The Oakmark family of mutual funds is an extension of Harris Associates’ value-focused approach to investing. For more about our selection of funds, visit Oakmark.com.
We incorporate both financial and non-financial factors, including ESG considerations, into our investment process. Our investment team continually monitors developments on the regulatory, political and technological fronts to gauge the economic impact to our companies from environmental factors, such as climate change. Socially, we monitor how well a company is positioned to retain key talent, manage supply chain risk, and outperform local product safety and quality regulations, among other metrics. In all companies in which we invest, we seek robust corporate governance practices. This full mosaic of information is used to assess the quality of a business and its ability to sustain per share value growth over the long term.
Company-specific ESG risks and opportunities are identified while a stock is on our research project list prior to its formal review by Harris’ Stock Selection Group (SSG). Analysts assess business quality and pinpoint material ESG factors. For ESG considerations deemed material, relevant risks and opportunities may be factored into revenue estimates, margin forecasts, the company’s cost of capital and terminal multiple to determine the analyst’s estimate of intrinsic value. A tangible output of our fundamental analysis is a business rating and management team rating for each company under coverage.
Escalation of an ESG issue is analyst driven. When there is a material change to intrinsic value or our investment thesis, an analyst will distribute a memo to the entire department. The note is archived in our internal research database, which is accessible to all investment professionals. An analyst can also bring a company for review at Harris’ weekly SSG meeting. Ultimately, if an ESG issue materially impacts our perceived value drivers for the company, we will revisit our assessment of intrinsic value and ownership of the name.
We do not explicitly screen our investment universe based on ESG factors. As market generalists, our analysts search for value without regard to industry, sector or geography. We believe this unconstrained structure broadens analysts’ perspectives and allows them to assess relative value among companies in different businesses. We do not look to exclude companies or sectors from our investable universe because we believe we have an obligation to consider all ESG risks against the impact they may have on long-term financial performance.
Our greatest value to you is found in the people who deliver our services. Whether they are involved in security analysis, allocation or meeting your account’s needs, each is dedicated to ensuring our relationship delivers the expertise you seek.