Jupiter Responsible Income Acc (OEIC/Unit Trust)
SRI / Ethical Overview
The Fund’s objective is to provide income and long-term capital growth through investment primarily in UK equities.
The Jupiter Responsible Income Fund focuses on investing in UK companies that are considered by the Manager to be responding positively to and profiting from the challenges of environmental sustainability or are making a positive commitment to social wellbeing. The Fund will specifically avoid investing in companies associated with armaments, tobacco, nuclear power and animal testing for toiletries and cosmetics. Companies’ investment and financial prospects are assessed by the Jupiter Environmental Investment Team.
SRI / themed / ethical assets under management – overview
- Fund Size (GBP): £63.7 million as at 30 June 2018
- Total value of SRI/ethical/environmental/ social/ environmental or sustainability themed funds: £928m at 31 March 2018
- Total assets under management: £928m at 31 March 2018
SRI Policies (Primary strategy in bold)
- Environmental policy Find investment funds with environmental policies - ie that consider issues such as pollution, climate change, resource management, environmental impact. This will include options from all of the different SRI Styles, including funds where their core strategy is to focus on other areas such as ethical funds. See fund information for fund specific policy details.
- Ethical policies Find funds with 'traditional' ethical investment policies. These typically focus on avoiding companies that are involved in the armaments industry, tobacco, gambling and/or pornography. Options will include funds where their core strategy or style may be to focus other issues - like sustainability or the environment, not just 'ethical funds'. Strategies vary significantly. Check fund literature for details.
- Sustainability policy Find fund options that consider issues relating to the sustainability agenda (e.g. resource management, environmental impact, climate change and/or social issues such as equal opportunities, human rights and adherence to recognised codes). This will include funds from all of the different SRI Styles. See fund information for explanations of the different strategies.
- Social policy Find fund options that consider social issues (e.g. human rights, labour standards, equal opportunities, child labour and adherence to internationally recognised codes such as the UN Global Compact). This will include funds in most of the different SRI Styles as this is considered a core issue. See fund information for detail.
- Governance policy Find fund options that have policies that relate to corporate governance issues such as board structure, executive remuneration, bribery and/or corporate corruption. These funds will typically avoid companies with poor practices.
- Animal welfare policy Find ethical fund options that have policies that require specific animal welfare standards to be adopted by investee companies in order for them to be considered for inclusion within the fund.
- Animal testing exclusion policy Find ethical investment options that avoid companies that are involved in testing their products on animals. Ethical fund strategies vary - some exclude all companies that test on animals, others allow companies that test for medical purposes or where required by law. Read fund details for fund specific information.
- Tobacco production avoided Find fund options that exclude manufacturers of tobacco (or related) products. This typically relates to ethical funds however funds from other SRI Styles commonly avoid this area also. Strategies vary and funds may invest in retailers of such products (e.g. supermarkets or hotels.) See fund information for further information.
- Armaments manufacturers avoided Find ethical fund (and other SRI) options that avoid avoids companies that manufacture products intended specifically for military use. Fund strategies vary - particularly with regard to non strategic military products. Read fund literature for specific details.
- Nuclear exclusion policy Find ethical funds (and other options) that have a published policy that sets out the fund's position on avoiding or limiting exposure to nuclear power. See fund literature for details of their policy.
- Coal, oil &/or gas majors excluded Find sustainable investment and ethical fund options that avoid significant involvement in coal, oil and/or gas producing companies. Funds vary. See individual fund literature to confirm details.
- Climate change / GHG policy Find sustainable investment and ethical fund options that pay significant attention to climate change related issues such as greenhouse gas/carbon emissions. Strategies vary, see fund literature for individual fund information.
- Alcohol production excluded This filter helps you to find ethical funds - and other options - that avoid investment in alcohol production. See fund literature for further information.
- Gambling avoidance policy Find ethical fund options (and other options) that avoid companies with significant involvement in the gambling industry. See fund policy for details.
- Pornography avoidance policy Find ethical fund option - and in some cases other options - that avoid companies that derive significant income from pornography. See fund details for further information.
- Positive social impact theme (new) Find funds that specifically state that they aim to deliver positive social (ie people related) impacts and/or outcomes
- Positive environmental impact theme (new) Find funds that specifically set out to help deliver positive environmental impacts, benefits or outcomes
- Negative selection bias Find funds where their main 'ethical approach' is to avoid companies by using negative screening criteria. Read fund literature for further information.
- Balances company 'pros and cons'/best in sector Find ethical funds and other options that consider both the 'positive' things companies do and the 'negative' things they do in order to make balanced, often complex decisions about where they might invest. Such funds often invest in the best/most ethical companies across most industries ('best in sector'), rather than excluding entire sectors. The fund manager may combine this with 'responsible engagement' activity to encourage better business practices. See fund literature for specific policy explanations.
- Eurosif transparency Find funds that meet the standards of the EUROSIF transparency Code. This means that they are a leading fund in terms of openness and transparency, publishing - for example - extensive information about where they invest and how they deal with companies.
- Sustainability themed Find funds where there is a significant emphasis on sustainability issues either as its primary strategy or as a core strategy that compliments other criteria. (This may apply to a number of different SRI Styles). Such funds will consider environmental and social issues when making stock selection decisions. Read fund literature for further information.
- Strictly screened ethical fund Find funds that have a high level of negative ethical avoidance. These funds are likely to exclude more companies than other ethical (and SRI) fund options. Read fund literature for further information.
- Limited/few ethical exclusions* Funds with this label tend to avoid fewer companies than other ethical funds or other options with avoidance criteria. Strategies vary. The fund may only avoid companies in one or two areas (eg only exclude tobacco or armaments companies) or they may exclude only the very worst companies when measured against internationally accepted standards (across potentially a range of areas). Read fund literature for further information.
- ESG integration strategy (new) Find funds that factor in 'environmental, social and governance' issues as part of their investment decision making process. (These typically relate to improved risk management.)
- ESG/SRI engagement Find funds and fund management companies that actively encourages higher 'environmental, social and governance' and/or 'sustainable and responsible investment' practices amongst investee companies - when positive change is aligned with the best interest of investors. This may apply to a single fund or a group of funds. Read fund literature for further information.
- Responsible Ownership policy for non SRI funds Find funds run by fund managers that apply Responsible Ownership or 'Stewardship' policies to all or most of their investment assets. This means that active involvement (e.g. voting, dialogue) with the companies they invest in across funds (not normally limited to ethical or SRI options.) Read fund literature for further information.
- Integrates ESG factors into all/most fund research Find fund management companies that research environmental, social and governance (ESG) issues when deciding whether or not to invest in a company. This typically applies to all funds, not only those which are promoted as being 'ethical' or 'SRI themed'. This is increasingly often used as a risk management tool.
- Vote all* shares at AGMs/EGMs This fund manager votes or aims to vote all* the shares they own at Annual General Meetings and Extraordinary General Meetings. A commitment to voting shares is a key indicator of 'responsible share ownership' - where fund managers consider - and express their views on - the key business issues effecting the companies they part own. (*Allowance is made for exceptional situations such as when shares are in the process of being sold.)
- In house responsible ownership/voting expertise Find fund / fund management companies where there is in-house expertise that enables the fund manager to make their own decisions on issues such as shareholder voting, setting of in-house guidelines - for example - particularly with regard to environmental, social and governance (ESG) issues.
- Responsible Ownership/ESG a key differentiator The fund managers have said they consider this area to be a key differentiator for their business
- UK Stewardship Code signatory Find fund managers that are signatories to the FRC UK Stewardship Code, which sets out a framework for constructive investor / investee relations where fund managers are encouraged to behave as responsible 'company owners'.
- Publish Responsible Ownership/Stewardship report Find fund management companies that publish information on their approach to responsible investment ownership - also known as 'Stewardship' - following the introduction of 'the Stewardship Code'. This sets out their approach to voting, dialogue with company management and any related activity. This is publicly available.
- Publish full voting record Find fund management companies that publishes a full record of how they vote at AGMs and EGMs. This information is publicly available.
- Regularly lead collaborative ESG initiatives Find funds managed by fund management companies that regularly initiate or help run industry wide (collaborative) investor projects aimed at raising environmental, social and governance standards amongst investee companies.
- PRI signatory Find fund management companies that have signed up to the UN backed 'Principles of Responsible Investment' initiative.
- UKSIF member (new) The fund management company is a member of UKSIF - the UK Sustainable Investment and Finance association
- Climate Action 100+ or IIGCC member (new) Involved in collaborative institutional investor initiatives that are encouraging companies to address climate change (ie reduce carbon emissions)
- Encourage board diversity eg gender (new) Fund managers encourage the companies they invest in to have more diverse board structures (eg more women on boards)
- Encourage carbon / GHG reduction (new) The fund management company is working with the companies it invests in to encourage reductions of carbon dioxide and other greenhouse gas emissions.
- Employ specialist ESG/SRI/sustainability researchers (new) The fund management company directly employs specialist ESG/SRI/sustainability researchers or analysts
- Use specialist ESG/SRI/sustainability research companies (new) The company makes use of expert external research
- In house carbon/GHG reduction policy (new) The fund management company is working to reduce its own carbon/greenhouse gas emissions.
- Specialist SRI / positive impact fund management company (new) Find fund management companies that specialise in - or focus entirely on - delivering positive impacts or SRI related fund management options
SRI / Ethical Policy
The Fund typically invests in companies that fall into one of two categories:
- those that are actively managing their environmental and social impacts: good governance companies; or
- those that are providing solutions to environmental and social problems
Good governance companies are analysed under the following headings:
Leading company assessment:
Companies that demonstrate leading policies amongst their industry peers in terms of policies, processes or performance in the areas of Corporate Responsibility and are demonstrating a commitment to managing their impacts and reporting on progress.
High impact companies:
Companies that operate in sectors with potentially high environmental and social impacts, such as the resources sector, which includes mining and oil & gas businesses. To be included in the Fund, these companies in particular are required to demonstrate outstanding practices in the areas mentioned above relative not only to their peer group but across all sectors. Where appropriate, emphasis is placed on engagement with high impact companies on such issues prior to taking a holding. Resource sector companies are also considered favourably if a significant part of their business is explicitly involved in providing environmental solutions.
Limited impact company assessment:
Companies that have low environmental impacts and manage these appropriately.
Small company assessment:
Companies whose management have a commitment to improve environmental performance and can demonstrate that key social and environmental risks are managed well.
These companies have not yet reached leading company status but are typically working towards continuous improvement in policies, processes or performance in the areas of Corporate Responsibility and are demonstrating a commitment to managing their impacts and reporting on progress.
The Fund will be allowed to invest in almost all sectors of the stock market, including those companies whose products and services do not contribute directly to sustainable development. However, the Fund seeks to avoid investment in any company that is involved in activities which are believed to be incompatible with its environmental and social goals.
Examples of such negative activities include:
- manufacture of armaments;
- manufacture or sale of tobacco products; and
- generation of nuclear power
The Fund will not invest in any company that derives over 10% of its turnover from any one of these activities. Neither will the Fund invest in any company that conducts or commissions animal tests carried out for cosmetic or toiletry purposes.
A company involved in animal testing on other products, and their ingredients, will only be suitable for investment if it has made a substantial commitment to minimise animal testing.
Since taking over managing the Fund, Charlie has embarked on a review of the inclusion of companies involved in the mining sector on economic and environmental grounds, in spite of being mindful of the need to sustain a threshold level of dividend income.
Also, Charlie expects that in the longer term, the portfolio is likely to include a larger weighting in environmental solutions companies. These are businesses whose growth is being supported by a discernible shift in attitudes towards environmental sustainability at a political, corporate and individual level, at a time when the cost competitiveness of green products is improving rapidly. Examples of companies that fit this category are Johnson Matthey (energy efficient machines) and Shanks Group (waste and recycling).
In order to respond to stock market opportunities, up to 5% of the Fund’s assets may be invested in companies that appear suitable but for which research is still in progress. If the research has not been completed within three months of the investment date, the holding will be sold.
The Fund will be allowed to invest in almost all sectors of the stock market, including those companies whose products and services do not contribute directly to sustainable development. However, the Fund seeks to avoid investment in any company that is involved in activities that are believed to be incompatible with its environmental and social goals (a ‘negative’ screen).
Companies fail a negative screen if they derive over 10% of turnover from armaments, manufacture or sale of tobacco products and generation of nuclear power. The Fund will not in invest in any company that derives over 10% of its turnover from any one of these activities. Neither will the Fund invest in any company that conducts or commissions animal tests carried out for cosmetic or toiletry purposes. A company involved in animal testing on other products, and their ingredients, will only be suitable for investment if it has made a substantial commitment to minimize animal testing.
Resources, Affiliations & Corporate Strategies
In House RI/ESG Research
Jupiter has a dedicated Environment & Sustainable team focusing on the responsible investing products we offer and giving input and advice to the fund managers of the other strategies we offer. The research produced by our Environment & Sustainable analysts is shared widely with other investment teams.
Jupiter’s Governance Research (GR) team is embedded within the fund management department with a reporting line directly to the CIO. The GR team work in partnership with our fund managers on voting and engagement matters. The team’s responsibilities also include the monitoring of companies, client engagement, proxy voting operations, assessing industry consultations and contributing the development of internal policy and generating engagement ideas.
Jupiter’s ESG investment approach is fund manager led and this gives the fund managers the flexibility to integrate their ESG analysis into their investment approach. We believe that only through integration at a fund manager level can ESG issues truly be analysed and aid securities analysis through risk identification and mitigation as well as alpha generation.
Jupiter is a signatory to the United Nations Principles for Responsible Investment (UNPRI). At Jupiter, engagement with companies on ESG issues is carried out through face-to-face meetings, teleconferences and written communications which help inform our investment analysis and decision-making processes. We seek to invest in companies that are well managed, with high standards of corporate behaviour, responsibility and governance, which create an appropriate culture to enhance long-term shareholder value. We look to ensure appropriate disclosure on ESG issues both directly through its engagement with companies, and through it participation in investor initiatives. Jupiter participates in a number of key investment industry bodies including the Investment Management Association, the National Association of Pension Funds and UKSIF, the sustainable investment and finance association. We also participate in a number of joint investor networks and initiatives to promote sustainable investment and good governance, including the following:
Carbon Disclosure Project (CDP) – Jupiter is a founding signatory of CDP, which was launched in 2000 and conducted its first survey in 2003. CDP conducts a survey, which charts how the world's largest companies are addressing the challenges of climate change. The survey rates companies on the depth and scope of their disclosures and the quality of their reporting.
CDP Water Disclosure Project – Jupiter is a founding signatory to this new project that aims to help institutional investors better understand the business risks and opportunities associated with water scarcity and other water-related issues by increasing the availability of high quality information on this issue. The CDP Water Disclosure 2010 information request was sent to more than 300 of the world’s largest companies in sectors that are water intensive or are particularly exposed to water-related risk.
Investor Statement on a Global Agreement on Climate Change – The Statement was launched by the Institutional Investors Group on Climate Change (IIGCC) in 2006 and Jupiter became a signatory in 2008. The statement, supported by investment institutions, concludes that clear, credible long-term policy signals are critical for investors to integrate climate change considerations into their decision-making process and to support investment flows into a low-carbon economy.
Climate Communiqué’s – Bali 2007; Poznan 2008; Copenhagen 2009, Cancun 2010 – Jupiter has been a signatory of all four Communiqué’s, which call on world leaders to agree “an ambitious, robust and equitable global deal on climate change that responds credibly to the scale and urgency of the crisis facing the world today”.
Jupiter provides bespoke quarterly voting reports to institutional clients detailing meetings voted on, votes against management and reasons for doing so.
Jupiter is a Member of:
- UKSIF (the UK Sustainable Investment and Finance Association) – since 2001
- The 30% Club investor group – since 2009
- Green Bond Principles (GBP) – since 2016
- Investor Forum – since its launch in 2014
- Diversity Project – since 2017
Jupiter is a Respondent to:
- The UNPRI – since 2008
- EUROSIF European SRI Transparency Code – since 2001
- Carbon Disclosure Project – since 2000
Jupiter is a Signatory to:
- UNPRI (Jupiter is rated "A+" for “Strategy & Governance” as well as "A" for both "Listed Equity – Incorporation“ and "Listed Equity – Active Ownership) – since 2008
- UK Stewardship Code – since 2011
- Statement of Support for Task Force on Climate Related Financial Disclosures – since 2017
- Japan Stewardship Code – February 2018
- LGPS Transparency Code – April 2018