Philosophy: ESG factors key to sustaining cash flow
The Mackenzie Resource Team believes that future returns are driven by the sustainable free cash flows a company can generate. Responsible management of environmental, social and governance (ESG) factors is key to the sustainability of future cash flow, and ESG analysis is therefore an integral part of the team’s work. The team believes that society will only reward companies that manage their social and environmental license to operate and contribute to improving society by providing products with a reduced carbon footprint.
ESG factors influence return expectations both at the industry and company level. On the industry level, the team believes that ESG factors will differentiate the future prices of commodities, as consumers will prefer more sustainable products and avoid polluting commodities. At the company level, the team specifically targets ESG improvers, which are companies that are contributing to an improvement of society at an accelerated pace relative to their peers, which, in the team’s view, should be rewarded by superior returns over time and reduced investment risk.
A team effort in ESG analysis
All members of the Resource Team are responsible for conducting ESG analysis as part of their research process. Resource Team members have a science background with a deep fundamental understanding of industry fundamentals, and all are responsible for ESG analysis and integration as well as engagements.
The Resource Team’s in-depth process
The Resources team’s ESG approach in action
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