T. Rowe Price's updated ESG Policy Statement describes a company-specific, materiality-focused approach to integrating ESG issues into its investment analysis and decision-making that engenders consideration of a broad range of ESG issues tailored to each investment.
These guiding principles reportedly drive its approach:
- Collaboration—Companies, investors, and governments all have a role to play in improving corporate disclosures and strengthening the sustainability of business practices over time.
- Accountability—Investment analysts are responsible for assessing the full range of factors likely to have a meaningful impact on the company’s performance, and they receive specialized resources and training to enable them to make these assessments.
- Fundamental research—ESG analysis and engagement are most effective when led by experienced investors who know the company well and are best positioned to evaluate these considerations in the appropriate context.
- Stewardship—Responsibilities as diligent investors do not cease with the decision to purchase a security. T. Rowe maintains regular dialogue with the managements of its portfolio companies.
- Materiality—T. Rowe focuses on the ESG factors it considers most likely to have a material impact on the performance of the companies in its clients’ portfolios.
Depending on the company's specifics including its management, industry and geography, T. Rowe may consider, e.g., long-term environmental considerations, incentive pay structure and its alignment with strategy, human rights issues, the regulatory environment, company disclosures, and shareholder communications and engagement.
Access additional information & resources on our Institutional Investors and Sustainability/ESG pages. This post first appeared in the weekly Society Alert!