Fuelled by the power of 3

Our three-part process enhances our research by integrating material sustainability and governance issues.

Frameworks

Material sustainability and governance risks and opportunities can impact the value of investments over several years or decades. That's a timeframe which naturally aligns with our long-term orientation. We therefore carefully consider these issues in our investment research and decision-making through our environmental, social and governance (ESG) integration process.

 

Analysis of material sustainability and governance issues, alongside other considerations, helps us identify investment risks and opportunities. They can be, but are not necessarily, determinative to an investment decision.

RESEARCH & INVESTMENT FRAMEWORKS

What's material for one isn't material for all

We have developed 25+ sector-specific investment frameworks that distill our thinking on material sustainability and governance issues, brought to life with 40 data sources.

MONITORING PROCESS

How we identify, evaluate and assess

To complement our investment research, our monitoring process uses available third-party data* to flag a subset of investments for further research and review.

Want more on monitoring? Learn how our process works in the real world.

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ENGAGEMENT & PROXY VOTING

Meaningful dialogue on hard-to-measure sustainability and governance issues

We believe our detailed, hands-on, case-by-case practice of engagement with companies serves an important role.

Related Resources

PRO

Want to stay ahead of the curve?

Explore the latest research and insights in our perspectives library.

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ESG policy statement

Learn more about how we integrate material ESG risks and opportunities into our investment approach, The Capital System.

*IMPORTANT INFORMATION

For corporate holdings, we use two data providers (MSCI and Institutional Shareholder Services Inc. (ISS)) and five different indicators to monitor and flag holdings. These indicators capture materially lower ESG performance relative to peers and potential violations of international norms via the UN Global Compact (UNGC) and Organisation for Economic Co-operation and Development (OECD) Guidelines. For sovereign holdings, our proprietary assessment for an issuer is a weighted average of raw data inputs from three data sources: Notre Dame Global Adaptation Initiative Climate Vulnerability Index, United Nations Human Development Index, World Bank Worldwide Governance Indicators. Historically, our methodology for sovereign holdings has most heavily weighted governance metrics. Governance indicators can provide important signals about a country’s ability to meet its financial obligations. 

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.