T. Rowe Price T. Rowe Price Trusty Logo

The T. Rowe Price Approach

T. Rowe Price ESG Investment Policy Statement

T. Rowe Price

Executive Summary

At T. Rowe Price, fundamental analysis is the foundation of our investment decisions. Through our bottom-up approach, we endeavour to understand the long-term sustainability of a company’s business model, and the factors that could cause it to change. We believe that environmental, social and governance (ESG) issues can influence investment risk and return and, therefore, incorporate ESG risk considerations into our fundamental investment analysis. Accordingly, T. Rowe Price is a signatory of the Principles for Responsible Investment (PRI)1 . We support the PRI framework as an effective means to encourage better dialogue among investors and improve disclosure from companies globally. Our ESG analysis serves to complement our ultimate objective of delivering superior long-term investment returns to clients.

GUIDING PRINCIPLES

The primary responsibility for determining the impact of ESG factors on clients’ investments lies with our analysts. Our approach is driven by the following principles:

  1. COLLABORATION – We believe companies, investors and governments all have a role to play in improving corporate disclosures and strengthening the sustainability of business practices over time. 
  2. ACCOUNTABILITY – Our investment analysts are responsible for assessing the full range of factors likely to have a meaningful impact on the company’s performance and they receive specialised resources and training to enable them to make these assessments. 
  3. FUNDAMENTAL RESEARCH – We believe ESG analysis and engagement are most effective when led by experienced investors who know the company well and are best positioned to evaluate these considerations in the appropriate context. 
  4. STEWARDSHIP – We believe our responsibilities as diligent investors do not cease with the decision to purchase a security. We maintain regular dialogue with the managements of our portfolio companies. 
  5. MATERIALITY – We focus on the ESG factors we consider most likely to have a material impact on the performance of the companies in our clients’ portfolios over our investment time horizon.
HOW DO WE INTEGRATE ESG ISSUES?
  • When we assess the suitability of an investment for our clients’ portfolios, we consider a variety of factors. Broadly defined, these factors include: the company’s capital stewardship, accountability, transparency, leadership quality, strategy and execution, the competitive dynamics in its industry, its management of human capital and its efficient use of resources.
 

The evaluation of ESG factors is highly dependent on the country, industry, company and management we are analysing. Therefore, the particular issues considered vary with each investment. Some specific examples of the broad range of ESG issues we may consider in our investment research process are:

  • long-term environmental considerations such as regulation, the availability and costs of raw materials, water, energy and other significant inputs
  • a company’s incentive structure and how closely aligned it is with stated corporate strategy
  • supply-chain risks, work stoppages and labour controversies
  • the quality and diversity of a company’s Board
  • the current and potential regulatory environment, particularly with regard to highly regulated industries or controversial situations as the world’s economy and industries evolve over time
  • the relative quality of a company’s disclosures, its degree of focus on investors’ interests, and its philosophy regarding stakeholder communications and engagement.

Responsibility for incorporating ESG risks into investment decisions is embedded across the research platform. At T. Rowe Price we have analysts who are experts in their fields. They cover a specific region or sector, and may well follow some companies for over 10 years. Their responsibilities include meeting the management teams, conducting site visits and producing detailed company and industry analysis.

In order to supplement our analysts’ assessment of ESG risk factors, we use external research partners to provide detailed company-level reports. These help to verify and challenge our in-house views. We also have a proprietary system for analysing and recording our portfolio managers’ proxy voting decisions and our engagement activities.

Finally, we have our own full-time specialists in global corporate governance and legislative affairs integrated into our research teams. These experts work with our investment analysts and portfolio managers to help them understand relevant political, governance and regulatory risks.

OUR ULTIMATE GOAL: SUPERIOR LONG-TERM INVESTMENT RETURNS FOR OUR CLIENTS

All portfolios are managed to provide long-term reward commensurate with acceptable risk. By assessing and understanding the range of ESG risks, together with many other investment criteria, we believe we will be better positioned to deliver consistent, superior long-term investment returns for our clients.

Important Information

This material, including any statements, information, data and content contained therein and any materials, information, images, links, sounds, graphics or video provided in conjunction with this document (collectively “Materials”) are being furnished by T. Rowe Price for your general informational purposes only. The Materials are not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the Materials and in certain countries these Materials are only provided upon specific request. It is not intended for distribution to retail investors in any jurisdiction. Under no circumstances should the Materials, in whole or in part, be copied, redistributed or shown to any person without consent from T. Rowe Price. The Materials do not constitute a distribution, an offer, an invitation, recommendation or solicitation to sell or buy any securities in any jurisdiction. The Materials have not been reviewed by any regulatory authority in any jurisdiction. The Materials do not constitute investment advice and should not be relied upon. Investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision. Issued in Australia by T. Rowe Price International Ltd (“TRPIL”) (ABN 84 104 852 191), Level 50, Governor Phillip Tower, 1 Farrer Place, Suite 50B, Sydney, NSW 2000, Australia. TRPIL is exempt from the requirement to hold an Australian Financial Services license (“AFSL”) in respect of the financial services it provides in Australia. TRPIL is authorised and regulated by the UK Financial Conduct Authority (the “FCA”) under UK laws, which differ from Australian laws. For Wholesale Clients only. Issued in Canada by T. Rowe Price (Canada), Inc. T. Rowe Price (Canada), Inc. enters into written delegation agreements with affiliates to provide investment management services. T. Rowe Price (Canada), Inc. is not registered to provide investment management business in all Canadian provinces. Our investment management services are only available for use by Accredited Investors as defined under National Instrument 45-106 in those provinces where we are able to provide such services. Issued in the Dubai International Financial Centre by TRPIL. This material is communicated on behalf of TRPIL by the TRPIL Representative Office which is regulated by the Dubai Financial Services Authority. For Professional Clients only. Issued in the EEA by T. Rowe Price International Limited (“TRPIL”), 60 Queen Victoria Street, London EC4N 4TZ which is authorised and regulated by the Financial Conduct Authority. For Qualified Investors only. Issued in Hong Kong by T. Rowe Price Hong Kong Limited (“TRPHK”), 21/F, Jardine House, 1 Connaught Place, Central, Hong Kong. TRPHK is licensed and regulated by the Securities & Futures Commission. For Professional Investors only. Issued in Japan by T. Rowe Price International Ltd, Tokyo Branch (“TRPILTB”) (KLFB Registration No. 445 (Financial Instruments Service Provider), JIAA Membership No. 011-01162), located at GranTokyo South Tower 7F, 9-2, Marunouchi 1-chome, Chiyodaku, Tokyo 100-6607. This material is intended for use by Professional Investors only and may not be disseminated without the prior approval of TRPILTB. Issued in New Zealand by T. Rowe Price International Ltd (“TRPIL”). TRPIL is authorised and regulated by the UK Financial Conduct Authority under UK laws, which differ from New Zealand laws. This material is intended only for use by persons who are not members of the public, by virtue of section 3(2)(a)(ii) of the Securities Act 1978. Issued in Singapore by T. Rowe Price Singapore Private Limited (“TRP Singapore”), No. 501 Orchard Rd, #10- 02 Wheelock Place, Singapore 238880. TRP Singapore is licensed and regulated by the Monetary Authority of Singapore. For Institutional and Accredited Investors only. Issued in Switzerland by T. Rowe Price (Switzerland) GmbH (“TRPSWISS”), Talstrasse 65, 6th Floor, 8001 Zurich, Switzerland. For Qualified Investors only. Issued in the USA by T. Rowe Price Associates, Inc., 100 East Pratt Street, Baltimore, MD, 21202, which is regulated by the U.S. Securities and Exchange Commission. For Institutional Investors only. T. ROWE PRICE, INVEST WITH CONFIDENCE and the Bighorn Sheep design are, collectively and/or apart, trademarks or registered trademarks of T. Rowe Price Group, Inc. in the United States, European Union, and other countries. This material is intended for use only in select countries.

 

2014-SS-49

Dismiss
Tap to dismiss

Download

Latest Date Range
Audience for the document: Share Class: Language of the document:
Download Cancel

Download

Share Class: Language of the document:
Download Cancel
Sign in to manage subscriptions for products, insights and email updates.
Continue with sign in?
To complete sign in and be redirected to your registered country, please select continue. Select cancel to remain on the current site.
Continue Cancel
Once registered, you'll be able to start subscribing.

Change Details

If you need to change your email address please contact us.
Subscriptions
OK
You are ready to start subscribing.
Get started by going to our products or insights section to follow what you're interested in.

Products Insights

GIPS® Information

T. Rowe Price ("TRP") claims compliance with the Global Investment Performance Standards (GIPS®). TRP has been independently verified for the twenty one- year period ended June 30, 2017 by KPMG LLP. The verification report is available upon request. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm's policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.

TRP is a U.S. investment management firm with various investment advisers registered with the U.S. Securities and Exchange Commission, the U.K. Financial Conduct Authority, and other regulatory bodies in various countries and holds itself out as such to potential clients for GIPS purposes. TRP further defines itself under GIPS as a discretionary investment manager providing services primarily to institutional clients with regard to various mandates, which include U.S, international, and global strategies but excluding the services of the Private Asset Management group.

A complete list and description of all of the Firm's composites and/or a presentation that adheres to the GIPS® standards are available upon request. Additional information regarding the firm's policies and procedures for calculating and reporting performance results is available upon request

Other Literature

You have successfully subscribed.

Notify me by email when
regular data and commentary is available
exceptional commentary is available
new articles become available

Thank you for your continued interest