An understanding of the environmental, social and governance (ESG) implications of our investments is vital to creating value, primarily through ameliorating risks that could undermine investment assumptions and thus adversely impact returns. We integrate ESG considerations into our investment management processes in the pursuit of both financial performance and risk management.
Putting Responsible Investing into Practice
Our Responsible Investing policy guides our investment team in underwriting new investments and managing existing investments. This policy is approved by our investment committee, but is owned on a daily basis by the entire Freedom 3 team. The investment committee meets twice a week to discuss existing and new investments, and ESG-related issues are regularly discussed.
Due Diligence & Underwriting
Freedom 3’s investment professionals assess ESG-related risks throughout the due diligence process of each transaction. Rather than a “check-the-box” assessment of ESG, the investment team identifies the specific ESG-related risks and benefits associated with the prospective investment. A formalized assessment of ESG is included in the investment committee memorandum for each new investment.
Through fundamental analysis, we seek to gain a comprehensive understanding of the factors that influence the sustainability of the investments we make. We view the importance of ESG as driven by ownership and management. As such, we focus our efforts on discussions with those constituents to arrive at our view of ESG-related risks and the importance that is placed on ESG by the company.
Portfolio Monitoring
After each investment is made, our portfolio team continues to monitor each portfolio company to ensure that an investment's ESG risk profile remains consistent with our original underwriting thesis and any changes to a company’s operations are considered. We understand that the materiality and relevance of various factors will differ from sector to sector and change over time as science and technology change and new information emerges.