When we’re approaching the ESG issue within the concentrated global portfolio, we really think about these key issues of [whether] we want to be in this business with these people. And the “in this business” is very much the E and the S, the environmental and social, and “with these people” is very much the governance.

So, if you’re a quality investor, you’ve been asking a lot of those questions historically, and we continue to do so as ESG becomes a little more formalized and we have discussions with our clients about what they really want to know as well. We start to have a formula that we start to think through, so that we can in particular get enough data that we can monitor for improvement over time. And that’s really a key going forward.

The focus we have is to try and know a great deal about the relatively few numbers of companies we’re looking at and ultimately investing in. So, in a 30-stock portfolio, we have a team of 14 analysts around the world. That’s a concentrated approach in the sense of the amount of work the analysts are doing per company. It’s very focused and, within that, we expect them to know really as much as they possibly can about all aspects of the business.

We’re engaging with our businesses constantly. We’re going to visit them; they come to see us. And we’re asking a lot of questions about [each] business, which includes those key ESG criteria. But we need to follow that through. So, it’s all very well saying a business has an issue—everyone’s going to have an issue from time to time. We need to know what that [issue] is and that we understand it, we think the company is addressing it and, more importantly, we can come back at a period of time and say: yes, it has been addressed, we were right to say that was an issue that we thought we could withstand and the business will withstand and, indeed, they would get better. For us, it’s about companies improving—not about being perfect the first time out.

We try to look long-term. We try to take a five-year perspective. In that view, you need to think about some of the issues that may come up that will affect that business’ opportunity to grow over time. And a lot of those things are now thought of as ESG, but historically they weren’t. They were just good, quality businesses doing the right thing in the right way.

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