ESG stands for Environmental, Social, Governance. ESG Investing is necessary because ESG issues and investments are reciprocal. This undermines the level of risk, volatility, and long term returns of securities and markets. Therefore, ESG becomes a method to manage assets. Fund managers and investors evaluate a corporate’s behavior to determine how these issues potentially affect the returns of investments.
Environment
“Environment” considers all factors related to the natural and physical world, including the use of renewable and non-renewable resources (such as water, minerals, energy, ecosystems, and biodiversity). We measure the environmental impact of a company’s operations and the efficiency of resource management based on benchmarks in different industries, thus, evaluate the level of care for their surrounding environment.
Social
“Social” focuses on the factors that affect human life. It revolves around how the company creates value for its stakeholders and manages internal and external relationships. Indicators such as community responsibilities, treatment of customers, employee satisfaction and rights, equal opportunities, diversity, and inclusivity are regarded.
Governance
“Governance” observes issues within the company’s business model and common practices, as well as the interests of the management hierarchy. The company’s board of directors, shareholder rights, business ethics, policy practices, and operating regulations are evaluated.
ESG Investment Principle
LW Asset Management’s ESG Integration Statement
This document describes our company-wide efforts and commitments to integrate ESG information into the investment decision-making and summarises the foundations, ownership and oversight mechanisms that underpin our methodology. ESG integration is the process of incorporating important ESG information into the investment. Based on the LWAM’s commitment to achieve sustainable risk management, we aspire to be an industry leader by incorporating sustainability into our investment research, assets management, investment solutions and our business development.
Contents:
- LW’s Principles of ESG Investing
- Our Methodology
- Active Investment Approach
- Index Investment Approach
- Oversight and Governance
- Our Commitment towards LW’s ESG Framwork
LW Asset Management’s White Paper 2022:
A Risk Management Oriented Environmental, Social, Governance Solution
ESG Investing has always been an integral part of LW Asset Management’s investment strategy. To provide a sustainable approach for our investors, we incorporated an ESG solution to our FATA model. Our solution is a Quant data-focused scoring system that highlights ESG risks in Asset Management. The white paper discusses challenges of ESG in Hong Kong, explains our philosophy of ESG Investing and justifies our methodology.
Contents:
- Importance of ESG Investing in 2022
- Challenges of ESG Investing
- Busting ESG Myths
- LW’s Principles of ESG Investing
- Our Methodology
- Why LW’s Methodology
- Our Commitment towards LW’s ESG Framework
Our Commitment
LW Group Implements ESG into Corporate Culture to Align with Global Trends
ESG (Environmental, Social, Governance) stands for connecting our sustainable goals and standards to our investment strategies. It has always been one of our core ideologies and a philosophy we take pride in when investing. Apart from investment, we are also committed to spreading ESG awareness with our colleagues through integrating responsible actions into our daily operations.
Our Governance
Integrity is our corporate culture. To implement the spirit of self-discipline in the corporate governance culture, LW established with a sound internal control system and strictly follow the compliance with regulations.
Maintaining Strong Governance
The Investment and Audit Committee regularly reviews the existing policies and conducts due diligence reviews the companies in our portfolios.
Fair Treatment of Customers
Commitment to treat customers fairly is corporate culture
Promoting Customers Education
Regular company updates are provided to help consumers earn better understanding of the latest developments in the company.
Our Environment
Developing our business while being responsible to the environment, the LW office has implemented waste reduction programmes.
Renewable Energy Certificate
Purchase “Renewable Energy Certificates” from The Hong Kong Electric Company since September 2021 to support the development of local renewable energy.
Waste Reduction
Use both sides of the paper and on the back of non-confidential documents
Energy Saving
Set the temperature to an energy-efficient level so that employees will feel comfortable rather than cold; Using energy efficient lighting
Our People
Focus on physical and mental wellbeing of people, create a work-life balance environment
Equality Workplace
Focuses on equal opportunity in all aspects, including remuneration, training and development, evaluation and promotion. We conduct fair evaluations based on knowledge, skills, competencies, and predetermined criteria.
Employee Welfare Benefit Plan
All employees are covered by various types of insurance, including group medical and hospitalization plan
Talent Training
We are dedicated to nurturing talent since 2020, we have actively accepted overseas and local graduates to join us as intern analysts, inviting enthusiastic young people to join our team.
Our Society
We support the community and give back to the community through a variety of social services and fundraising.
Caring Company
We offer several generous matching programs that allow employees to give back to the community through fundraising or social service. We are committed to partnering with the community and material donations. We are honored to be nominated by Chinese YMCA of Hong Kong as a Caring Company for 2021/22 for our dedication.
Y-CARE Perfect Partner
Engaged in a variety of community service activities and was awarded the ” Y-Perfect Partner” from Chinese YMCA of Hong Kong in 2021.
What does ESG mean to LW?
ESG stands for ” Environmental, Social, Governance “.
ESG stands for Environmental, Social, and Governance. “Sustainability” has evolved significantly in recent years. Investors now apply these non-financial factors as part of their investment processes, and as a criterion to reduce investment risk while improving overall return. For LW A.M., profit and return is not the sole purpose of our investments, we also integrate ideologies of ESG into our strategic planning.
In addition to achieving higher investment returns, we believe that there are three major advantages to ESG investing:
Sustainable Development Approach
We consider “sustainability” as a core value in our internal operations and the valuation of our assets. Based on our research, companies with higher ESG scores report higher excess return and lower volatility. ESG provides an innovative perspective to a company’s performance, capabilities, and efficiency. It complements traditional methods of valuation such as financial statements and stock prices.
Risk Management
By applying the ESG framework assessment, we hope to manage investment risk by avoiding material issues, controversial companies and sensitive commodities. Past ESG incidents have led clients to pay more attention to a company’s transparency and regulatory mechanisms, making ESG a core factor to avoid companies at risk of serious scandals in their investments. A prominent example would be Facebook’s data privacy scandal. Cambridge Analytica traded personal data of 87 million Facebook users, resulting in a multi-billion-dollar loss in Facebook’s market capitalization.
Contributing with investment
ESG investing is a way for investors to express one’s values with an emphasis on environmental and social responsibility. As ESG investing matures, social contributions can accompany substantial returns, breaking the stereotypical view of needing to sacrifice one another.