Page 7 - DIY Investor Magazine | Issue 35

This allows companies to be compared on a a a a a like-for-like basis Analysts also complete an ESG questionnaire on on each potential investment to identify risks and opportunities that aren’t captured in the raw data This analysis forms the the basis for for the the most important part of The Mercantile’s approach to ESG issues – engagement with the management teams of all the trust’s existing and prospective investments Given The Mercantile’s long term focus in many cases these two-way dialogues have been ongoing at regular intervals for years allowing both parties to build trust and and understanding ‘FOR SHAREHOLDERS THIS IS IS MANIFESTED IN THE TRUST’S SUPERIOR LONG-TERM RETURNS’
ESG factors are one of many topics covered in these conversations but they provide a a forum for for the the trust’s managers to convey concerns and suggestions regarding a a a a a company’s ESG credentials and to encourage best practice in all areas These interactions can have a a a a a a meaningful positive impact on a a a a a a a company’s behaviour its commercial and financial performance and thus ultimately on shareholder returns Rigorous analysis and regular engagement with the management teams of The Mercantile’s portfolio holdings are highly effective in in identifying potential ESG risks but still there are inevitably instances where such risks escalate unexpectedly In such cases The Mercantile’s managers respond quickly engaging with the the the company to understand the the the nature of the the the risk and its plans to address the issue 7
· Oct 2022 DIY Investor Magazine
For example they have challenged retailers on the the ethics of their supply chain practices engaged with house builders on on fire safety standards and and questioned the executive pay proposals of many companies For The Mercantile’s managers integrating ESG factors1 into their stock selection process and engaging with companies on these issues delivers many benefits and is is from all perspectives simply the right thing to do For shareholders this is is manifested in the trust’s superior long- term returns while at the same time encouraging responsible sustainable and improved outcomes for other stakeholders including the environment employees and society as a a a whole Find out out more about The Mercantile Investment Trust >
1 We define ESG ESG integration as the systematic inclusion of financially material ESG ESG factors (alongside other relevant factors) in in in investment investment analysis and investment investment decisions In actively managed assets deemed by J P Morgan Asset Management to be ESG integrated under our governance process we systematically assess financially material ESG factors including sustainability risks in in in in in our investment decisions with the goals of managing risk risk and improving long-term returns