ClearBridge Investments Extends Its Long History of ESG Integration

April 30, 2024 /3BL/ - ClearBridge Investments, a leading global equity manager with $188 billion in assets under management, released its seventh annual Stewardship Report for the 2023 year, detailing its approach to creating shareholder value through the incorporation of environmental, social and governance (ESG) factors into its investment process. ClearBridge, a Franklin Templeton company, has used ESG integration as a core part of its active management approach for more than 35 years.

“Harnessing innovation to advance sustainability priorities and partnering with portfolio companies to drive progress for shareholders remain central to what we do,” said Terrence Murphy, Chief Executive Officer of ClearBridge Investments.

"It is important to reflect on how essential public companies are to the innovation that improves life on earth. Three-quarters of emission reductions needed for net zero will be from technology that is not yet commercial,” said Mary Jane McQuillen, Head of ESG and Portfolio Manager. “ClearBridge is seeing the potential for potential for new investment opportunities addressing nature-related risks, with new business models reducing demand for high-impact commodities, responsibly managing land and sea ecosystems, reducing pollution or enabling decarbonization.”

2023 Highlights

In 2023, ClearBridge earned top scores across all three categories of the U.N.-supported Principles for Responsible Investment (PRI) reporting assessment, scoring well above the median for the PRI universe. ClearBridge has been a PRI signatory since 2008.

In November 2023, ClearBridge joined a group of international investors representing $4.5 trillion in assets under management and advisement to sign the Interfaith Center on Corporate Responsibility’s Living Wage Statement calling on U.S. companies to take steps toward paying a living wage to both direct and contract workers in line with international human rights standards.

ClearBridge also made updates to its ESG policy to increase its focus on several material topics and bolster ESG oversight of its portfolio companies. These updates included articulating a clear biodiversity policy and formally endorsing internationally recognized standards and frameworks on human rights, such as the U.N. Guiding Principles on Business and Human Rights (UNGPs), the OECD Guidelines for Multinational Enterprises and the U.N. Global Compact.

“Human rights are relevant to businesses across sectors and in every part of the globe. They are therefore an essential part of ClearBridge’s company engagements,” added McQuillen.

Proxy Voting and Company Engagements

ClearBridge uses its influence as an active owner and top 20 shareholder at more than 200 public companies to promote positive change through its proxy voting and company engagement activity. In 2023, ClearBridge voted on 15,060 shareholder proposals at its portfolio companies, continuing its track record of casting 100% of its proxy votes.

As a long-term shareholder with an average holding period of five years, ClearBridge has cultivated strong and lasting relationships with company management teams. In 2023, the firm convened more than 1,000 meetings with companies and initiated over 600 ESG-related company engagements.

“Engagement to drive positive change in public equities is a long-standing part of ClearBridge’s investment decision-making process and a key element of active ownership,” said Murphy.

Net Zero Alignment

In 2021, ClearBridge joined the Net Zero Asset Managers initiative, a group of more than 300 asset managers with nearly $60 trillion in assets under management committed to playing their part in getting the world to net-zero carbon emissions by 2050. As of the end of 2023, 55% of ClearBridge’s in-scope assets were net-zero aligned, representing a 27% increase year over year of net-zero-aligned assets.

Building a Diverse and Inclusive Culture

The firm sustained strong representation of women and people of color among its workforce in 2023, with women and people of color representing 37% and 33% of its total staff, respectively. ClearBridge has continued to build diversity in its investment management team, and the percentage of women and people of color within ClearBridge’s investment analyst team has grown significantly since 2021.

“An effective way for us active managers to guide our portfolio companies is through leading by example. We are proud of the efforts we have made at ClearBridge to develop and maintain a diverse workforce, increasing the number of people of color in investment roles for three years in a row,” added Murphy.

Advancing the U.N. Sustainable Development Goals (SDGs)

ClearBridge contributes to the advancement of the U.N. SDGs through its active public equity ownership as well as its philanthropic efforts. In 2013, ClearBridge first partnered with WaterAid, an international nonprofit improving the accessibility of clean water and sanitation in Timor-Leste, one of the world’s least developed countries. These efforts directly support Sustainable Development Goal 6: Clean Water and Sanitation.

In 2023, ClearBridge’s collaboration with WaterAid facilitated the installation of a water pump, which serves four villages in Darulete, a rural community in the Liquiçá municipality of Limor-Leste. This pump, now owned and maintained by the local water collective action group, has transformed the lives of the community members, particularly young girls, who were previously burdened with hours of daily travel to collect water.

About ClearBridge Investments

With $188 billion in assets under management as of March 31, 2023, ClearBridge Investments is a leading global equity manager committed to delivering long-term results through authentic active management, offering investment solutions that emphasize differentiated, bottom-up stock selection to move clients forward. The firm integrates ESG considerations into its fundamental, bottom-up research and stock selection process across all strategies. Owned by Franklin Templeton, ClearBridge operates with investment independence from headquarters in New York and offices in Baltimore, Fort Lauderdale, London, San Mateo, and Sydney.

About Franklin Templeton

Franklin Resources, Inc. [NYSE:BEN] is a global investment management organization with subsidiaries operating as Franklin Templeton and serving clients in over 150 countries. Franklin Templeton’s mission is to help clients achieve better outcomes through investment management expertise, wealth management and technology solutions. Through its specialist investment managers, the company offers specialization on a global scale, bringing extensive capabilities in fixed income, equity, alternatives and multi-asset solutions. With more than 1,500 investment professionals, and offices in major financial markets around the world, the California-based company has over 75 years of investment experience and over $1.6 trillion in assets under management as of March 31, 2024. For more information, please visit franklintempleton.com and follow us on LinkedIn, Twitter and Facebook.