Environmental, Social and Governance (ESG)

Overview

As an early pioneer of the discipline, responsible investing is embedded in Rockefeller Capital Management’s beginnings as a firm and is based on our belief that adding sustainability criteria to an investment selection process should not require the sacrifice of financial performance. In the 1970s, certain members of the Rockefeller Family gave a powerful voice to the view that investment decisions have moral, social and financial dimensions. Thus, at the forefront of environmental, social, and governance (ESG) investing, the family office pursued a solution-oriented program for the Rockefeller Family, which has evolved into what we now call “Sustainability and Impact” or “S&I” investing.
We see our role and contribution to sustainability and impact as one that bridges the divide between hard-hitting financial analysis and the deep social and environmental concerns of our clients.

Approach

Our approach to Environmental, Social and Governance (ESG) investing focuses on managing publicly traded equities in an effort to provide competitive returns and have an impact on the sustainability of a company’s operations. Though it is important to support solutions to ESG issues, the power of a business to impact wider society also comes from its practices, its behavior and processes: not just the product, but its modes of production. Essential to our ESG approach, is our belief that a commitment to sustainable investing does not have to compromise competitive alpha generation.

The Rockefeller Global ESG Equity Strategy seeks to combine our collaborative culture with the rigor and insight characteristic of our equity research. Our analysts apply a proprietary Four Pillar Method to understand company performance in the context of interrelated ESG-related criteria, to practice an integrated, financial-first approach. The Four Pillars, detailed in the interactive graphic below, include the categories of Governance, Products and Services, Human Capital Management, and Environment.

Company Performance

Governance:

We begin our analysis by assessing the quality, integrity, transparency and accountability of a company’s management and board. We consider board composition and independence, executive compensation, diversity, transparency and other key issues that affect all levels of a business. Due to our global investment focus, we pay particular attention to the country of operation and country-specific best practices.

Products & Services:

We seek to invest in companies with business models, products and modes of production that are aligned with the sustainable development of the world’s economy. Under this pillar, we also assess a company’s marketing practices, its relationship with customers and supply chain transparency.

Human Capital Management:

The management of a company’s human capital has the potential to impact employee productivity and the long-term growth of the business. We assess how companies promote safety, diversity and positive relations in the workplace and in communities in which they operate.

Environment:

Under this pillar, we assess how a company is preparing for climate change and the transition to a low-carbon economy. We look for management and reduction of greenhouse gas emissions and other environmental liabilities. We consider a company’s consumption of natural resources and seek to understand the lifecycle impacts of manufacturing and production.

Engagement

Rockefeller Capital Management engages with companies on behalf of our clients in seeking to influence positive change on global ESG issues. We act on the belief that sustainable investing and a practice of impact can propel progress best in tandem.

In seeking to contribute to long-term, self-reinforcing, and real change, we aim to help companies become more sustainable and improve the ways in which they already operate sustainably. Team members not only engage directly with companies, but also participate and advocate with other businesses and investors in working groups; for example, Rockefeller Asset Management is an Investment Manager signatory to the United Nations Principles for Responsible Investment (PRI) and we are a participating member of the Sustainable Stock Exchanges Initiative.

We are also committed to the proxy voting process, and take the ability to exercise a vote that has direct consequences very seriously. Many issues can be directly addressed through voting a proxy and we believe that seeking to affect progress from within companies as stakeholders is an important way to provide impact where it is needed.