What makes a good steward?
Good stewards are more than good managers. They are more than good leaders. They are custodians who understand and carry out their responsibilities with integrity and respect for the people who rely on them and on whom they rely, and for the society and environment around them.
Good stewardship is about looking after our clients’ savings as much as we’d look after our own – with good judgement and extreme care and consideration. It’s also about understanding our rights and responsibilities in respect of the companies we have a share in.
In the companies we invest in, good stewardship relates to owners and managers with both the competence and desire to make good long-term decisions on behalf of the businesses they run.
In our view, management transparency, a diversity of views – such as a range of social, cognitive and ethnic backgrounds and good gender representation – a willingness to learn from mistakes, and a keen consideration for customers, their workforce, suppliers, the wider community and the environment are all good omens with regard to the question of stewardship.
We rule out the majority of companies
Poor governance, a lack of integrity, a willingness to take shortcuts, a failure to take responsibility for social or environmental impacts and a company culture which reflect this are reasons we rule out a huge number of companies.
We are all prisoners of recent history which often has very dangerous consequences. Both for companies and for investment managers. As stewards of capital we should extend our historical perspective as far as we can so as to prevent us from becoming too enthusiastic or depressed.
Our approach to ESG
For us, ESG is not a screen added to an investment process, it has always been a core part of our philosophy. Measuring environmental and sometimes social impact has come a long way in the past ten years; measuring ‘integrity’, (i.e. what the “G” of ESG should truly mean) is just as challenging today as ever. We do not and shall not own businesses whose major source of income is tobacco, arms/defence or gambling.