ESG: Much more than a must

Compass Group’s responsible invest ment framework has always been based on “do no harm” and “good environmental, social and governance (ESG) practices are good for financial returns¹”. As social and environmental challenges become urgent, our clients, our employees and our corporate citizenship are driving us towards greater engagement. We all need to do more.

As many of our invested companies and clients know, Compass has long considered ESG issues when analyzing potential investments. In 2016, we began to incorporate ESG metrics systematically in credit ratings. From that experience, it became intuitive that our ESG assess ment should also impact cost of equity², which was later confirmed by research and, since then, has been integrated into our valuation guidelines. Our approach to full ESG integration is such that we don’t have ESG specialists as part of the invest ment team – we are all ESG specialists.

Our proprietary ESG questionnaire is an integral part of our bottom-up analytical toolkit. Resulting company ESG score impacts credit ratings, valuations, portfolio risk management and serves as a guide for our ongoing engagement with our invested companies. ESG engagement is a natural progression of investment philosophy. Our research is high-touch oriented and has boots-on-the-ground. We meet with Latin American issuers over [1800+] times per year with the objective of learning and sharing our views about operations, strategy and ESG