The Legg Mason Approach to ESG Investing
Your investments can make a difference
Today, a greater awareness of the impact our investments can have on the world around us are leading many investors to consider strategies that incorporate Environmental, Social and Governance (ESG) factors.
Investors once believed that performance would suffer by applying ESG factors (or, as it is sometimes known, Socially Responsible Investing or Sustainable Investing) to their investments, but that has been proven false. In fact, Legg Mason believes that ESG best practices – environmental and product safety, workplace diversity, strong corporate governance – are all significant contributors to long-term return while helping to manage risk.
ESG INVESTING WITH LEGG MASON
Our holistic view of ESG permeates everything we do – from how we run our business to the products and strategies our independent affiliates offer. Historically ESG meant screening out companies that didn’t meet certain moral criteria (that is, companies within certain industries, like nuclear power, alcohol, or non-renewable energy). But today, ESG means much more than that. It means understanding that companies meeting high ESG standards are also generally the type of high-quality, well-run companies our managers look for.
We view ESG three ways:
- Affiliate-level ESG integration within investment process. Managers may use formal or informal ESG screening criteria.
- Dedicated and custom ESG products via managed accounts, custom portfolios or a traditional mutual fund structure.
- Corporate-level ESG/SRI initiatives. We are deeply committed to workplace diversity and inclusion, environmental stewardship and community engagement.
In addition, seven affiliates are signatories to the U.N. Principles for Responsible Investment (PRI), demonstrating our managers’ commitment to responsible investment.
- Brandywine Global
- Clarion Partners
- ClearBridge Investments
- Martin Currie
- RARE Infrastructure
- Western Asset
Is ESG the new form of activist investing? Engaging with management leads to greater transparency with in turns creates long-term value.
ESG strategies enable investors to reap the benefits of responsible, sustainable business and promote positive change through company engagement, proxy voting and raising awareness of ESG issues.
For 30 years, ClearBridge has prioritized evaluating ESG factors in their investment process. In recent years, they have developed an internal ESG rating system across their entire research platform. The analyses are a core part of their fundamental research process done for every company in their coverage with a long term investment, high conviction investment horizon.
Independent ESG expertise
Your investment needs are unique – and so are our independent invest affiliates’ approaches to ESG investing. Taken together, we provide strategies to help institutional and individual investors build portfolios that can incorporate ESG on many different levels, from specific products to ESG-aware processes.
Dedicated ESG Strategies
ClearBridge Investments offers dedicated ESG investments across income, high active share and risk management, as well as customized portfolios.
ESG Factors Integrated Into Investment Approach
Martin Currie believes ESG is especially valuable in emerging markets, where corporate governance standards are often more complicated and harder to decipher.
Where appropriate, RARE incorporates environmental and other ESG factors (such as the cost of emitting carbon for large power utilities) into their cash flow forecasts for all of revenues, expenses and capital expenditures.
Customized ESG Strategies
Brandywine Global has managed customized equity and fixed income portfolios based on ESG and SRI criteria for over 20 years.
Western Asset has offered customized portfolios since 1986. Today, portfolios include client-specified screening, sustainable bond portfolios and “Green” bond strategies.
Clarion Partners, a real estate specialist, fosters a culture of environmental responsibility and ensures that employees, tenants, partners, and service providers have the tools and resources to make their properties more efficient.
As part of its rigorous due diligence process, EnTrustPermal asks its underlying managers to complete a pre-meeting questionnaire to determine if the manager complies with environmental, social and corporate governance guidelines.
LEGG MASON ESG SOLUTIONS
Our family of independent investment affiliates provides the strategies and solutions to help you build a total ESG-aware portfolio – from equity to fixed income to alternatives. Be sure to talk to your financial professional about your goals and risk tolerance before investing.
Financial professionals: Read the results of our proprietary survey of investors' changing attitudes regarding ESG investing.
The investment process may change over time. The characteristics set forth above are intended as a general illustration of some of the criteria the strategy team considers in selecting securities for client portfolios. There is no guarantee investment objectives will be achieved.
Equity securities are subject to price fluctuation and possible loss of principal.
IMPORTANT INFORMATION: All investments involve risk, including loss of principal. Past performance is no guarantee of future results. Please see each product’s web page for specific details regarding investment objective, risks, performance and other important information. Review this information carefully before you make any investment decision.
Carefully consider a fund’s investment objectives, risks, charges and expenses before investing. Please view the prospectus or summary prospectus for this and other information. Read it carefully.
FINANCIAL ADVISORS: Please note that not all share classes may be available for sale at your firm. Please call the Legg Mason Sales Desk 1-800-822-5544 or your Legg Mason Sales contact for more information.
Separately Managed Accounts (SMAs) are investment services provided by Legg Mason Private Portfolio Group, LLC (LMPPG), a federally registered investment advisor. Client portfolios are managed based on investment instructions or advice provided by one or more of the following Legg Mason-affiliated sub-advisers: ClearBridge Investments, LLC and Western Asset Management Company. Management is implemented by LMPPG, the designated sub-advisor or, in the case of certain programs, the program sponsor or its designee.