Doing What’s Right — Integrating ESG
CIFC’s mission is to deliver superior risk-adjusted returns to our investors. As a firm founded on the pillars of trust, integrity and excellence, we recognize how the Environmental, Social and Governance (“ESG”) attributes of a company directly impact the performance of our clients’ investments.
The Principles for Responsible Investment (“PRI”)
CIFC is a signatory and advocate of the United Nations Supported Principles for Responsible Investment. By becoming a signatory, CIFC acknowledges the importance of delivering tangible results with respect to responsible investing, while reporting on our approach and related developments. We are honored to be part of a growing community of financial services firms who incorporate these key Principles for Responsible Investment:
- Incorporate ESG issues into investment analysis and decision-making processes
- Be active owners and incorporate ESG issues into our ownership policies and practices
- Seek appropriate disclosure on ESG issues by the entities in which we invest
- Promote acceptance and implementation of the Principles within the investment industry
- Work together to enhance our effectiveness in implementing the Principles
- Report on our activities and progress towards implementing the Principles
Our Investment Approach
At CIFC, we believe that ESG simply makes for better underwriting and long-term capital preservation. Our approach and our decisions are informed by an assessment of multiple criteria, including company, industry, market, macro, transaction details and of course, certain ESG factors. CIFC believes that incorporating ESG considerations as part of the original due diligence and ongoing monitoring of an investment improves our selectivity and maximizes the performance of our funds over time. 1
ESG Considerations in the Investment Process 1
In addition to working directly with our issuers, financial sponsors and bankers, our analysts consult numerous third-party ESG resources during the investment evaluation phase, typically including the SASB Materiality Map, Rating Agency reports, ratings and scores and Sustainalytics where available. These resources help us consider and capture the factors most relevant to the industries in which we invest and so they may be thoughtfully applied to our investment decisions. The factors considered are outlined in our underwriting memos and are reviewed by the Investment Committee. These typically include, but certainly are not limited to the following:
- Greenhouse gas emissions and air quality
- Energy, water and wastewater management
- Waste and hazardous materials management
- Combined ecological footprint and impact
- Human rights
- Customer privacy and data security
- Access and affordability
- Product quality and safety
- Customer welfare, sales practices and product labeling
- Labor practices, employee health and safety
- Employee engagement, diversity and inclusion
- Business ethics and competitive behavior
- Management of the legal & regulatory environment
- Critical incident and systemic risk management
Lastly, CIFC recently worked closely with the Loan, Syndication and Trading Association (“LSTA”) to establish a standardized ESG diligence questionnaire that can be adopted by the key constituents (borrowers, bankers and investors) to establish an ESG-based focus on the loan asset class. This is a significant step forward in bringing “ESG Thinking” to the loan industry and will help bring further attention to the need for future ESG diligence.
Doing What’s Right — Fostering Social Responsibility
CIFC views our own firm with similar ESG-minded considerations. “Doing What’s Right” is at the core of CIFC’s philosophy in creating our workforce and workplace. Our hiring policy is mindful of maintaining diversity and inclusion while actively training and supporting a workplace free of discrimination and harassment. We work to ensure that our employees enjoy comprehensive benefits and a best-in-class work environment. Additionally, CIFC contributes financially to the numerous philanthropic programs spearheaded by our employees to support the communities where we work and live. In summary, CIFC is a firm believer that the implementation of ESG considerations makes us stronger as an organization, more diligent as investors and better stewards of investor capital. “Doing What’s Right” means continuing to exercise strong, principled leadership across our industry while advancing smart, ethical investing as a firm and a member of our community.
1Reflective of CIFC’s general procedures; actual process may vary depending on strategy, facts and circumstances.