ESG

As an active manager whose heritage is built on rigorous, fundamental analysis, environmental, social, and governance (ESG) considerations have always informed our investment decisions.

Enhancing Our
Search for Quality

By incorporating ESG factors into our fundamental analysis, we create a more complete picture of the risks and opportunities facing companies today and in the future.

Naturally Aligned

ESG factors have a meaningful impact on a company’s ability to create value over time, so our core investment philosophies and processes are naturally aligned with sustainable investing principles.

A More Holistic View

As the link between off-balance-sheet risk factors and a company’s financial performance has become clear over the past decade, we have realized our need to be even more intentional and systematic in how we integrate ESG factors into our investment process.

Sustainable Value Creation

Across our fundamental equity strategies, we seek to identify companies that can produce excess returns on invested capital and use those returns to control their destinies. We believe that a company’s ability to do this is inextricably linked to ESG factors.

Our Commitments

WILLIAM BLAIR INVESTMENT MANAGEMENT 2020 PRI SCORES

Per 2020 PRI Assessment Report. See our PRI Transparency Report and review the PRI assessment methodology.

  • A+ Rating for Equity Incorporation from the United Nations- Supported Principles for Responsible Investment (PRI)
  • U.S. Investor Stewardship Group member
  • International Corporate Governance Network member
  • Japan Stewardship Code Signatory
  • Korea Stewardship Code Signatory
  • See our proxy voting activity: Mutual Funds | SICAV Funds

Looking For ESG Resources?

The journey to deeper, more authentic ESG integration at William Blair is an ongoing one—and it’s central to our mission to continually improve as investors.

Stephanie Braming, CFA, Partner
Global Head of Investment Management

ESG Integration in Our Investment Process

We look at ESG factors from a bottom-up perspective, incorporating third-party ratings into our own due diligence—because ratings only tell part of the story.

Beyond Third-Party Ratings

Because they’re based largely on publicly available data, third-party ratings don’t always convey the nuanced factors that affect a company’s ESG profile—or assess how material these factors are to financial performance. Furthermore, the availability of ratings data varies.

Opportunities for Active Managers

Digging deeper to find information that isn’t readily available and scrutinizing that information to determine what it truly means for a company’s prospects is the essence of our fundamental, bottom-up research process.

A More Nuanced Approach

Our research analysts develop long-term relationships with corporate management teams and understand how sustainability aligns with longer-term strategy and financial performance—a more thoughtful, nuanced approach we believe can create significant value for our clients.

ESG CASE STUDY: FOOD AND STAPLES RETAILER

One global food and staples retailer had generated strong corporate performance over the past 20 years, but received the lowest possible third-party ESG rating.

In seeking to identify the drivers of that rating, we found that the largest element was social impact, primarily in terms of food safety.

This is a problem inherent in food production and retailing because such companies have large global supply chains. This company, specifically, had a problem a few years prior when a food poisoning outbreak was linked to shrimp it sourced from Thailand.

After determining this was a temporary rather than structural problem, we looked at how the company responded. In this case, the problem was resolved, and the company took measures to ensure that food safety along its supply chain is well identified and controlled.

Our assessment of ESG quality for the company was thus higher than the third-party rating.

Focus on Materiality

Not all ESG factors are equal in their influence on a company’s financial performance. That’s why our approach to ESG integration begins with determining which ESG factors are material for a given industry.

Sharing Expertise

When exploring industry-specific ESG factors, we reviewed the provisional materiality framework developed by the Sustainability Accounting Standards Board and brought in experts from sustainability-focused research partners to sharpen our analysts’ thinking in terms of materiality assessments.

Prioritizing Factors

Then, sector by sector, we held internal discussions to identify which ESG factors were most relevant at the industry level. We would rather our financial analysts spend time researching climate-change implications for an insurance company than for a regional bank, for example.

Investment-Process Integration

To ensure material factors become engrained in our research process, analysts address material ESG factors in Summit, our proprietary research platform, and discuss with management teams the challenges and improvements a company has experienced in implementing sustainable practices.

Focusing on materiality allows us to zero in on the factors that have a meaningful impact on corporate performance in each sector.

Blake Pontius, CFA
Director of Sustainable Investing, Global Portfolio Specialist

Our Evolution

The ESG-related risks and opportunities companies face are constantly evolving, so we are continually evaluating and improving our efforts to fully integrate ESG factors into our fundamental research.

Proprietary ESG Ratings

Building on our materiality framework, we’re developing a proprietary qualitative ratings system that is fully aligned with our views on the ESG factors that affect company performance by industry.

Enhanced Data-Capturing Tools

We continue to invest in technology that will improve our ability to capture and categorize the increasing data about ESG characteristics in a way that makes it more useful for analysts and portfolio managers.

Aligned Proxy Voting Guidelines

In addition to improving reporting on our proxy voting activity, we’ve implemented voting guidelines that are focused on financial returns and consistent with the objectives of sustainability-minded investors.

As our ESG integration efforts have deepened over the years, so have the insights from our analysts on these topics. Their judgment is critical in our ability to form a more holistic view of corporate risks and opportunities.

David Fording, CFA, Partner
Portfolio Manager, U.S. Growth Equity Team

ESG Blog Posts

Looking for More ESG Insights?

Featured ESG Videos

Featured ESG Brochures and
White Papers

Why ESG Matters in Emerging Markets

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ESG in Emerging Markets Debt

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View All ESG Resources

Create an
Enduring Partnership

Our active ownership culture creates long-term client relationships by aligning with your interests and helping you achieve successful investment outcomes. Contact us to learn how we can partner with you.

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