Environment – Social – Governance (ESG) Investing has recently had significant interest by institutional and retail investors alike. The idea of helping society and the environment is a noble goal. A big challenge and question many investors have on ESG Investing is what makes a portfolio “ESG”. There are many portfolios simply just adding the “ESG” label.
There are many approaches to ESG Investing. Our firm Cedargold takes a unique approach – we call it the New Investment Paradigm (NIP) – an ESG Portfolio that focuses on all stakeholders and, at the same time, targeting outperforming portfolio returns. The NIP involves focusing on all stakeholders, not just shareholders – customers, investors, communities, government, employees and the environment. There are several studies indicating synergism between this focus on all stakeholders and success on financial terms and on equity outperformance terms.
The power behind this unique approach is in promoting and investing in businesses that are successful in the economy and that are helping society and the environment at the same time.
We have constructed an actively managed ESG Portfolio in the form of an Index called the Cedar Austrian Economics ESG Index (“CAEEI”) to implement the NIP. What makes our portfolio ESG?
A Unique Approach to ESG Investing
We do not just apply a label of “ESG”. We take the following unique approach to ESG Investing:
- We take an integrated view of ESG Investing, based on three pillars:
- ESG Investing in the traditional sense, with a focus on assessing and monitoring a business’ ESG factors – we employ a proprietary assessment of five comprehensive ESG metrics as depicted below
- Socially Responsible Investing (SRI), with positive screening and negative screening – with reasonable discretion, we generally apply five positive screens and five negative screens as depicted below
- Impact Investing – with a focus on businesses applying investments towards impactful projects delivering financial return
- We qualify businesses for their success not only in the economy and in the financial markets, but also in addition for their success in helping society and the environment
- We are a signatory to the United Nations Principles for Responsible Investment (UNPRI), encompassing a powerful structure of industry best practices and reporting metrics for responsible investing.
- We emphasize businesses that promote the 17 UN Sustainable Development Goals
- We take an approach based on market environmentalism, not agenda-based environmentalism; this approach is based on the four principles of market environmentalism – listed here below. Download details on Market Environmentalism:
- Natural Market – a free market enterprise system;
- Decentralization – localized, decentralized solutions;
- Property Rights – that which no one owns, no one cares for; and,
- Optimism and Innovation – technology solutions based on human nature.
- We also measure, assess and monitor the carbon (Greenhouse Gas GHG) emissions by each business using the Swiss Sustainable Finance (SSF) We emphasize businesses implementing programs and initiatives towards migrating to carbon net neutral. We strive for our ESG Portfolio toward being carbon net neutral.
Powerful Active Ownership
Perhaps most powerful of all, we take an active ownership in the businesses of our ESG Portfolio. We have launched a program aligned with UNPRI principles toward active involvement with the businesses. We are providing consulting advice and services to the businesses for enhancing and improving their operations, with a particular focus on their programs to help society and the environment. These activities can also be complementary to the Impact Investing programs of the businesses in our ESG Portfolio.
For more information on any of the above, please visit our website.