ESG Integration

SFDR Disclosure

Environmental

  • Carbon emissions
  • Energy management
  • Resource management
  • Risk mitigation
  • Circular economy

Social

  • Human capital
  • Intellectual property
  • Diversity, equity and inclusion
  • Supply chain management
  • Privacy and data security
  • Product safety

Governance

  • Corporate governance
  • Shareholders'rights
  • Executive compensation
  • Accountability of board leadership
  • Prevention of corruption and instability
  • Carbon emissions
  • Energy management
  • Resource management
  • Risk mitigation
  • Circular economy
  • Human capital
  • Intellectual property
  • Diversity, equity and inclusion
  • Supply chain management
  • Privacy and data security
  • Product safety
  • Corporate governance
  • Shareholders'rights
  • Executive compensation
  • Accountability of board leadership
  • Prevention of corruption and instability

SustainabilityLong Term Value Creation

What are the risks and opportunities that underpin long-term growth and value creation?

  • Drive Innovation
  • Improve Market Access
  • Identify and Manage Risks and Opportunities
  • Attract the Best Talent
  • Strong Relationships with Customers and Partners
  • Stakeholder Engagement
  • Operating Cost Efficiencies
  • Lorem Ipsum

ESG Integration

Edgewood employs a comprehensive fundamental research process to identify what it deems to be the highest quality growth companies. Edgewood integrates environmental, social, and governance risk factors in its fundamental analysis of a company's potential long-term value creation. Edgewood's ESG Integration approach looks to systematically include ESG risks and opportunities as part of the investment analysis. By applying this integration approach, Edgewood assesses ESG factors that may impact a company's potential long-term value creation. Edgewood believes systematically considering ESG issues will likely lead to more complete investment analysis and better-informed investment decisions. While ESG factors are typically non-financial, how a company manages them has financial consequences. As a long-term investor, Edgewood focuses on value creation and integrating ESG factors in its analysis identifies risks that might impact the value of the portfolio investments over the longer term. A proactive approach to ESG management may enable a company to drive innovation, relate better to its customers and partners, identify risks and opportunities, increase operating costs efficiencies, improve market access, and attract the best talent.

ESG Risk Ratings

Edgewood integrates ESG risk factors by incorporating material, non-financial factors into its portfolio construction process. Edgewood quantitatively factors ESG risks into its proprietary financial model by assigning an ESG discount rate to offset the ESG risk factors that may impact a company's earnings growth. The higher the ESG risk profile, the higher the ESG risk modifier to reflect the higher risk to a company's earnings growth and potential long-term value creation.

ESG Risk Rating ESG Risk ESG Risk Modifier
0 - 19.99Low0
20 - 29.99Medium50 bps
30+High 100 bps

Edgewood uses research and data from various third parties to supplement its internal research. Edgewood uses Sustainalytics data service to source ESG Risk Ratings.

Exclusionary Screening

Edgewood's core investment objective is to invest in companies distinguished by their financial strength, levels of profitability, strong management teams, and the potential to deliver long-term earnings power. Edgewood focuses on companies with strong cash generation capabilities, consistent earnings power, superior revenue growth, return on equity, low debt, solid business models, good unit volume growth, recurring revenues, and fee-based businesses. Edgewood will not invest in companies where a significant amount of revenues (greater than 5%) are derived from manufacturing tobacco products, producing pornography, or operating gambling establishments and will not invest in companies that manufacture cluster munitions and landmines. Edgewood will not invest in companies that derive more than 25% of revenues from the production of energy generated by coal.

Active Ownership –
Engagement and Proxy Voting

Monitoring and engaging with companies plays an integral role in Edgewood's investment strategy. As part of its stewardship, Edgewood will engage with companies to further assist with its assessment of how a company is managing ESG risk factors. When Edgewood identifies material ESG risks that may impact long-term financial performance and long-term growth, Edgewood analyzes whether the company has a strategy in place to manage the risks and whether that strategy is suitably ambitious in scope. Edgewood also seeks to learn how clear and effective the company's policy is around the risks and whether the company discloses its approach in sufficient detail. Members of the ESG Committee meet with management teams of portfolio companies to learn how portfolio companies respond strategically to the changing sustainability risk factors. Edgewood votes proxies in accordance with its Proxy Voting Guidelines. Edgewood will review ESG-related proposals on a case-by-case basis and in cases where the Investment Committee determines there to be a governance, environmental or social concern, the Investment Committee may decide to vote against management.

ESG Committee

Edgewood's ESG Committee is responsible for the ESG Integration program and is composed of members of Edgewood's investment team and legal and compliance department. The ESG Committee reviews ESG risk ratings and significant events as well as compliance with the exclusionary screening.

Disclosure

SFDR Disclosure

The ESG regulatory landscape is evolving and some data may not currently be provided by companies ordata sets may be incomplete. Also the assessment of material ESG risks can be subjective and couldinclude data from third parties which may be incomplete or inaccurate. There is no guarantee the impact ofsustainability risk will be properly assessed. Third party data providers may occasionally provide estimatesdue to lack of corporate disclosures.