WCM's ESG Investment Team focuses on integrating business analysis with an independently developed ESG framework. The goal is to construct portfolios that outperform their respective benchmarks over a market cycle while reducing risk. Our process begins with identifying great businesses based on strong or strengthening competitive advantages ("economic moats") with substantial runway for organic growth. Our ESG procedure focuses on material Environmental, Social and Governance factors that we believe impact the long-term financial performance of our portfolio companies. Our team does not outsource its ESG analysis to third-parties. We believe integrating business and ESG analysis provides us with a more holistic picture of a quality company, gives us credibility when engaging our portfolio companies on important ESG issues, and allows us to identify businesses undergoing significant ESG improvements ("ESG Trajectory"). We construct concentrated portfolios of "best ideas", with diversification across countries/currencies, industries and sectors. We further utilize a "three-basket" framework which maintains balance between cyclicals, consistent earners and emerging franchises. Protecting capital is emphasized by focusing our efforts on financially sound and free cash flow generative companies.
The ESG Investment Team seeks high-quality companies with strengthening competitive advantages, best-in-class and/or improving ESG profiles ("ESG Trajectory"), sustainable profitability, high returns on invested capital, solid free cash flow generation, strong balance sheets, and substantial runway for organic growth. The application of stringent ESG and fundamental analysis frameworks considerably reduces the investment universe. All capitalization levels are considered.