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A Letter of Introduction From The Portfolio Managers


Welcome to our 2022 Impact report. We aim to improve the report every year and have added sections on our significant votes and most impactful ESG engagements. Given the priority we place on quality in the portfolio, there are very few items in either category but we believe that it is nonetheless useful to see. Almost all our companies are now working towards adoption of science-based targets, and we have engaged with the remaining ones on their pathway. The portfolio’s carbon intensity is quite low, as detailed in last year’s report and this one.

We are long-term investors with our capital invested alongside yours. Our average investment is held for approximately eight years. We have a long-term investment horizon that requires us to incorporate all risks and opportunities—both ESG and fundamental–into our holistic research in order to maximize long-term investment returns. The longer the timeframe, the more that ESG matters, in our view.

All our research starts with the customer – what problem the company is solving and why this will create value over the next five years. For us, it makes good business sense to do good and make a social statement. The best companies we see are using either environmental or social outcomes for customers to compound their competitive advantages and to drive business outcomes – we call these their Sustainable Business Advantage (SBA) drivers. In our view, the SBA drivers differentiate the companies we invest in from their rivals and their clients often pay more for their products as they are creating intangible value beyond the input costs. This is not virtue signalling – money talks! One of our favourite quotes from customer surveys is “it is not cheap but it’s good value.” This gets to the heart of how SBA drivers can lead to long-term returns and we can see it in the numbers. The corollary of ESG risks is obvious.

We remain enthusiastic about the increasing adoption, from the companies in our portfolio,  of Science-based Targets (SBTs) and use of sustainability policies to work towards solutions to current environmental and climate challenges. Our strategy’s primary goal is first and foremost to deliver investment returns and this is our guiding fiduciary responsibility – but not at any cost to earth and our societies. We are deeply committed to sustainable investing. As described above, we seek companies that use sustainability in a positive way to drive business outcomes and identify them using our proprietary SBA framework. In our view, this results in a win for customers, a win for the environment and society and ultimately, a win for shareholders. We also consider ESG risk and any potential downside to our investments from negative actions.

We would like to take this opportunity to address any concerns about the recent “ESG backlash” we have witnessed in some geographies – this is an understandable concern. As global investors, we are very conscious of the range of views on many topics, including ESG, and how these differ across countries, regions and continents. We believe our common sense approach to investing, alongside thinking holistically about sustainable opportunities and ESG risks, sets us up for long-term investment performance. We have written in detail in the past about our thinking on this subject and very little has changed. As a concentrated global investment strategy we set very high standards for our investments – afterall, we have the widest possible universe to select from and can afford to be picky. While there is some “noise” on ESG in some markets, we don’t believe that lowering our standards as a result of this is a good idea.

We are very fortunate to benefit from Brown Advisory’s in-house Sustainable Investing team. They helped us define SBA and support us with primary ESG research. The good news is that this team continues to grow. Building this expertise internally gives us huge value add – just as we would never outsource investment selection to a sell-side broker, we don’t outsource ESG research or ratings to third party providers either. Afterall, a large part of what we do is subjective – alpha generation does not come from a template.

This team also challenges us to think through new developments in the world of sustainability – a constantly evolving space. We have worked with the team to integrate additional concepts into our work, such as Net Zero Asset Managers (NZAM) targets and introductory work on evaluating Scope 3 emissions. We thank them and the entire equity research team at Brown Advisory for their efforts!

Thanks for taking the time to read this report. We hope you enjoy it and look forward to any feedback that will help us improve it going forward. 


Mick Dillon, CFA
Portfolio Manager 

Bertie Thomson, CFA
Portfolio Manager





*Brown Advisory entities included are: Brown Advisory LLC, Brown Investment Advisory & Trust Company, Brown Advisory Ltd., and Brown Advisory Trust Company of Delaware, LLC.