMENT INSIGHTS
  • ABOUT CAPITAL

Our approach to ESG and Stewardship

 

Since our inception in 1931, the goal of achieving superior long-term results for our clients has shaped our distinctive investment process. Environmental, social and governance (ESG) factors are intrinsic to this process. A company’s carbon emissions, its relationships with employees and the wider community, the independence of its board of directors and many other ESG factors can have a considerable impact on long-term financial performance and investment returns.
"We look for companies with a long-standing focus on corporate governance. We hold them to high standards of governance and expect them to operate in the best interests of investors, employees and society."

Robert W. Lovelace, Portfolio Manager and Vice Chairman, Capital Group.

Past results are not a guarantee of future results.  


ESG Brochure

DOWNLOAD

ESG integration

Fundamental research is critical for a full understanding of the risks and opportunities that ESG factors present, especially considering that many companies lack an articulated ESG strategy and public disclosure continues to be inconsistent. We do not separate ESG from the rigorous analysis that we conduct for each and every investment.
ESG is integrated into each of the four stages of our investment process, which we have termed MADE.

 

Meet
We meet with decision makers who impact the outcome of our investments.
We conducted 12,000+ face-to-face meetings during 2018.
Analyse
We develop investment convictions through extensive in-house assessment of long-term risks and opportunities. We incorporate internal and external data inputs and forward-looking information.
Distil
We identify the key factors of success behind every investment case, which is the foundation for subsequent engagement and ongoing dialogue with management.
Engage
Active stewardship is a cornerstone of our commitment to foster strong corporate governance.
We focus on engagement as a path to create a positive impact.

Active stewardship

Active stewardship of our investments reflects our focus on fundamentals and with a long-term horizon. We regularly appraise the sustainability of the companies and countries we invest in through our proprietary in-house research and engagement with a range of stakeholders. Ongoing conversations with company decision-makers is an important part of active stewardship. Our dedicated Governance and Proxy (GAP) team of 20 specialists conducted 250 ESG-specific engagements over 2017. This is in addition to the more than 12,000 meetings held by investment professionals as part of the fundamental investment research. This deep on-the-ground research and engagement anchors our ability to exercise proxy votes on each of our holdings through in-house decision making, rather than outsourcing this function. We exercised our proxy vote in more than 2,600 annual and special general meetings in fiscal year 2018.*
 
* Data as at 30 June 2018.

European Engagement and Proxy Voting

For more information on our approach to voting activity for our European investment managers, please refer to the Proxy Voting Policies for our Luxembourg UCITS management company Capital International Management Company (CIMC) and our UK MiFID firm Capital International Limited (CIL), as well as our Engagement Policy.
Throughout the year we vote on thousands of proposals at all types of companies from small businesses to international corporations. Given our long-term research-driven investment approach, each proxy vote is analysed on a case-by-case basis. Proxies for those accounts and funds that we manage are ultimately voted for by each investment division for the relevant account or fund.
These investment divisions operate independently from one another. Therefore, if accounts and funds from different investment divisions invest in the same company, those accounts or funds may vote differently on the same proposal if their respective investment divisions determine to vote differently and this will be reflected in our proxy voting reports accordingly.
Links to annual proxy voting records for equity securities held in portfolios managed by CIMC and CIL for each fiscal year will be published here in due course. Reports will be published for each Luxembourg fund managed by CIMC, and in addition CIMC and CIL will each publish a report for those segregated accounts they manage respectively in aggregate.

Industry engagement

We use our voice as investors to contribute to setting high standards of industry practice. We take an active role in key organisations that advance and protect the interests of our clients, among which are:
  • Sustainability Accounting Standards Board (SASB) and Investor Advisory Group (IAG)
  • UN Principles for Responsible Investment (PRI)
  • International Corporate Governance Network (ICGN)
  • Asian Corporate Governance Association (ACGA)

The ABCs of ESG investing

ESG investing has gone mainstream. But how can today’s investors separate the substance from the hype? Capital Group’s ESG investment director Natasha Braginsky Mounier offers a historical perspective on the growing movement and explains how Capital Group approaches responsible investing.

Listen to the podcast below

The value of investments and income from them can go down as well as up and you may lose some or all of your initial investment.

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. The information provided is not intended to be comprehensive or to provide advice.

Data as at 31 December 2018 and attributed to Capital Group, unless otherwise stated.