Our Beliefs

Our ESGC Investing™ process derives from a set of core beliefs about the world and how investing relates to that world as it changes from a relatively wasteful society to one of greater consideration of the Environmental, Social, Governance, and Carbon inputs to corporate activity on the planet.

Core Belief #1: ESGC Investing™ is Best Practice Risk Management

ESGC (Environmental, Social, Governance and Carbon) investing when combined with margin of safety financial criteria, in our opinion, is the best set of investment screens to manage the many risks involved with portfolio management.

We believe companies who excel in all these areas are much less prone to lawsuits, fines, and irreversible public relations damage and over the longer term will be better placed to compete. While it is impossible to eliminate all risks of this nature, ESGC Investing™ will prevent many of them from being in your portfolio.

Core Belief #2: ESGC Investing™ Returns As Good or Better Than Traditional Investment

There are many studies on ESG investing. Our research indicates none establish unequivocally this method of investing provides returns less than traditional investing, a common misconception among the media.

The addition of a carbon screen to make it ESGC Investing™ in a time when carbon costs are becoming a factor in corporate cost structure leads us to believe that over time this methodology will produce returns as good or better than traditional investing.

It is our firmly held belief that companies who incorporate awareness and action on their environmental, social, governance, and carbon related business issues are simply better run, command more customer respect and loyalty, and reduce their overall corporate risk profile.

Core Belief #3: Economic Prosperity and Environmental Health Go Hand in Hand

The choice between economic progress and preserving the environment has always been a false construct used to discourage pricing of the externalities of pollution and waste into the true cost of the products we consume.

As has been demonstrated many times, firms that focus on preserving the environment through less waste, resource efficiency, and the intelligent use of life cycle design not only save money and produce higher profits, they are also better stewards of our environment.

So who would you prefer to have in your investment portfolio?

Core Belief #4: Resource Efficiency is Not an Option

There are almost 7 billion people on this planet. Many commodities are already becoming scarcer and the trend is inexorably moving towards greater scarcity.

Until the year 2000, the world lead a fairly wasteful existence and could afford to be inefficient in its use of many of the raw materials that form the products we use on a daily basis. However, China and India have changed that forever. The future will see more recycling and a call for greater efficiency in the use of everything that is part of the productive cycle. Zero waste will be the new corporate mantra.

Core Belief #5: The Throw Away Society is Coming to an End

The era of the throw away society is fast coming to an end. Durability, value, and cradle to grave design and corporate product responsibility will replace the build it, sell it, and forget it mentality that pervades our industrial manufacturing base.

The Earth does not have the landfill room, the resources, or the energy to produce at the western society waste level for everyone on the planet who wants to and can afford that standard of living. Our hope is that people will no longer be considered throw away either.

Core Belief #6: Carbon Counting Will Soon be Mandatory

By 2020 there will be few aspects of life that do not involve being accountable for the carbon impact of those activities. By starting now and incorporating those decisions in our everyday lives, including investing for the future, we will be prepared when we no longer have the choice to squander and waste our resources. For those who do not learn, the cost will be massive and for some businesses, a terminal cost.

For this reason, we have incorporated carbon screens into the ESG investment model to produce ESGC Investing™ and more fully capture the true risk profile of corporate investments.

Core Belief #7: The Debate About Global Warming is Over and This is Not About Saving The Planet

Despite the altruistic journalistic emphasis to present a balanced opinion on global warming, the reality is anything but. While there is a small group of scientists on the planet (less than 500 and many funded by oil/coal associations) that hold to the argument we humans are not causing the problem, it is pretty much held in wide agreement that we are.

While we can never be certain we must look at the issue on a risk adjusted basis. If people who say global warming is not happening are wrong and we continue to do nothing, then we potentially commit 40% of the Earth's species to extinction (humans may be one). If people who say Global Warming is happening are eventually wrong and we take strong action now all we are doing is making the world a more efficient, less wasteful, and less polluted place to be. Which side would you rather be on?

We also want to be perfectly clear that investing in this manner is not about saving the planet. That concept is a decidedly arrogant human construct fraught with ego and hubris. The planet has been around for 5 billion years give or take about 500 million. It will most likely be around for another 5 billion or so years.

The real issue is: Will humans be on the planet in the next 1,000 years? When you think of it in that regard then we are really preserving our species. We do this not for ourselves but for our children's great grand children.

Core Belief #8: Massive Opportunities For the Next 50 to 100 Years

The World will be transitioning away from the current oil/coal/gas energy platform and towards technologies and businesses that emphasize efficiency and zero waste over the current economic structures. In addition, there will be growing pressure from investors for corporation to more fully account for and manage their environmental, social, governance, and carbon issues.

Essentially, we are in the same position as we were in at the beginning of the carbon based society in the mid 1800s. From that it should be evident that opportunities for massive increases in wealth will be present and should be taken advantage of in any investment program.

Core Belief #9: ESGC Investing™ Can Be Done Now

The information exists to manage investment portfolios on a sustainable and carbon risk adjusted basis right now. It simply involves making more informed choices about investments with respect to the risks that they entail.

For instance if the choice came down to an oil sands producer that is contributing to the environmental debacle in Northern Alberta and has a high carbon emission cost risk or a natural gas producer that drills for gas and has a much lower environmental and carbon emission risk profile then we would choose the natural gas producer.

None of this is rocket science (well some is). It just takes understanding the carbon chain and carbon risks of the different investments that are available and then applying this knowledge to the ESG (Environmental, Social, and Governance) investment screening process.

Core Belief #10: Absolute Return Focus

We believe that investment managers should take an Absolute Return focus to their investment process. We strive to provide our clients an annual return after fees of at least 8.00% each year and we judge our success by this measure. We may exceed this target and we may fall short. However, we do everything we can to attain this goal.

We contrast this with traditional investment management where the goal is to beat a benchmark by a certain percentage. Better known as Relative Performance, the problem with this approach is that if the benchmark return was negative it is possible the investment manager could still produce negative returns even though they beat their benchmark. As an investor, you cannot eat relative performance when the returns are negative.