Riverwater Partners believes Responsible Investment is in the best interest of our clients, our firm, our communities and our society. Therefore, we consider Environmental, Social and Governance (ESG) policies, practices, and outcomes, alongside traditional investment criteria, when evaluating companies. Our goal is to promote greater impact over time with respect to improved corporate governance, fair treatment of all stakeholders, greater environmental stewardship, and ultimately, superior financial outcomes and real economy benefits. We employ a three-pillar approach to evaluate ESG efforts of companies being considered for inclusion in client portfolios: Due Diligence, Engagement and Collaboration.
ENVIRONMENTAL
We target companies working towards conserving energy and using renewables in their supply chains while avoiding firms with a history of poor environmental practices. We encourage companies to both actively measure their total environmental impact and set sustainability goals.
SOCIAL
We focus on investing in companies that encourage diversity in their workforce, have the best health and safety records in their respective industry, and engage in active discussion surrounding human rights and community issues.
GOVERNANCE
Good corporate governance ensures fair treatment of shareholders, customers and employees. In this realm, we look for diverse boards among the talent, race and gender spectrums. We prefer to invest in companies with separate CEO and Chairman roles, well-aligned compensation structures, non-staggered boards and those that have instituted sustainability reporting.
PILLAR 1: DUE DILIGENCE
Riverwater’s Due Diligence process seeks to understand a company’s attention to environmental, social and governance (ESG) factors, believing that a focus on ESG factors can shed light on potential risks and/or opportunities, 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 regarding improvement.
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ENVIRONMENTAL
We seek companies whose practices protect the planet. We consider energy consumption, water use, emissions reductions, waste reduction, recycling programs and attention to supplier environmental practices.
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SOCIAL
We seek companies that value all people. We consider fair treatment of employees, employee diversity, worker safety, product safety, supply chain human rights, and giving back to the community. We encourage companies to adopt policies and practices that treat all stakeholders fairly.
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GOVERNANCE
We seek companies with strong corporate governance practices. We consider executive diversity, board diversity, independent board chair/CEO roles, executive pay tied to performance, and stock ownership requirements. This diversity of thought and experience, as well as alignment of interests, ensures that companies work to protect people, planet and profit.
PILLAR 2: ENGAGEMENT
Riverwater engages with companies 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 engage with laggards to increase impact and with leaders to raise the bar. Click here to read Riverwater Partners’ Engagement Policy.
PILLAR 3: COLLABORATION
Collaboration with Responsible Investment thought leaders informs our practice and strengthens our engagement.
RIVERWATER SUSTAINABILITY REPORT
Our 2019 Sustainability Report highlights the ESG efforts and positive impact of our holdings, how we engage with our them to improve those efforts and our own sustainability efforts at Riverwater Partners.
RIVERWATER ESG GUIDELINES AND POLICIES
Proxy Voting Guidelines. (We actively use proxy voting as a tool to encourage companies to incorporate ESG principles and improve ESG efforts.)