Longfellow Investment Management | LIM

Our integrated approach to ESG analysis is focused on identifying and mitigating material risks often overlooked by a more traditional fundamental fixed income research process. This is consistent with our core philosophy of downside risk reduction and principal preservation. For instance:

Legal, environmental, and labor weaknesses can lead to increased cost of capital, reduced access to funding, and reputational damage.
Resource-efficient operations can improve margins.
A diverse, independent board can alleviate business risks associated with groupthink.

How We Implement ESG Integration in Corporate Credit Research

ESG Integration incorporates an evolving set of criteria that investors can use to better understand an organization’s governance structure, environmental footprint, and impact on its employees and the community.

Critical to this analysis is the willingness of management teams to be transparent about ESG factors that are most relevant to their operations. In our view, this provides a clearer understanding of their attitudes toward stakeholders and the long-term sustainability of the business.

ESG factors have always been part of our fundamental credit research process. As such, we are aware of material ESG factors and consider them in our investment analysis to provide a more holistic assessment. However, consistent with other traditional metrics, we will not purchase or sell a position based solely on our ESG analysis.

Our proprietary ESG scoring framework provides a snapshot of a company’s ESG characteristics today and how they have improved or deteriorated over time. Actively engaging with management helps us understand how the company is managing risks and to get a sense for how they might fare in the future.

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Customized solutions

Our approach to ESG analysis and portfolio construction enables us to develop customized solutions that align your investments with your unique values.

We will work closely with you to understand your mission-related objectives and ensure they are appropriately reflected in your portfolio within the context of your investment guidelines. Moreover, we can provide customized reporting to demonstrate the measurable elements of your portfolio, such as alignment with the United Nations’ Sustainable Development Goals framework, diversity of leadership, greenhouse gas intensity, etc.

ESG Integration

Integrate ESG factors to identify risks, uncover opportunities, and assess valuation in conjunction with our traditional analysis. Also includes shareholder advocacy and engagement

Responsible

Use ESG factors to screen out or minimize exposure to investments that have elevated ESG risks or do not align with a client’s values (tobacco, alcohol, fossil fuels, etc.) Can include positive considerations on best-efforts basis

Thematic

Focus on social or environmental themes such as diversity, racial equity, or clean energy. Investments can be aligned with Sustainable Development Goals (SDGs) and include a regional focus as well

Learn more about our customized solutions