At Capital Group, ESG is part of our investment process, not a separate product. 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.
Learn more about our ESG philosophy
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 investment frameworks, a multilayered monitoring process and engagement and proxy voting. Each element reinforces the others, which makes the system smarter over time.
Engagement & proxy voting
Investment frameworks Analysts identify the ESG issues that are material to each sector.
Years of tenure
Annual data as of 31 December 2020.
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.
Materiality is the foundation of our ESG investment approach
Frank Beaudry, Capital Group analyst, explains how he identifies ESG issues that influence his investment decisions in the mining industry.
Investment framework in action: US Health care services sector
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 overly 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.
ESG data aggregation
One database combines our own ESG research and third-party ratings, e.g., MSCI, Sustainalytics, and UN Global Compact assessments.
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.
Evaluation and documentation
Flagged holdings require enhanced research and review. Insights and engagement are recorded.
Assessment and review
If there are oustanding concerns, the Issuer Oversight Committee provides an additional layer or review.
New Perspective Fund (LUX)
Portfolio holdings are subjected to ESG screens using multiple lead data providers and risk methodologies. Click the chart below to see the percentages of flagged and non-flagged holdings.
Data as of 31 December 2020
Source: Capital Group
Engagement & proxy voting We gather more information with each new engagement.
We believe ongoing dialogue and engagement with companies and issuers are stronger tools then 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 relations 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 integral to our role as investment stewards. Our investment professionals are central to determining votes, supported by a specialist Governance and Proxy (GAP) team. Read our proxy voting policies and procedures to learn more.
Our approach to investment stewardship applies to our own business practices and is implemented globally. Beyond our direct engagement with individual companies, we join international agreements and industry initiatives that address ESG themes and focus on improving our communities and environment.
We engage with organisations to seek better long-term outcomes
can provide powerful leverage with management teams.
Annual date as of 31 December 2020
at which we voted keep us engaged and influential on behalf of our investors.
Annual data as of 31 December 2020.
dedicated to governance and proxy issues. In 2020, our investment professionals had ESG-specific engagements with more than 400 organisations in which we hold shares.