OUR COMMITMENT TO ESG INTEGRATION
Individual research analysts and portfolio managers are responsible for implementing ESG integration in their portfolios and investment research. We believe this bottom-up approach encourages strategy-specific innovation while allowing each portfolio management team to learn from best practices across the investment platform. Our ESG Investing team accelerates this process with top-down expertise and support.
Furtrongroup Investment’s Environmental, Social and Governance Integration Framework
Our ESG-integrated strategies select an approach from our ESG Integration Framework of Avoid, Assess, Amplify or Aim for Impact, depending on various
factors such as the objectives of the strategy, asset class and investment time horizon.
PROPRIETARY ESG ANALYSIS AND RATINGS
At Furtrongroup Investment our research analysts have worked closely with our in-house ESG Investing team to rate corporations on
material ESG metrics at the industry level. Core to development of this proprietary ESG ratings system has been our ability to
marry the specialized sector expertise of our analysts with our dedicated internal ESG investing team’s perspective on complex
ESG data sets.
Assessment of Environmental and Social Factors
A cohesive three-part method
1
Industry-Specific Assessment
Conduct material factors analysis using Sustainability Accounting Standards Board (SASB) as a starting point, but adding expert analyst judgement
2
Broad Range of Sources
Combines company-reported, specialized data and third-party research used to measure performance against these factors
3
Active Engagement
Engaging with company management provides additional qualitative insight for analysts to overlay quantitative assessment
Enablers of Success
Accelerating impact across our Corporate Sustainability and Responsible Investment activities requires a multi-year focus on the foundational elements of a robust and vibrant ESG program:
1) Embedding ESG into our culture by activating our global employee base to shape our priorities and drive implementation,
2) Increasing transparency through data by translating our qualitative objectives into more quantitative goals, and
3) Expanding our spheres of influence through external partnerships and collaborative cross-industry problem solving.
While the specific activities under these headings may change from year to year their role as key enablers of sustained impact will not.
Embedding ESG into Our Culture
After creating a distributed resource model of 120+ ESG champions across our investment strategies and corporate functions in 2020, we began to add dedicated ESG specialists by line of business. We believe a combination of the two — ESG specialists partnering with homegrown ESG champions — is the best way to integrate ESG within each team’s culture.
Increasing Transparency Through Data
While 2020 was a year for defining the data collection needs for each ESG integration plan, 2021 was the year of more systematic collection and analysis of that data. Throughout this report you will see more data across both our Corporate Sustainability and Responsible Investment sections, an effort that we plan to expand in future report
Engaging with Like-Minded Partners to Move Our Industry Forward
Just as we focus on accelerating the impact we can achieve directly, we know that longer-lasting systemic change will only happen through partnering with other like-minded firms, shareholders, limited partners, industry associations, and non-profits, among others. In 2021 we launched industry initiatives with traditional competitors and supported other programs that we feel have the potential to transform ESG practices across private markets.
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In the years ahead, the differentiated ESG program will be the one that embeds itself in the heart and mind of every employee, informing their daily work. Our aspiration is when someone asks ‘who is responsible for ESG?’ we all will raise our hands.
The Issues that Matter Most to Us
We believe a good sustainability program starts by identifying material issues — those important to both stakeholders and the success of our business.
We identified our material issues based on what we deemed most important to our stakeholders and most significant to our long-term performance.
We intend to perform this assessment annually to ensure that our strategy is informed by issues we believe are most critical to our continued success.
Responsible Investment
How we scale our sustainability practices throughout our investment platform
Mobilizing an entire investment platform to act on a clear ESG vision requires a deliberate approach to governance.
In 2020, we explicitly laid out our thinking on ESG governance by clarifying the respective roles of our
Board of Directors, Executive Management Committee, ESG Team, the groups of ESG Champions embedded in each investment strategy as well as the front-line investment and portfolio management professionals. Through this model, we collaborate firm-wide to tailor our ESG strategy to each investment group and drive ownership and accountability across the platform.
Board of Directors and Executive Management Committee + ESG Team
Roles & Responsibilities
- The Executive Management Committee conducts an annual review of the ESG Team's business plan as prepared by the ESG Team.
Accountability
- The Executive Management Committee ensures that we maintain a platform-wide, strategic, long-term ESG business plan.
- The ESG Team executes on a business plan designed to seek to deliver value to Ares and our stakeholders.
ESG Team + ESG Champions
Roles & Responsibilities
- The ESG Team defines the ESG objectives, implementation steps and processes for our investment platform.
- The ESG Team partners with designated ESG Champions to adapt the platform-wide approach to the bespoke dynamics inherent to their investment strategy
Accountability
- The ESG Team enables strategies to develop a tailored ESG implementation plan.
- The ESG Champions author an ESG integration approach that is practical and bespoke to the underlying strategy. ESG Champions refine the approach over time.
ESG Champions + Investment Committees + Investment and Portfolio Management Teams
Roles & Responsibilities
- With technical support from the ESG Team, ESG Champions serve as a local resource within strategies and review the ESG integration plan annually for priority improvements.
- Investment Committees and Teams review the outputs of ESG integration steps throughout the investment lifecycle.
- Frontline investment and portfolio management professionals execute ESG-related tasks on a deal-by-deal basis.
Accountability
- ESG Champions ensure quality and fulfillment of ESG integration outputs.
- Investment Committees ensure implementation at the fund level.
- Investment and portfolio management professionals ensure implementation at the individual deal level.
Corporate Sustainability
How we lead by example through our own corporate operations
Climate Change
We are committed to leading by example on climate change through our own corporate practices.
Diversity, Equity and Inclusion
We embrace our differences and offer a multitude of programs and policies that support our diverse workforce and enrich our work environment.
Philanthropy
We partner with charitable organizations to make an impact in our communities.