Environmental, Social and Governance (ESG) Strategy

MCSI ESG rating scale as found at https://www.msci.com/esg-investing

When financial professionals speak about Socially Responsible Investing (SRI), they’re referring to how public companies are behaving. Specifically, they mean how companies behave with Environmental, Social and Governance (ESG) issues. These criteria show how a company:

  • stewards the natural environment;
  • relates to employees, suppliers, customers, and local communities; and
  • handles its leadership, remuneration, financial management, and shareholder rights.

At Balanced Rock, we combine ESG criteria with traditional value investment analyses. We build globally diversified portfolios drawn from a wealth of high-quality research and tools. Unlike much of the industry’s SRI/ESG market, we do this at the lowest cost possible. 


How do we keep our costs low?

A large part of the SRI/ESG market is full of high-cost funds that severely limit investor returns. To sidestep these costs, Balanced Rock purchases the underlying research that these funds use. We do our own research and customize portfolios to meet our clients’ values. We believe that you don’t have to expect lower returns in order to incorporate your values into your investments.

For an in-depth review of the financial benefits of investing with an ESG lens, check out our blog post, “ESG Isn’t a Trade-Off, It’s a Trade-Up.”

We use ESG data in three ways.

First, we shift client portfolios towards companies that are behaving best according to ESG criteria. We use a “best-in-class” approach for each industry. Secondly, we eliminate companies that have involvement in areas the client doesn’t want. Some common exclusions are fossil fuels, nuclear power, tobacco, predatory lending, guns, and firearms. Lastly, we compare funds and target those comprised of higher ESG-rated companies. Using our comparative analyses, select the best investments for our clients’ values.

The following chart outlines how Balanced Rock combines in-house research and ESG research with financial data to select companies and funds for client portfolios that are in alignment with client values and support each client’s unique financial plan.

To learn about how Balanced Rock clients are able to make an impact with their portfolio beyond traditional public markets, check out our Direct, Impact, Alternative and Local Investing (DIAL-In) strategy.