Today’s investor has more ability than ever to align their values with their investments, and ultimately, use their investment dollars to create positive change in the world. Environmental, social and governance (often referred to as socially responsible investing) are three central factors used in measuring the sustainability and ethical impact of an investment.
McKinley Capital Management, LLC has developed an ESG platform and a US Sustainable Equity Portfolio to offer our clients the opportunity to generate returns while aligning their investments with their core values and principles. Our methodology allows for both negative screening (which eliminates investment holdings by a predetermined criteria), and positive screening (which seeks investment holdings that have certain values-based criteria or risk criteria and integrates them into the overall portfolio construction).
McKinley Capital clients have access to the financial industry’s leading ESG tactics through our collaboration with several data providers, our ongoing review of older sources as they develop additional granularity, and our industry-pioneering partnership with the Wharton School at the University of Pennsylvania. This partnership recently released a groundbreaking ESG study which resulted in a complete update of the finance industry standard for ESG investing (MSCI KLD criteria).
ESG factors are incorporated into McKinley Capital’s investment process in three primary ways:
Our research team has identified sources of alpha, particularly in the Governance sector of ESG, which complements our disciplined quantitative investment process. In contrast, we’ve found that Environmental and Social factors are frequently proxy for sector bets and can lead to increased relative risk.
Our work with clients ranges the continuum – from identifying and removing stocks related to various issues, to the creation of complex, custom environmental portfolios that align with specific client criteria. Our investment process was specifically designed to allow for this client-driven customization, and we have years of experience with hundreds of clients implementing it successfully.
McKinley Capital offers clients the option to leverage either: (i) a corporate governance-centered voting policy; or, (ii) a sustainability-centered voting policy. Both policies were developed with a leading ESG service provider and promote long-term shareholder value and risk mitigation through responsible corporate governance requirements.
In addition to considering the preservation and enhancement of shareholder value, McKinley Capital’s sustainability-based proxy voting policy promotes support for sustainable business practices that advocate for environmental stewardship, fair labor practices, non‐discrimination, and the protection of human rights. McKinley Capital is continually working to positively impact the communities in which we live and work, and we are proud to offer our clients the ability to do the same.