Tammira Philippe, president and CEO of Bridgeway Capital, said in a phone interview that the firm has been thinking about the topic not only in terms of what they're doing in their portfolios, but how they are being a good corporate citizen.
She noted that Bridgeway donates 50% of its profits to organizations creating "positive transformative change" in the world, and donations have been made to more than 500 different non-profit organizations.
Ms. Philippe noted also that 67% of Bridgeway Capital's professionals are people who identify as women and/or people of color.
Elena Khoziaeva, head of U.S. equity and a portfolio manager at Bridgeway, said the firm's approach to ESG integration is driven by its risk-management principles.
"For us, this is primarily during the portfolio construction phase, making adjustments to the weights of the positions, both inclusionary and exclusionary based on the ESG data items," Ms. Khoziaeva said. She also noted that the firm has taken a very active stance on proxy voting as well.
At St. Louis-based Kennedy Capital Management Inc., which ranked second with its microcap opportunities strategy returning a gross 68.9% for the year ended Dec. 31, the firm's ESG assessments are embedded within its research capabilities.
Anil Thomas, managing director and head of consultant relations and institutional sales at Kennedy Capital, said in a phone interview that its entire 14-person research team is involved in integrating ESG assessments alongside its primary company-specific research.
The challenge, he said, is the level of ESG disclosure among microcap companies.
"The consistency of disclosure, it's not there yet," Mr. Thomas said. "It's improving, (but) we have to do a lot more work to get that full ESG profile."
Morningstar gives Bridgeway Capital and Kennedy Capital's top-performing strategies sustainability ratings of two out of five globes each, which ranks them below average. Morningstar uses ratings from subsidiary Sustainalytics to measure a company's material ESG risk.
