Ensemble Capital’s Approach to Stakeholder Analysis

22 July 2021 | by Sean Stannard-Stockton, CFA

In recent years, the field of what was once called socially responsible investing has evolved into ESG analysis, or the incorporation of environmental, social and governance analysis into the process of stock selection. While Ensemble Capital does not market our investment approach as an ESG strategy nor seek to conform to 3rd party ESG rating systems, we believe that evaluating the value a company generates (or extracts) from all of its stakeholders is a central part of profit seeking, long term investment strategies.

Ensemble isn’t the only equity investor focused on high quality companies that has long incorporated analysis of a company’s impact on stakeholders other than shareholders into their analysis. As Lawrence Cunningham, a professor, director of the Quality Shareholder Initiative, and an expert on Warren Buffett, recently put it, “Quality investors were ESG-friendly long before it was fashionable.” But today, many investors still cling to the misguided concept that caring about the value created for stakeholders other than shareholders is a distraction from maximizing long term shareholder interests.

Today, we’re pleased to publish an illustrated white paper that reviews why shareholder interests are best served by companies who are able to manage the challenging task of creating value for all of their stakeholders. Rather than a distraction from generating value for shareholders, the value created for all stakeholders is the source of the value that accrues to shareholders.

You can download the report by clicking here.

For more information about positions owned by Ensemble Capital on behalf of clients as well as additional disclosure information related to this post, please CLICK HERE.

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