Sarasin Responsible Global Equity P Acc (OEIC/Unit Trust)
SRI / Ethical Overview
Environmental, social and governance concerns are fully integrated into our investment process.
ESG issues are part of the assessment conducted by each analyst on every stock considered for inclusion on our buy list. The impact of ESG issues considered as part of modelling the revenue and cost projections of every stock, as well as how we consider threats to the business case. Our Stewardship analysts undertake research into specific ESG issues and manage policy engagement and governance.
Sarasin & Partners has managed ethical mandates for over 20 years, predominantly for charity clients, and has extensive experience throughout the firm of implementing ethical and socially responsible policies. Within our client teams we have considerable experience of how ethical issues have evolved and the different ways in which they may be considered by different interest groups.
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.
- 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.
- Measures positive impacts Find funds that measure the positive effect of their investment decision making on society and/or the environment. (This may involve eg carbon saved or jobs supported.) Managers aim to quantify the benefits they deliver (relative to other strategies or other benchmarks) to ensure they are delivering positive benefiting. This is a new and evolving area. See fund literature for information
- Limits exposure to carbon intensive industries Find environmental, sustainable investment, ethical fund and other options that aim to significantly reduce or limit exposure to carbon intensive industries (ie sectors which are major contributors to climate change). Funds vary - strategies may involve excluding sectors such as coal, oil & gas, mining or airlines - or may indicate a 'best in sector' approach is taken. See fund literature for details.
- Health & wellbeing policies Find ethical or sustainable investment fund options that have a policy which supports (ie aims to invest in) companies that are viewed as offering positive lifestyle, health or wellbeing related benefits.
- 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.
- Human rights Find funds that consider human rights practices when approving companies for investment. Such funds will require decent standards of human rights to be demonstrated - which typically means adherence to international norms as a minimum standard.
- - No primary policy area
- RSMR Rated Find funds that are rated by research agency 'Rayner Spencer Mills Research' (awarded 'RSMR SRI Rated' status). Read fund literature on contact RSMR for further information.
- 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.
- Over 50% large cap Find funds that invests more than half of their money into what are commonly regarded as 'large companies'. This will typically mean that the market capitalisation (or value) of the companies they hold is in excess of £5 to £10 billion.
- 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.
- Favours cleaner, greener companies Find funds that aim to nvest in companies with strong environmental policies and practices. This may mean it invests in smaller companies offering market leading environmental services or products and/or larger companies that are working towards the improved management of their negative impacts. Read fund literature for further information.
- Favours companies with strong social policies Find funds that invest in line with positive strategies that relate to 'people' issues - such as having strong human rights, labour standards and equal opportunities practices. Such funds are likely to invest in companies that have market leading standards with regard to employee and supplier practices. 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.
- 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.
- 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.
- 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.
- Review(ing) carbon/fossil fuel exposure for all funds Find funds / fund managers that are reviewing or have reviewed their exposure to carbon intensive industries including (but not only) mining, oil and gas companies. This work is being carried out in the context of climate change related concerns, and may often reference international agreements.
- 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.
- Boutique/specialist fund manager Find options offered by smaller, more specialist fund management companies with a significant (or entire) emphasis on sustainable, responsible, ethical, ESG or responsible ownership related investment strategies. Note - strategies vary significantly. Check fund manager supplied links for further information.
SRI / Ethical Policy
Our core investment philosophy and process, along with stewardship oversight, applies to all the funds we manage on behalf of clients. The key aim of this process is to identify companies that offer long-term value enhancement opportunities, which are currently undervalued by the market. We select companies by virtue of their fit with our:
- Opportunity sets: We look for companies well-placed to benefit from global change, ranging from rising resource scarcity, to the growing wealth and aspirations in emerging markets, to productivity trends and policy changes.
- Corporate themes: We look for companies with credible strategies to transform an ‘Opportunity Set’ into enduring value, as well as the governance structures that will deliver this for shareholders. We currently focus on five core themes which describe the underlying corporate characteristics we seek – Corporate Restructuring, Security of Supply, Disruption & Innovation, Strong-get-Stronger and Franchise Power.
- Attractive valuation: We bring together our assessment of the long-term prospects for the company and the returns that will flow to investors, to form a view of a likely future security price. This is compared with the current price to ensure that we are buying securities with attractive risk-adjusted return profiles.
Environmental, social and governance concerns are fully integrated into our investment process. ESG issues are part of the assessment conducted by each analyst on every stock considered for inclusion on our buy list. The impact of ESG issues considered as part of modelling the revenue and cost projections of every stock, as well as how we consider threats to the business case. Our Stewardship analysts undertake research into specific ESG issues and manage policy engagement and governance.
Our Responsible Global Equity fund excludes investment in companies which are materially involved in the production and distribution of ethically unacceptable products, including but not limited to:
- Extraction of thermal coal or the production of oil from tar sands
We seek to avoid investing in companies which are materially involved in ethically unacceptable practices, such as:
- Environmental degradation
- Poor labour practices
- Breaches of human rights
- Companies which persistently, knowingly and materially breach international legal standards
Resources, Affiliations & Corporate Strategies
These range from our support for membership organisations, to investor discussion groups that allow for regular information sharing amongst like-minded investors, to active investor coalitions focused on specific company or policy matters.
Membership organisations and investor discussion groups related to responsible investment include:
- UN Principles for Responsible Investment (UNPRI)
- The Pensions and Lifetime Savings Association (formerly the National Association of Pension Funds, NAPF) – active in promoting Stewardship within the UK.
- International Corporate Governance Network (ICGN) – Natasha Landell-Mills is a member of the Accounting and Auditing Practices Committee
- Global Investors Governance Network (GIGN) - an informal network of investors on governance matters
- Asian Corporate Governance Association – providing current research on Asian corporate governance matters, and a platform for engagement with companies and policy-makers in the region.
- The UK Sustainable Investment and Finance Association (UKSIF) – promotes responsible investment and other forms of finance that support sustainable economic development.
- Centre for the Study of Financial Innovation – hosts regular roundtable discussions with thought-leaders on key issues facing the financial sector, from stewardship, to financial sector litigation or carbon risks.
- The Local Authority Pension Fund Forum – We have actively supported for many years
Investor coalitions/initiatives related to responsible investment include:
- Institutional Investors Group on Climate Change (IIGCC) – Brings together investors keen to promote a more robust action to counter climate change.
- Energy Futures – A facilitated investor–corporate dialogue which explored the key long-term energy challenges facing the world, and implications for investors.
- The Investor Forum – constituted as a Community Interest Company to represent the interest of the entire investment chain
- Investor coalition on Audit - to promote high quality and independent audits. This group was coordinated by Natasha Landell-Mills since its formation in 2012, and culminated in a position paper (signed by over 30 institutions representing over EUR 2 trillion in assets) and outreach in the European Union to deliver audit market reform.
- Investor coalition on International Financial reporting Standards (IFRS) and Going Concern – This group coordinated by Natasha Landell-Mills was formed in 2012, and is reaching out to policy-makers in the UK and EU to ensure an accounting framework that supports and promotes stewardship for the long-term.
- Corporate Reporting and Auditing Group convened by the IMA – bringing together representatives from the largest long-term investor associations to discuss topical accounting and auditing issues, and feed into government consultations.
- Banking Futures – A facilitated investor-company dialogue around a vision for a sustainable banking sector for the future. This involves thought leaders in long-term investment sector as well as senior executives from large UK based banks.