Massachusetts Water Resources Authority (“MWRA”) Employees’ Retirement System
Environmental, Social and Governance (ESG) Policy
The consideration of ESG factors is a central component of our investment
process. We are unlikely to invest in a business if significant ESG issues are
not adequately recognized and addressed.
ESG PHILOSOPHY
Select Equity adopts an "ESG Integration" approach to responsible investing. We analyze ESG
factors solely as they relate to the financial risk and return of a company, focusing on dynamics
that could impact a company's future earnings power and investor perceptions. We believe ESG
Integration is aligned with our fiduciary duty to maximize returns for our clients.
OVERSIGHT
We established an ESG Committee responsible for overseeing the integration of ESG into our
research process.
RESEARCH
Our detailed analysis on companies includes, among other issues, assessing a company's ethics
and culture, consumer perceptions and performance relative to ESG issues. Our Qualitative
Field Research Team is an integral part of this process. We also subscribe to MSCI's ESG
research, which is analyzed and documented in Tamale, our research management system.
RISK MANAGEMENT
We try to highlight potential ESG red flags early in our diligence process so that we can carefully
evaluate risk before we purchase a stock. Once we initiate a position, ESG risks are monitored
through ongoing qualitative and quantitative analysis. We also subscribe to ISS proxy
governance reports and review and vote proxies annually.
ENGAGEMENT
We communicate regularly with management teams and convey our concerns and questions
regarding any issues, including ESG risks, that we identify during our research.
ESG Issues of Focus:
ENVIRONMENTAL
Contribution to climate change, costly
negative externalities, collateral
environmental damage, natural resources
usage, pollution or waste and use of clean
technology or renewable energy.
SOCIAL
Human capital development, equal
employment opportunity, fair
compensation, risks to the health and
safety of employees and the public,
sourcing of raw materials and labor from
developing nations, human rights and
product liability.
GOVERNANCE
Management, the Board of Directors,
conflicts of interest, executive
compensation, transparency, bribery and
corruption, reporting and disclosure,
shareholder rights, accounting/tax
avoidance and risk management.
IN NOVEMBER 2020, SELECT EQUITY BECAME A SIGNATORY TO THE UN-SUPPORTED PRINCIPLES FOR RESPONSIBLE INVESTMENT
(UN PRI), A GLOBAL ORGANIZATION THAT ENCOURAGES RESPONSIBLE INVESTMENT PRACTICES.
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