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Ariel Investments ESG Policy

As a risk aware manager, Ariel considers environmental, social and governance issues (ESG) as part of the broader review of the material and relevant risks to an investment. We interact with companies to understand their strategies to drive better outcomes. Ariel implements ESG considerations into our investment processes differently for the domestic strategies versus the international and global strategies, as summarized below:

Ariel’s Domestic Strategies

As part of our commitment to drive long-term results for our clients, we employ a rigorous approach when considering environmental, social, and governance (ESG) risk factors across our flagship traditional value strategies. Our dedicated ESG team, embedded in our domestic research department, works closely with our fundamental analysts and portfolio managers to integrate and assess financially material ESG risks and opportunities throughout Ariel’s investment analysis and direct engagement with management teams. For each company, we create an in-depth ESG research report including a proprietary ESG Risk Rating informed by assessments of industry exposure, disclosure, and management of material ESG issues. These strategies have a long tradition of using our position as significant shareholders to drive improvement on ESG performance through constructive relationships with management teams. Ariel’s traditional value and focused value strategies do not invest in companies whose primary source of revenue is derived from the production or sale of tobacco products, the manufacture of firearms or the operation of for profit prisons.

Ariel’s International and Global Strategies

We integrate material and relevant ESG risk factors and opportunities into our bottom-up fundamental research process using a combination of qualitative and quantitative analysis. Our approach to ESG is grounded in inclusion and improvement via engagement and dialogue, rather than exclusion or elimination via screens or scores. With respect to quantitative analysis, our team may utilize data from various third party sources, databases, and company disclosures. We also benchmark companies versus their appropriate industries and/or geographic peers. Qualitative analysis generally includes reading research reports, talking to company managements, reviewing trade and regulatory policies and publications, as well as talking to subject matter experts. These qualitative and quantitative assessments of potential financial impacts or opportunities on a company's enterprise value over our long-term investment horizon are then integrated into a formal ESG rating. We incorporate these proprietary ESG ratings into the hurdle rates used in financial valuations and include ESG considerations in our write-ups. They are also discussed and debated during our research calls and Stock Review Meetings. At client request, we accommodate restrictions on investing in certain industries such as tobacco and firearms.

Ariel’s flagship traditional value strategies include small cap value, small/mid cap value, and mid cap value.

Past performance does not guarantee future results. © Ariel Investments, LLC. This website and all of its content is for informational and educational purposes only and should not be considered to be investment advice or a recommendation to buy or sell any particular security. The mutual funds offered by Ariel Investment Trust are distributed by Ariel Distributors, LLC, a wholly-owned subsidiary of Ariel Investments, LLC. Use of this website is subject to our Terms & Conditions. The Ariel mutual funds referred to in this site may be offered only to persons in the United States. This web site should not be considered a solicitation or offering of any investment products, funds or services to ineligible investors, investors for whom such products, funds or services are not suitable, or investors outside the United States.

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