At Touchstone, responsible investment is an important component of our investment process and part of our investment stewardship.
We believe incorporating responsible investment in our decision-making process enhances investment outcomes for our investors as well as resulting in better societal outcomes. While we do not manage a specific sustainability fund, the principles of responsible investment are a key element in delivering our investment objectives, given ESG considerations are an important component of the long-term success and sustainability of all companies. Considering the impact of ESG factors on the risk, return and sustainability of investments produces a more thorough due diligence process. It also helps to identify opportunities that may not be captured by conventional financial analysis.
In line with our long-term investment horizon, we expect companies with strong ESG profiles are likely to be better positioned for future challenges and to experience fewer instances of corruption and fraud. Improved ESG factors can also lead to stronger profitability through higher customer loyalty, lower regulatory costs and management distraction, increased employee morale and productivity, lower employee turnover, superior supplier relations, a lower cost of capital, and better aligned management with shareholders for long-term value creation.
Finally, we believe practicing more active ownership – by engaging directly with companies and discussing ESG issues – enables us to request our portfolio companies to improve their ESG risk management and disclosure, as well as develop more sustainable business practices. Proxy voting can also be employed to influence specific ESG issues and promote transparency.
Read our Responsible Investment Policy in full.