Image for ESG Integration


ESG Integration

We analyze financially material environmental, social, and governance (ESG) risks and opportunities in our investment process.



Why ESG matters to us

Our mission is to help our clients meet their investment goals. We believe evaluating financially material ESG factors helps us better understand a company or bond issuer's potential risks and opportunities.

We view ESG factors as financially material when they’re likely to affect a company’s fundamentals or an issuer’s ability to fulfill its debt obligations. We refer to this approach as ESG integration.

 

How we incorporate ESG factors in our investment process

 

As part of our intensive research process, we evaluate many factors of a company, including financially material ESG factors, to determine if it’s an attractive investment. If we believe an ESG factor could impact our investment thesis, we’ll consider its risks and opportunities.

Financially material ESG factors can differ for each company or bond issuer. We pay particular attention to a company’s governance structure and practices, as well as environmental and social factors, when financially material, as part of our analysis of its business lines, industry, countries of operation, and history.

As value-oriented investors, we invest for the long-term and seek opportunities that have attractive earnings and cash flow prospects not reflected in a security’s current valuation. We may invest in a company with financially material ESG-related risks if we believe the company is making progress on addressing those, or if we conclude that it's still a compelling investment because of other considerations, like an attractive valuation.

We believe our role as an active manager extends beyond selecting securities for our portfolios. Maintaining a dialogue with company management teams and boards helps us build our understanding of their priorities and strategies over time. When we believe a certain issue is significant to our investment thesis, we look for opportunities to engage directly with the issuer. We may also express our views through our proxy votes.

To emphasize our commitment to ESG integration, we became a signatory to the Principles for Responsible Investment (PRI) in 2012.1

Research integration

We consider ESG-related risks and opportunities in our investment process when we determine they could be financially material to the company. We combine our own analysis with the evaluation of reports and data from third parties.

Engagement

We seek to build constructive, long-term relationships with management teams and boards. We may engage with management of companies we invest in when we believe their decisions don't align with the best interests of shareholders and bondholders.

Proxy voting

Our policy is to vote proxies in a way that we believe best serves our clients’ financial interests as long-term shareholders.

Review our proxy voting record >

As active managers, we conduct research across factors that could materially impact the long-term value of a company or debt security. We believe identifying and monitoring financially material ESG considerations helps us assess the full picture of risks and opportunities of a particular investment.


Documents



More about our time-tested approach

Over our more than 90-year history, we have continuously enhanced our approach as markets globalized and deepened. We devote all our energy to helping our clients achieve their long-term investment goals.

Our philosophy and process

We've employed the same, time-tested philosophy since our founding in 1930—guiding us through periods of market turbulence and enabling us to help our clients meet their long-term investment goals.

Our people

Meet the people who pursue investment excellence every day on behalf of our clients.

Disclosure

The ESG considerations assessed as part of the research and investment process may vary across investment strategies, eligible investments and issuers, and not every ESG factor may be identified or evaluated for every investment. There is no guarantee that the evaluation of ESG characteristics will be additive to a fund or account’s performance. ESG is not a uniformly defined characteristic and information used to evaluate ESG characteristics may not be readily available, complete, or accurate, and may vary across providers and issuers. Because of the subjective nature of ESG integration, there can be no guarantee that ESG factors considered will reflect the beliefs or values of any particular client.

Footnote

1 The PRI principles (formerly United Nations Principles for Responsible Investment (UNPRI) principles) related to sustainable and responsible investing represent general principles, which signatories integrate into their investment processes in different manners. Dodge & Cox integrates ESG considerations into our investment decision-making as described in our ESG policy statement and relevant offering materials, and may not fully implement certain PRI principles.