ESG Integration

Download ESG Policy
 

At Merlon, we value every potential investment with ESG factors in mind because ESG factors play a key role in determining the sustainability of Free-Cash-Flow, Merlon’s primary valuation consideration. We incorporate ESG considerations throughout our investment process, including:

  • Incorporating ESG considerations into our qualitative scorecard.
  • Heightening our emphasis on ESG related issues in our assessment of sustainable Free-Cash-Flow.
  • Assessing whether markets are too optimistic or too pessimistic about the potential impact of ESG issues on expected future cash-flows.
  • Developing valuation scenarios that cater for a range of sensible scenarios in relation to ESG issues.

Merlon acknowledges that not all ESG factors will be relevant to all investments.  As such, for each of our investee companies, Merlon considers what matters most depending on the companies’ sector, business model and governance practices.

Engagement

Merlon is very committed to active ownership and company engagement with two key outcomes in mind:

  • Enriching our research, including being leaders in ESG integration and engagement.
  • Positively influencing our investor companies for better investment and community outcomes.

This includes writing formal letters to board directors, summarising the key investment and ESG issues that have been identified to date, calls for action and seeking a response from the company.

Our assessment of a company’s ESG exposure and performance drives and priorities our proactive and formal engagement agenda.

For further detail on how we incorporate ESG and Engagement in our investment process please refer to our ESG Policy.

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