Funds Group: Lazard Funds
Management Company: Lazard Asset Management LLC
Funds Affected: Lazard US Sustainability Equity Fund
Principal Sustainable Investment Management Strategy: ESG Integration, Exclusions (Negative screening)
Summary:
In further narrowing the investable universe to select companies for investment by the Portfolio, the Investment Manager considers both (a) the financial sustainability of the company as a business—a company whose financial productivity is likely to be supported or enhanced in the future as a result of the move toward a more sustainable world (such as by considering the nature of the products and/or services that the company provides, from the perspective of environmental and social factors that impact financial productivity) and (b) how the company counters potential risks arising as a result of environmental and social concerns that may be material to the particular companies or the industries or sectors in which they operate. A proprietary sustainability analysis methodology is used to assess each company considered for investment, to the extent relevant to the company or its industry or sector, against the specific sustainability factors listed below (and other factors that may be considered relevant to the company or its industry), divided into the three categories of Human Capital, Natural Capital and Corporate Governance.
Human Capital: the extent to which the company
– Follows best practices in managing its workforce in a responsible manner, such as health and safety considerations and diversity and inclusion policies;
– Acts responsibly in terms of the impact its business operations, products and services have on the broader community;
-Aims to ensure its suppliers act responsibly; and
-Endeavors to treat its customers fairly and responsibly, for example by having appropriate product safety and data privacy and security standards.
Natural Capital: the extent to which the company, and its supply chains,
-Are reliant on using resources which generate significant environmental impact; and
-Actively seek to reduce the impact they have on the environment.
Corporate Governance: the extent to which the company’s board composition and policies, executive management composition and compensation, and the exercise of shareholder rights and voting powers are in line with current best practices.
Companies considered to be significantly involved in the manufacture of products or the provision of services that are broadly recognized as unsustainable by society (e.g., the production of tobacco, the generation, extraction and/or refining of certain fossil fuels or the production of unconventional weapons) generally will not fall within the investable universe for the fund. However, it is possible that Lazard may determine, after a combined consideration of its assessment of such a company’s financial productivity potential as described above and the results of the sustainability analysis methodology, that such a company is an appropriate investment for the fund. The fund may, however, invest in companies that provide equipment and services to the energy and mining sectors.
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