Responsible Investment Process

Responsible Investment Process

We believe responsible investment or ESG investing is in the best interest of our clients, our firm, our communities and our society. Therefore, our analysis process considers environmental, social and governance (ESG) policies, practices, and outcomes, alongside traditional investment criteria, when evaluating potential investment candidates. (A summary of our process is below; click here for full details of our approach).

We employ a Three Pillar Approach to evaluate ESG efforts of companies being considered for inclusion in client portfolios: Due Diligence, Engagement and Collaboration.

Pillar 1: Due Diligence
Our due diligence process seeks to understand a company’s attention to environmental, social and governance (ESG) factors. We believe that a focus on ESG factors can shed light on potential risks and/or opportunities for a company, which may impact people, planet and profit. We focus on those factors that are most salient to a company based on its industry. While we seek best-in-class efforts, we also invest in companies willing to engage with us regarding improvement.

We maintain a proprietary database of the ESG efforts of the companies in which we hold positions, those under consideration, and peer companies. Companies receive points for their efforts regarding ESG factors, for having a sustainability report, for inclusion in ESG Indices, and for the nature of their business being socially responsible.
Pillar 2: Engagement
Riverwater engages with company executives and boards to gain an understanding of their current attention to ESG factors and to encourage greater efforts. The overall goal of engagement, as with our other ESG efforts, is to generate positive impact to the environment and society, as well as superior financial outcomes. We are guided by our Engagement Policy to increase impact with laggards and to raise the bar with leaders.

Riverwater Partners documents and follows up on our engagement efforts. If a company is unresponsive or unwilling to improve its ESG efforts, we will consider selling our position.

Riverwater Partners votes proxies for portfolio companies according to our Proxy Voting Policy, which favors management and shareholder resolutions that align with our ESG views. Click here for our 2022 Proxy Voting Report.
Pillar 3: Collaboration
Collaboration with local, national and international responsible investment thought leaders informs our practice and strengthens our engagement. We are proud to partner with the following organizations: