by Salman Ahmed

Clients look to Steadyhand for investment returns, plain and simple. We’re continually looking at ways to aid in this and recently concluded that integrating an assessment of environmental, social and governance (ESG) issues into our investment process can do just that.

One of our investment managers introduced the idea to us some years ago. Company specific data on ESG issues was slowly becoming more accessible and was helping them make better decisions. Soon our other managers were echoing those remarks and introducing enhancements to their process.

If you’ve come to know us well, you’ll appreciate that we aren’t the type of firm to rely solely on someone else’s word. So, to gain a complete understanding, we sought out fans and skeptics of the idea. We met with dozens of academics, corporate executives, consultants and investment managers across Canada, the U.S. and Europe. And we read thousands of pages on the topic.

We found what we were researching fell under the heading of ‘responsible investing’. For some that conjures up images of funds that limit the types of businesses they invest in on the basis of personal values. However, that’s just one approach to investing responsibly.

The largest subset of responsible investing funds doesn’t force managers to exclude certain companies or industries at all. Instead, managers can invest in any company that could reasonably produce enough return to outweigh the risks if the impact of ESG issues is also considered in the analysis.

Today, all our managers embrace this approach, which is more commonly known as ESG integration. They started looking at ESG issues because they believed it would help provide a more complete picture of the investments they were considering. They’ve become responsible investors, sometimes unknowingly.

Over the last year, we’ve been formalizing our own views on this topic. We established a framework to guide us on what we’re calling Sustainable Steadyhand. To us, being sustainable means helping our clients grow their wealth first and foremost. Investing responsibly helps achieve this goal.

We also concluded that being responsible goes beyond our investing activities. It involves having high standards for how we interact with our clients and peers. Acting responsibly also includes building a culture that attracts and retains the brightest minds. We find this lacking in much of the responsible investing discourse. For example, there is no shortage of responsible investing funds that charge irresponsible fees.

In coming weeks, you’ll hear more from us on this topic. We will provide a primer on responsible investing, go deeper into our approach and provide examples to illustrate how our managers are committed to Sustainable Steadyhand.