Looking back on a landmark year for Responsible Investment

The year that just ended was a milestone in the deployment of our 2022 initiative aimed at stepping up and formalizing our ESG efforts.

As mentioned in our March and September communications, we set up an ESG Advisory Committee at the beginning of 2023, consisting of three industry experts. It met three times and its contribution has proved to be important and has helped guide Van Berkom’s internal ESG Committee in its strategic decisions.

We also reviewed and released our Voting Rights Policy in order to align it with our Responsible Investment Policy, which had been reviewed in 2022.

Since then, we have continued to make progress in line with our action plan. On the one hand, we have completed the ESG evaluation of all securities in our portfolio. This was a target set in autumn 2022, when we integrated the systematic and increased assessment of ESG considerations into our investment process. We now have both a qualitative and quantitative assessment of each company, which helps us draw a more comprehensive picture of the risks and opportunities involved, so that we can now measure the ESG evolution of our portfolios.

We have also calculated the carbon footprint of our portfolios using various recognized methodologies. In all cases, the results are convincing, and our strategies have a carbon footprint well below that of their respective indexes. For example, we have calculated the carbon intensity of our strategies, i.e., the number of tonnes of CO2 equivalent per million sales (Scope 1 and Scope 2), using the weighted average of the carbon intensities of the securities in our portfolio. We obtain a carbon intensity for each strategy of only 15% to 27% of the carbon intensity of their respective benchmark index.

 

Carbon footprint of our portfolios
StrategyVan BerkomIndex
Canadian Small Cap Stocks (1)24.5163.4
U.S. Small Cap Stocks (2)33.1149.2
U.S. Small-Mid Cap Stocks (3)32.6142.4
Global Small Cap Stocks (4)38.0141.0

(1) As at September 30, 2023, compared to S&P/TSX Small Cap Index

(2) As at September 30, 2023, compared to Russell 2000 Index

(3) As at September 30, 2023, compared to Russell 2500 Index

(4) As at December 31, 2022, compared to MSCI ACWI Small Cap Index

 

Finally, we would like to point out that the remuneration of all our investment professionals has been adjusted to include, on a recurring basis and starting in 2023, a significant component linked to the successful achievement of a few common ESG objectives and directly related to some of the priorities of our action plan. The importance and recurring nature of this component of our investment professionals’ compensation, linked to the achievement of certain ESG objectives, makes Van Berkom one of the leaders in our industry in this respect. This initiative was strongly supported by our investment professionals.

 

Looking ahead to 2024

After a year full of advances, this new year will be just as busy. First and foremost, we aim to consolidate our achievements. Although we have completed the ESG analysis of the securities in our portfolio, our experience has led us to improve our approach. We will therefore be updating all the analyses we have carried out, which will enable us to calibrate valuations between each of the investment professionals.

We also plan to roll out our corporate social commitment strategy in the first few weeks of the year. The close relationship we develop with the management of our portfolio companies puts us in a privileged position to influence their ESG efforts. As small-cap companies have fewer ESG resources and knowledge, they generally appreciate our involvement, which allows us to have a direct impact on their ESG policies and efforts. The results of our ESG assessment of the securities in our portfolio help guide us in setting priorities.

In addition, we plan to review our corporate ESG policy, including an analysis of our policy on diversity, equity and inclusion. Among other things, we plan to offset the carbon footprint of our business travel. We look forward to sharing the details of this corporate ESG policy with you as soon as it is finalized.

Finally, to support all the initiatives already in place and help us roll out the actions planned for this year and the years to come, we have recently opened the position of Responsible Investment Analyst. We aim to fill this position by the end of the first quarter.

If you would like more details about the information provided in this press release, or about our ESG approach in general, you can speak with your strategy manager or contact one of our two colleagues below.

Andy Kong
Senior Director, Institutional Markets
akong@vanberkomglobal.com
514 985-0909
Patrick Lamontagne
Chief Operating Officer
plamontagne@vanberkomglobal.com
514 262-6058