EnvironmentalHow does a company act as an environmental steward?
SocialHow does a company treat employees, customers & communities?
GovernanceHow does a company govern itself?
1. Research and analysisOur Corporate Governance & Responsible Investment group ensures that all our investment teams have access to industry-leading research on the ESG issues they consider material. Our investment teams consider ESG factors in their respective investment processes, contributing to an enhanced analysis of companies and a better understanding of the risks and opportunities facing them.
2. EngagementEngagement refers to direct communication between shareholders and the board or management of the company, depending on the nature of the issue. Its purpose may be to better understand a company’s approach to ESG issues or it may be to encourage the company to adopt better practices, including improved ESG-related disclosure and/or more effective identification and management of ESG issues.
3. Proxy votingVoting our shares responsibly is part of our fiduciary duty and we make our voting decisions independently, in accordance with our custom Proxy Voting Guidelines. The Proxy Voting Guidelines are updated annually to reflect our views on emerging trends in corporate governance and responsible investment, providing an overview of the corporate governance principles we support and how we will vote on ESG-related issues.
4. CollaborationWhen appropriate, we work together with like-minded investors, either directly or through organizations/coalitions, to allow us to have greater influence over the ESG practices of the companies in which we are invested. Learn more about our responsible investment commitments.
5. Engaging with regulators and lawmakersAs a firm, we engage constructively with regulators and other lawmakers to ensure the shareholder perspective is heard when changes to laws or regulations are being considered.
ESG integration in action
All investment teams select the ESG tools and processes that work best for their investment decision-making processes. However, there are some commonalities in how our investment teams consider ESG factors within asset classes. For example, good corporate governance practices are important for all of our investments across all industries and markets.
We believe that companies with good corporate governance structures are: better able to focus on the company’s long-term, sustainable growth; pose less risk for shareholders due to proper alignment of management and shareholder interests; are more likely to issue fixed income instruments with higher credit quality and lower credit risk; and are more likely to effectively manage the company’s environmental and social factors. Learn more about other aspects of ESG integration within asset classes at RBC GAM here.