Morgan Stanley Investment Funds - Calvert Climate Aligned Fund
SRI Style:
Sustainability Tilt
SDR Labelling:
Not eligible to use label (out of scope)
Product:
SICAV/Overseas
Fund Region:
Global
Fund Asset Type:
Equity
Launch Date:
08/04/2022
Last Amended:
Jul 2025
Dialshifter (
):
Fund/Portfolio Size:
£6.26m
(as at: 30/11/2025)
Total Screened Themed SRI Assets:
£791.00m
(as at: 31/03/2025)
Total Assets Under Management:
£36764.00m
(as at: 31/03/2025)
ISIN:
LU2459593203, LU2459593385
Contact Us:
Objectives:
Long term growth of your investment involving economic activities that address climate transition and/or are aligned to the long term de-carbonisation objectives of the Paris Agreement. The Fund is in scope of Article 9 of the European Sustainable Finance Disclosure Regulation.
Sustainable, Responsible
&/or ESG Overview:
The Calvert Climate Aligned Fund’s investment objective is to provide long-term capital appreciation, measured in US Dollars, primarily investing in companies that are involved in economic activities that address climate transition and/or are aligned to the long-term de-carbonisation objectives of the Paris Agreement. The Fund will maintain a carbon profile that follows the net zero objectives of the Paris Agreement, as reflected in the appropriate Paris-Aligned benchmark, or in the absence of an approved Paris-Aligned benchmark it will maintain a substantially lower carbon footprint, of at least 50% less than that of the underlying market benchmark, and taking into account the long-term carbon reduction objectives of the Paris Agreement which may warrant a revision of the targeted range of reduction over time. Carbon footprint shall be measured as weighted average carbon intensity, defined as tonnes of CO2 per $1million enterprise value including cash.
Primary fund last amended:
Jul 2025
Information directly from fund manager.
Fund Filters
Sustainability - General
Has policies that consider (environmental and social) sustainability issues. Strategies vary but are likely to consider environmental issues like climate change, carbon emissions, biodiversity loss, resource management, environmental impacts; and social issues like equal opportunities, human rights, labour standards, diversity and adherence to internationally recognised codes. See individual entry information.
Has a significant focus on sustainability issues
Has documented policies or thematic investment approaches supporting investment in more sustainable, greener transport methods. These will typically set out a preference for companies that run, enable or support more sustainable methods of transport.
Aim to encourage higher sustainability standards through responsible ownership / stewardship / engagement / voting activity
Use the UN Global Compact to inform or help direct where they can or cannot invest. Will typically not invest in companies with significant breaches (low standards) - strategies vary. (The UNGC covers a wide range of issues - search 'UNGC'). See https://unglobalcompact.org/
Environmental - General
Has policies which relate to environmental issues. These will typically set out their stance on issues such as pollution, climate change, resource management, biodiversity loss, carbon emissions, plastics and/or additional environmental impacts. Strategies vary.
Options that limit or 'reduce' their exposure to carbon intensive industries (ie sectors which are major contributors to climate change). Strategies vary.
Aims to invest in companies with strong or market leading environmental policies and practices. Strategies vary. See individual entry information for more detail.
Climate Change & Energy
Invest (or may invest) in clean / renewable energy companies and other assets. The proportion directly or indirectly invested in renewable energy may vary over time.
Encourage the transition to lower carbon activities through asset selection and / or responsible ownership activity.
Has an energy efficiency theme - typically meaning that the manager is focused on investing in organisations that manage - or help others to manage - energy use more carefully and less wastefully - and so reduce greenhouse gas emissions.
Invest in renewable energy companies and / or companies where renewable energy is a significant part of their business. Strategies vary.
Aims to ensure holdings will reduce their greenhouse gas emissions in line with targets set at COP21 in Paris. The core aim is to help achieve ‘net zero emissions by 2050’ and a ‘maximum global temperature increase of +1.5 to +2 degrees above preindustrial levels’. Strategies and opinions vary.
Requires all, or most of, the assets they invest in to have a ‘net zero action plan’ - describing how they will reduce their greenhouse gas emissions.
Social / Employment
Has policies which set out their approach to social issues (e.g. human rights, labour standards, equal opportunities, child labour and/or adherence to internationally recognised codes such as the UN Global Compact). Strategies with social policies typically avoid companies with low standards and/or work to encourage higher standards. See fund information for detail.
Has a labour standards policy - likely to mean they will invest in / favour companies that have higher employment related standards and avoid those with low standards. Strategies vary. See eg https://www.ilo.org/international-labour-standards
Aims to invest in assets with high social values - this may include strong human rights, labour standards and equal opportunities or safety related practices.
Ethical Values Led Exclusions
Has policies that set out their position on ethical or 'personal values' based issues. Strategies vary.
Companies are excluded if they are involved in any aspect of the production chain for tobacco products, including cigarettes, vaping, e-cigarettes, chewing tobacco and cigars.
Companies are excluded if they make more than 5% of their revenue from the manufacture, sale or distribution of tobacco products including cigarettes, vaping, e-cigarettes, chewing tobacco and cigars.
Avoids companies that manufacture weapons intended specifically for military use. Strategies vary - may or may not include non-strategic military products.
Has a written civilian firearms exclusion policy - meaning that they will not invest in companies that make (or perhaps also sell) handguns made for non-military users.
Avoids companies with significant involvement in the gambling industry. Some may allow a small proportion of revenues to come from this area.
Avoids companies that derive significant income from pornography and related areas. Strategies vary.
Human Rights
Has policies relating to human rights issues. Typically require companies to demonstrate higher standards, although some managers work to encourage improvements. Investee companies are often judged against internationally agreed norms or standards. Strategies vary.
Has policies to avoid companies that employ children.
Gilts & Sovereigns
Does not invest in / excludes 'sovereigns' - debt issued by governments. See eg https://www.investopedia.com/terms/s/sovereign-debt.asp
Banking & Financials
Can include banks as part of their holdings / portfolio.
May invest in insurance companies.
Governance & Management
Has 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. Strategies vary.
Avoids investing in companies with poor governance practices.(e.g. board structure, management practices etc.) Views may however vary on what counts as 'poor' practices - and funds may not immediately divest as they may prefer to work to encourage higher standards.
Exclude companies that are subject to United Nations sanctions. See eg https://main.un.org/securitycouncil/en/content/un-sc-consolidated-list
Encourage the companies they invest in to have more diverse board structures (e.g. more women on boards)
Encourage the banks and insurance companies they invest in to publish climate change related financial information - as set out by the Task Force on Climate Related Financial Disclosures (with the aim of helping investors measure and respond to climate risk).
Aim to encourage higher ESG standards through responsible ownership / stewardship / engagement /voting activity
Asset Size
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.
Impact Methodologies
Aims to measure the positive real world environmental and / or social benefits that are associated with their investment strategy. Investments that aim to deliver positive impacts and measure those impacts may be referred to as 'Impact' - although impact measurement is not restricted to Impact investments. Strategies vary.
Directs investment towards companies where a major part of their business is about solving environmental challenges. e.g. companies helping to address climate change.
Aims to deliver positive environmental and or social impacts (real world benefits) through its engagement with investee assets
How The Fund/Portfolio Works
Focuses on finding and investing in companies with positive / beneficial attributes. This strategy can be applied in addition to exclusion criteria and engagement/stewardship activity.
Invest more heavily in assets which have higher ESG ratings/standards or scores and less heavily in companies with lower ESG ratings. Where this is central to the strategy you should expect assets in most sectors. Strategies vary.
Makes stock selection (and ongoing management) decisions based on ESG data or company ratings (normally supplied by third parties) rather than focusing on what individual companies do, how they operate or their plans for the future
Aims to avoid companies that do significant harm. This originates from the EU’s sustainable finance ‘DNSH’ (do no significant harm) work, which is not necessarily used by UK investors.
Invests in assets which have an ESG strategy (which is typically focused on avoiding companies that pose environmental, social or governance related risks) together with additional criteria such as positive and/or negative screens, themes and stewardship strategies.
Publish explanations of their ethical, social and/or environmental policies online (i.e. investment decision making strategies/ buy/sell &/or asset management strategies).
Unscreened Assets & Cash
Holds between 70-79% of assets which align to the sustainability objectives; which are not being held purely for risk management purposes, such as derivatives and cash equivalent assets.
Holds between 80-89% of assets which align to the sustainability objectives; which are not being held purely for risk management purposes, such as derivatives and cash equivalent assets.
Holds at least 90% of assets which align to the sustainability objectives; which are not being held purely for risk management purposes, such as derivatives and cash equivalent assets.
Only invests in cash to aid the practical management (buying and selling) of assets and so do not use additional financial instruments.
Intended Clients & Product Options
Designed to meet the needs of individual investors with an interest in sustainability issues.
Labels & Accreditations
Find options classified under Article 9 of the EU’s SFDR (Sustainable Finance Disclosure Requirements). Article 9 of the SFDR applies to financial products that have sustainable investment 'objectives' - including emissions reduction objectives. (These may currently be referred to as 'impact' funds or aiming to deliver clear, specific positive outcomes.) These rules do not currently apply in the UK so product managers may leave this field blank.
Fund Management Company Information
About The Business
Finds fund / asset management companies that have a published company wide stewardship, engagement and / or responsible ownership policy or strategy that covers all investments. Stewardship typically involves encouraging higher ESG standards through voting and dialogue.
Find fund / asset management companies that actively encourage higher 'environmental, social and governance' and / or 'sustainable and responsible investment' practices across investee companies - typically where the aim is to encourage positive change that is aligned with the best interests of investors. Strategies vary. See additional information and options.
Find fund / asset managers that 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' demonstrating their support for or disagreement with management policy. (*situations can legitimately, occasionally occur where voting proves impossible, but in principle all shares should be voted.)
Find fund / asset management companies that aim to align all their investments (across all funds) to help meet the aims of the UN Sustainable Development Goals.
Finds organisations / fund managers that have an in-house (company wide) diversity improvement programme - meaning that they are working to ensure that within their own businesses they employ people from diverse backgrounds - often typically focused on ethnicity and/or sex.
Collaborations & Affiliations
Find fund / asset management companies that have signed up to the UN backed 'Principles of Responsible Investment'.
Fund management entity is a member of the Investment Association https://www.theia.org/
Resources
Find fund / asset management companies that employ people to steer and support fund managers in voting shares at company AGM's and EGMs in ways that are consistent with encouraging higher ESG/sustainability standards.
Find a fund / asset management company that directly employs specialist ESG/SRI/sustainability researchers or analysts. This allows asset managers to discuss environmental, social and governance risks and opportunities directly with companies.
Find fund / asset management companies that makes use of expert external research companies. This can help deliver specialist expertise and means resources are pooled with other investors.
Accreditations
Find fund / asset managers that are signatories to the FRC UK Stewardship Code, which sets out a framework for constructive investor / investee relations where managers are encouraged to behave like responsible, typically longer term 'company owners'.
Engagement Approach
Fund / asset manager has stewardship /responsible ownership strategy that is focused on addressing climate change with investee assets.
Fund / asset manager has a stewardship /responsible ownership strategy that involves working with fossil fuel companies on climate change related issues. See fund manager website for details.
Fund / asset manager has stewardship /responsible ownership strategy with involves encouraging investee asset to reduce plastic waste and pollution.
Fund / asset manager has a stewardship / responsible ownership policy that means they are working to encourage more responsible mining practices - where environmental and social issues are properly dealt with by the companies they invest in.
The fund / asset manager has a responsible ownership / stewardship strategy that focuses on biodiversity and nature issues relating to the assets they invest the aim of which will be to reduce harm and or deliver improvement. Strategies vary. https://tnfd.global
Fund / asset manager has a responsible ownership / stewardship strategy which means they are working to encourage the shift to more sustainable business practices in ways that respect and are sensitive to social issues and the impact change has on people effected by the changes that are taking place. https://www.transitionpathwayinitiative.org/ https://transitiontaskforce.net/
Fund / asset manager has responsible ownership / stewardship strategy in place which aims to address human rights issues in investee companies (and potentially their suppliers) with the aim of raising standards
Fund / asset manager has responsible ownership / stewardship strategy in place that aims to improve labour standards for the benefit of employees in investee companies (and potentially their suppliers)
Fund / asset management company has a stewardship strategy in place which involves working to raise diversity, equality and inclusion standards across investee assets
Fund / asset manager is working with the assets they hold to help stamp out modern slavery - where direct or indirect company employees are exploited for business benefits.
Fund / asset managers have stewardship strategies in place that focus on improving governance standards across investee assets
Has a stewardship / responsible ownership strategy that encourages responsible supply chain - ie the managers will discuss environmental, social and governance issues with investee companies with the aim of raising standards
Working to address sustainability, ESG and related concerns around artificial intelligence.
This fund / asset manager may vote differently for different clients or regions. See fund manager stewardship policy for further information.
Escalation policies describe how a manager will proceed if stewardship / engagement activity is not successful in the short term.
Company Wide Exclusions
Find fund / asset management companies (not funds) that avoid investment in 'controversial weapons' across all of their funds and other investment vehicles.
Climate & Net Zero Transition
Fund / asset management organisations that have pledged to reduce their greenhouse gas emissions to ‘net zero’. Strategies vary - this area is changing rapidly.
Fund / asset manager AGM / EGM voting strategy has processes in place that mean they will normally be expected to vote in a way that will encourage the transition to net zero greenhouse gas emissions.
This fund / asset management company has set a date by which they plan to achieve net zero greenhouse gas / CO2e emissions.
Find fund / asset management companies that are working with the companies they invest in to encourage reductions in carbon dioxide and other greenhouse gas emissions.
This fund / asset management company plans to achieve net zero greenhouse gas (CO2e) emissions with the help of a scheme that will lock away an amount of carbon that is equivalent to the company’s own emissions – so that the end result is ‘net zero’. Calculations and scope vary.
Transparency
Find fund / asset management companies that publish a report detailing their responsible investment ownership - also known as 'Stewardship' - activity.
Find fund / asset management companies that publish information about their sustainable and responsible investment strategies on their company website.
Fund / asset management companies that publish a full record of how they vote their shares at AGMs (annual general meetings) and EGMs (extraordinary general meetings). Voting strategies have an important role to play encouraging higher environmental, social and governance standards.
Find fund / asset management companies that have supplied Dialshifter information. See Dialshifter tab within record for more information.
Comments
Calvert Research and Management (Calvert or CRM) is part of Morgan Stanley Investment Management (MSIM), the asset management division of Morgan Stanley.
As part of MSIM, Calvert has a distinctive investment philosophy, approach and viewpoint and provides ESG customized solutions to clients spanning the global markets.
Calvert’s infrastructure support including portfolio implementation and trading is supported by MSIM and its affiliates. As such, the responses in this questionnaire will refer to both companies where appropriate.
For the following responses in the Affiliations & Collaborations section, we have also included Morgan Stanley affiliations where appropriate: GFANZ member (AFM company wide), UN Net Zero Banking Alliance member (AFM company wide), Fund EcoMarket partner, UN Principles of Responsible Banking framework signatory (AFM company wide) and TNFD forum member (AFM company wide).
Please note:
MSIM Investment teams are subject to MSIM Sustainable Investing policy. However, MSIM’s individual investment teams and advisor entities (collectively, “investment teams”) may maintain additional policies related to sustainable investing, as appropriate. Some investment strategies may not consider ESG factors where it is not currently feasible or appropriate to do so as determined by an investment team, including but not limited to: passive investment strategies, certain asset allocation strategies, or where requested by clients.
- ESG specialists on all investment desks: Many of MSIM’s investment teams, asset class platforms, and businesses have appointed at least one dedicated Sustainable Investing/ESG specialist to co-ordinate and support
- Engagement Approach: MSIM has a duty to be good stewards of our clients’ capital. We fulfil this duty by seeking to engage with selected companies in which we invest, and by exercising our proxy voting and other rights as shareholders. These stewardship activities give us the opportunity to help guide companies in which we invest toward better ESG practices, which we believe may contribute to producing attractive returns for our clients over the long-term. Our investment teams, where appropriate to their investment strategy, endeavor to engage in constructive dialogue with companies, which may encompass activities ranging from meetings and discussions on a particular issue to multi-year engagements on a range of ESG topics specific to the company or asset to encourage improvement of companies’ ESG practices where relevant. This can encompass a range of topics that may affect the long-term value of a business or asset, including strategy, capital structure, operational performance and delivery, risk management, executive pay and corporate governance, recognising that different approaches to engagement may be appropriate in different regions. This helps us manage risk in the near and long-term, enhance our understanding of our investee companies/issuers, and, where relevant, create positive sustainable outcomes – all of which we believe may contribute to the long-term returns of our clients. The MSIM Sustainability team has identified five common themes which certain of our investment teams focus on in their engagements, based on their respective investment strategies, where relevant and appropriate. These five Engagement Themes are aligned with the United Nations Sustainable Development Goals, which are areas that may cause risk to our society and well-being, global economy and/or capital markets, but may also present opportunities for improved sustainable and/or financial outcomes.
- Company Wide Exclusions: MSIM does not have a firm-wide investment exclusion list; all exclusions are applied at product level at the discretion of the investment team. Exclusions are also subject to local laws and regulations.
Sustainable, Responsible &/or ESG Policy:
Calvert broadly sees a multi-decade transformation of the global economic system defined by broad decarbonization efforts of the global energy system, endeavors to create business processes that are far more resource efficient and circular and an evolving social contract between individuals and institutions. This transformation must address investment risks from externalities, or impacts that companies have on the environment and society for which we do not currently have a pricing mechanism. Climate change is arguably the greatest of all externalities with once-in-a-generation events such as floods, droughts, hurricanes and heatwaves increasing in frequency. These externalities come with material negative economic impacts which raise the urgency with which to divert capital to tackle climate change and adapt to its impacts. As we look forward to the coming decades, we believe that capital markets are on the precipice of an increase in the impact of corporate environmental, social and governance (ESG) performance on security prices. We expect a corresponding acceleration of capital deployed to solve the environmental challenges we face today.
With this future state in mind, leadership on issues of sustainability such as climate change requires companies across industries to evolve their product strategies, refine their corporate strategies and continually strengthen their abilities to provide effective oversight and execution of the sustainable transition before us. The Calvert Climate Aligned Fund seeks to invest in these companies and address climate related issues through Calvert’s proprietary Environmental, Social and Governance (ESG) research process, investment in climate aligned companies and corporate engagement.
Success for the strategy will be determined by:
- Similar or Excess Returns to the MSCI World Index
- Diversification across a portfolio of approximately 200 stocks with factor risk exposures and financial characteristics similar to the MSCI World Index
- Ongoing, year-by-year decrease in portfolio level Green House Gas Emissions intensity
- Focused investment on climate and environmental solutions providers
- Low Annual Turnover
- Tracking Error to the MSCI World Index of 1%-2%
The Fund utilizes a quantitative and qualitative ESG research process that applies the Calvert Principles for Responsible Investment to define the investment universe while making sure that such companies do not significantly harm any environmental or social objective.
The Calvert Principles for Responsible Investment can be found on www.morganstanleyinvestmentfunds.com and on www.morganstanley.com/im. The Investment Adviser may engage company management around financially material ESG issues that it deems to have a positive impact on society or the environment.
Process:
The Climate Aligned Strategy seeks to identify companies we consider climate aligned in areas that are material to long term performance. Our approach consists of three distinct parts:
- Security Selection Identifies Companies that are Climate Aligned
- Portfolio Construction Aligns with Net Zero, Decarbonization and Risk Management Goals
- Strengthen Companies on Climate through Engagement
The portfolio construction process takes the following steps:
Step 1 – Quantitative Research/Security Selection
The goal of security selection is to identify companies from the Calvert Global Developed Markets universe that are most Climate Aligned. Climate Aligned companies are ones that we believe are:
- Substantially free from ESG controversies
- Aligned with Paris Aligned Benchmark Requirements
- Providing solutions to mitigate climate change impacts or help society adapt
The starting point of this process is the Calvert Global Developed Markets Universe which is defined by the Calvert ESG Research Process. This universe is made up of global companies in developed markets that meet Calvert’s Principles for Responsible Investment and exhibit environmental sustainability, resource efficiency, support for equitable societies and human rights, and accountable governance and transparent operations. This universe is made up of companies that manage their financially ESG issues, including climate, well and are largely free from controversies and controversial activities. Calvert’s ESG Research Process already identifies and typically removes companies involved in controversies however we apply a specific set of screens largely focusing on revenues to ensure compliance with EU Paris Aligned Benchmark (PAB) requirements including:
- Removal of companies involved in manufacturing or producing controversial weapons and civilian firearms
- Removal of companies involved in manufacturing or producing tobacco
- Removal of companies that violate the UN Global Compact (UNGC)
- Removal of companies that have significant revenue from coal, revenue from oil and revenue from gas (not applied to electric utility companies)
- Removal of electric utilities that either generate a significant portion of their revenue from fossil fuel based power or have significant revenue from trading oil & gas
Step 2 – Qualitative Overlay
The second step of the process is a qualitative review performed by the ARIS and ESG Research Teams. The Qualitative Overlay provides quality control on the initial portfolio to ensure that included companies are climate aligned and show a distinct leadership position on climate issues. The security selection process is highly effective at identifying these companies, however we believe best practice is to review the portfolio for accuracy and consistency. The qualitative overlay ensures:
Companies Demonstrate Leadership
- Product and corporate strategy - companies offers more sustainable long-term growth opportunities and/or allows for management of existing and emerging financially material climate related issues likely to affect current operations
- Oversight and Execution – climate related issues that impact the business’s financial condition are identified and effectively managed. Once climate related issues are identified, successful companies develop measurement systems, strategies and targets to manage associated risks and opportunities. These companies are also transparent and report on their progress in managing these issues.
Removal of Companies
- Companies showing stagnation or potential reversal in performance on climate and environmental related issues
- Companies with increased potential controversy risk
- Companies with increased potential governance risks
Inclusion of Improving Companies
- The Qualitative assessment allows for inclusion of companies that are improving on financially material climate and environmental issues though their scores in the Calvert Research System may not yet reflect this improvement. Companies demonstrating improvement may be added to the portfolio.
Step 3 – Optimization
With a confirmed portfolio of climate aligned companies, the portfolio management team then seeks to create a risk-controlled portfolio that tilts toward companies with better climate and environmental impacts. The team does this through a multipronged optimization approach that aligns with Net Zero goals and promotes decarbonization.
The team uses Barra Optimizer to apply a standard mean-variance optimization on the initial portfolio of climate aligned stocks using a number of investment and environmental goals and constraints.
Common goals we may use in optimizing securities positions include:
Investment Goals
- Maximize expected returns
- Minimize risk
- Minimize transaction costs
- Minimize taxes
- Minimize penalties
- Weights of Assets
- Cash Contributions and Withdrawals
- Transaction Type Limitations
- Cash Position
ESG Goals
- Reduce portfolio-level absolute carbon footprint
- Increase allocation to Climate Leaders
- Increase allocation to ESG Leaders
- Increase allocation to companies benefiting from energy transition
- Increase allocation to companies investing in the energy transition
- Decrease allocation to companies with high physical risk
- Decrease allocation to higher emitters
- Decrease allocation to companies that without a progressive reduction in carbon intensity
- Decrease allocation to companies with average or below average Calvert ESG scores
The optimizer reallocates to different securities within the portfolio to create an allocation that maximizes the portfolio’s ability to meet the goals described above.
Data Sources
Calvert’s team of ESG analysts leads the ESG research process for Calvert’s portfolios, working closely with the respective fundamental investment teams for each strategy. We use the Calvert Research System to capture multiple sources of ESG data and evaluate this information, with roughly 200 peer group models.
All of Calvert’s ESG research is conducted internally. Calvert’s ESG analysts review a wealth of data from diverse sources to evaluate a company’s ESG practices, policies and track record.
Calvert currently uses data and information from more than 20 specialist ESG data providers that are incorporated into data and information we also receive from NGO’s, traditional investment research resources, information from investor networks and information from issuers themselves. We most frequently source third party vendor data from MSCI, Sustainalytics, ISS, Asset4, and Trucost. We rigorously test vendor ESG data to ensure that the KPI’s work as the vendor describes, are accurate, are financially material to issuers and provide consistent results over time. Our data testing might lead us to use different vendors and data sets for different issues at different times.
It is important to note that Calvert does not use ESG ratings from other companies. We incorporate data from these sources to form our own view of how companies are managing their financially material ESG exposures.
All ESG rankings are stored in FactSet’s RMS system. Additionally, an intranet portal allows ESG analysts to share their industry and company models as well as other data and written material with the fundamental analysts and portfolio managers.
Resources, Affiliations & Corporate Strategies:
ESG/SRI Resources
The team uses its proprietary ESG scorecard, the Material Risk Indicator (MRI), which aims to identify and assess potentially financially material ESG risks and opportunities facing each company; and the Pay X-Ray (where relevant and possible), which we use as a tool to try to assess whether a company’s pay practices are aligned with management’s intention and/or ability to deliver sustainably high long-term returns on operating capital.
Given our bottom-up fundamental approach to research, in most instances, the main source for our ESG analysis is a company’s own disclosures. Our well-resourced team conducts in-depth analysis of companies, including how potentially financially material ESG issues are approached, drawing on Annual Reports and, where relevant, additional ESG-related reports such as sustainability reports, cyber security reports or human resources-related reports. Our investment team may also engage with companies to further assess potentially financially material ESG issues relevant to companies and to understand their strategies to address these, to monitor progress, and to encourage companies towards better ESG practices where relevant to manage these potentially financially material risks and opportunities.
To support our research, the team may also use vendor applications and systems. In particular, the team uses FactSet Research Systems, a financial database and analytical tool that allows customised screenings of global companies according to various financial characteristics that may be associated with a strong business franchise. We also have access to ESG data and information from third party sources which we may use as additional points of reference during our research process. We have access to a broad set of mainstream ESG data providers including MSCI ESG, ISS, Sustainalytics and Trucost, as well as other more specialised data providers such as Equileap, a comprehensive global database on gender equality. We might also use external research from not-for-profit organisations that assess companies’ performance and management on key ESG issues where such issues are potentially financially material, such as the World Benchmarking Alliance (WBA), Forest 500, Zoological Society of London’s (ZSL’s) company assessment on key commodities such as Palm Oil, and KnowTheChain’s assessment of companies’ performance on forced labour in global supply chains.
No single data source is used to make a final investment decision but may contribute to the overall fundamental analysis of the company if considered relevant.
Please note, external data is updated based on the provider. Data sourced from third party data providers may be subject to methodological limitations and may be subject to data lags, data coverage gaps or other issues impacting the quality of the data. ESG-related information, including where obtained from third-party data providers, is often based on qualitative or subjective assessment, and any one data source may not in itself present a complete picture relating to the ESG metric that it represents. MSIM takes reasonable steps to mitigate the risk of these limitations. However, it does not make any representation or warranty as to the completeness or accuracy of such data. Any such data may also be subject to change by the third party provider without notice. As such, MSIM may choose to take such action (or inaction) based on any change in data provided by a third party data provider as it deems appropriate in the circumstances.
Governance Structure & Responsibilities
The investment team is headed by Managing Director and portfolio manager William Lock. Other portfolio managers include Managing Directors Bruno Paulson, Nic Sochovsky, Marcus Watson, Alex Gabriele and Richard Perrott, and Executive Directors Isabelle Mast, Anton Kryachok and Marte Borhaug (Head of ESG). The International Equity team subscribes to a flat organizational culture; each team member has global sector research responsibilities and participates in investment decisions. The team also includes research analysts Alessandro Vaturi, Helena Miles, Sora Utzinger (ESG), Bart Dziedzic, Jinny Hyun and Toyosi Somoye.
In addition to the bottom-up ESG research conducted by team members, our team’s Head of ESG and Portfolio Manager Marte Borhaug and Senior ESG Research Analyst Sora Utzinger add sustainability expertise and specialist research to the investment debate and our engagement with companies, where required. Marte reviews and contributes to ESG strategy for the team, liaises with Morgan Stanley, MSIM and external ESG resources, and co-ordinates ESG matters for the team. Sora focuses on supporting research, engagement strategy and proxy voting on potentially financially material ESG issues across the team’s strategies.
Proxy Voting
MSIM’s Proxy Voting Policy outlines our proxy voting procedures and high-level, principles-based voting guidelines while providing investment teams with adequate flexibility to make informed voting decisions in line with their investment goals and client expectations.
The MSIM Global Stewardship Team (GST) analyses proxies and provides vote recommendations to MSIM investment teams in accordance with the Proxy Voting Policy. Subsequently, vote recommendations along with rationales are then escalated to the relevant investment team, who have the ultimate decision on how to vote.
MSIM obtains research on issuers and selected environmental and social issues from its investment teams’ own research, as well as two independent advisers, Institutional Shareholder Services and Glass Lewis. MSIM does not outsource proxy voting decision-making to either firm.
ESG related affiliations and membership
Through its various businesses and internal functions, MSIM and Morgan Stanley participate in, belong to or take a leading role in many ESG-related initiatives and organizations.
This includes participating in industry conference panels, exploring joint research, and supporting the work of groups focused on ESG-related issues.
Please refer to our 2023 UK Stewardship Code Report, under "MSIM Collaborative Initiatives" - https://www.morganstanley.com/im/publication/resources/ukstewardshipcode_msim_en.pdf?1734703336999
Dialshifter
This fund is helping to ‘shift the dial from brown to green’ by…
Offering clients a portfolio that primarily invests in companies that are involved in economic activities that address climate transition and/or are aligned to the long-term de-carbonisation objectives of the Paris Agreement. The Fund will maintain a carbon profile that follows the net zero objectives of the Paris Agreement, as reflected in the appropriate Paris-Aligned benchmark, or in the absence of an approved Paris-Aligned benchmark it will maintain a substantially lower carbon footprint, of at least 50% less than that of the underlying market benchmark and taking into account the long-term carbon reduction objectives of the Paris Agreement.
SDR Labelling:
Not eligible to use label (out of scope)
Key Performance Indicators:
- % of the Fund’s portfolio compliant with the Calvert Principles
- Carbon footprint at least 50% lower than that of the MSCI World Index. Measured by tonnes of CO2 per $1million enterprise value (including scope 1 and 2 emissions, and only including scope 3 emissions for certain sectors for which, in the view of the Investment Adviser, scope 3 emissions are likely to constitute a material factor in overall carbon emissions)
- % of portfolio holdings which demonstrated environmental and/ or climate leadership or improvement in accordance with the Investment Adviser’s proprietary methodology
- 7% reduction in emissions year-on-year to reach net zero at portfolio level by 2050 or earlier. For this purpose, the Fund considers scope 1 and 2 GHG emissions and scope 3 GHG emissions for all sectors currently required to be considered by the EU CTBs and UC PABs.
Literature
Fund Holdings
Voting Record
Disclaimer
While every care has been taken in preparing the information provided in this document, such information and materials are provided "as is" without warranty of any kind, either express or implied; in particular, no warranty regarding accuracy or completeness.
There is no guarantee that any investment strategy will work under all market conditions, and each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market. Prior to investing, investors should carefully review the relevant strategy / product offering document. There are important differences in how the strategy is carried out in each of the investment vehicles.
Prior to investing, investors should carefully review the relevant offering document for the strategy/product. Please consider the investment objectives, risks and fees of the strategy/product carefully before investing.
This material is a general communication, which is not impartial and has been prepared solely for informational and educational purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy, and any such offering is subject to the execution of a written contract. All investments involve risks, including the possible loss of principal. The information herein has not been based on a consideration of any individual investor circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal or regulatory advice. To that end, investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision.
Except as otherwise indicated, the views and opinions expressed herein are those of the portfolio management team, are based on matters as they exist as of the date of preparation and not as of any future date, and will not be updated or otherwise revised to reflect information that subsequently becomes available or circumstances existing, or changes occurring, after the date hereof. They are subject to change based on market, economic and other conditions. Certain information contained herein constitutes forward-looking statements, which can be identified by the use of terms such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” or “believe” (or the negatives thereof) or other variations thereon. Due to various risks and uncertainties, including, but not limited to, those set forth herein, actual events or results or actual performance of any investments may differ materially from those reflected or contemplated in such forward-looking statements. The information presented represents how the portfolio management team generally implements its investment process under normal market conditions.
Forecasts and/or estimates provided herein are subject to change and may not actually come to pass. Information regarding expected market returns and market outlooks is based on the research, analysis and opinions of the authors. These conclusions are speculative in nature, may not come to pass and are not intended to predict the future performance of any specific Morgan Stanley Investment Management product.
Any performance information provided in this document is not indicative of future performance or investment returns, and you should not view such performance information as an indicator of the future performance of a particular investment.
Any strategy weights and/or number of holdings referenced herein represent typical ranges and are not a maximum number. The portfolio may exceed this from time to time due to market conditions and outstanding trades. The targets, turnovers and exposures presented for pooled vehicles are typical ranges. There is no assurance that these targets will be attained.
Risk management implies an effort to monitor risk, but should not be confused with and does not imply low risk.
Any index referred to herein is the intellectual property (including registered trademarks) of the applicable licensor. Any product based on an index is in no way sponsored, endorsed, sold or promoted by the applicable licensor and it shall not have any liability with respect thereto.
This document is intended solely for the use of the person to whom it has been delivered (including such person’s employees, representatives, agents, or advisors, as applicable). MSIM has not authorized financial intermediaries to use and to distribute this document, unless such use and distribution is made in accordance with applicable law and regulation. Additionally, financial intermediaries are required to satisfy themselves that the information in this document is appropriate for any person to whom they provide this document in view of that person’s circumstances and purpose. MSIM shall not be liable for, and accepts no liability for, the use or misuse of this document by any such financial intermediary.
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Please refer to the most recent fund factsheet which provides product specific risk disclosures.
All information contained herein is proprietary and is protected under copyright law.
| Fund Name | SRI Style | SDR Labelling | Product | Region | Asset Type | Launch Date | Last Amended |
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Morgan Stanley Investment Funds - Calvert Climate Aligned Fund |
Sustainability Tilt | Not eligible to use label (out of scope) | SICAV/Overseas | Global | Equity | 08/04/2022 | Jul 2025 | |
ObjectivesLong term growth of your investment involving economic activities that address climate transition and/or are aligned to the long term de-carbonisation objectives of the Paris Agreement. The Fund is in scope of Article 9 of the European Sustainable Finance Disclosure Regulation. |
Fund/Portfolio Size: £6.26m (as at: 30/11/2025) Total Screened Themed SRI Assets: £791.00m (as at: 31/03/2025) Total Assets Under Management: £36764.00m (as at: 31/03/2025) ISIN: LU2459593203, LU2459593385 Contact Us: Nikita.Gorasiya@morganstanley.com |
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Sustainable, Responsible &/or ESG OverviewThe Calvert Climate Aligned Fund’s investment objective is to provide long-term capital appreciation, measured in US Dollars, primarily investing in companies that are involved in economic activities that address climate transition and/or are aligned to the long-term de-carbonisation objectives of the Paris Agreement. The Fund will maintain a carbon profile that follows the net zero objectives of the Paris Agreement, as reflected in the appropriate Paris-Aligned benchmark, or in the absence of an approved Paris-Aligned benchmark it will maintain a substantially lower carbon footprint, of at least 50% less than that of the underlying market benchmark, and taking into account the long-term carbon reduction objectives of the Paris Agreement which may warrant a revision of the targeted range of reduction over time. Carbon footprint shall be measured as weighted average carbon intensity, defined as tonnes of CO2 per $1million enterprise value including cash.
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Primary fund last amended: Jul 2025 |
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Information received directly from Fund Manager |
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Fund FiltersSustainability - General
Sustainability policy
Has policies that consider (environmental and social) sustainability issues. Strategies vary but are likely to consider environmental issues like climate change, carbon emissions, biodiversity loss, resource management, environmental impacts; and social issues like equal opportunities, human rights, labour standards, diversity and adherence to internationally recognised codes. See individual entry information.
Sustainability focus
Has a significant focus on sustainability issues
Sustainable transport policy or theme
Has documented policies or thematic investment approaches supporting investment in more sustainable, greener transport methods. These will typically set out a preference for companies that run, enable or support more sustainable methods of transport.
Encourage more sustainable practices through stewardship
Aim to encourage higher sustainability standards through responsible ownership / stewardship / engagement / voting activity
UN Global Compact linked exclusion policy
Use the UN Global Compact to inform or help direct where they can or cannot invest. Will typically not invest in companies with significant breaches (low standards) - strategies vary. (The UNGC covers a wide range of issues - search 'UNGC'). See https://unglobalcompact.org/ Environmental - General
Environmental policy
Has policies which relate to environmental issues. These will typically set out their stance on issues such as pollution, climate change, resource management, biodiversity loss, carbon emissions, plastics and/or additional environmental impacts. Strategies vary.
Limits exposure to carbon intensive industries
Options that limit or 'reduce' their exposure to carbon intensive industries (ie sectors which are major contributors to climate change). Strategies vary.
Favours cleaner, greener companies
Aims to invest in companies with strong or market leading environmental policies and practices. Strategies vary. See individual entry information for more detail. Climate Change & Energy
Clean / renewable energy theme or focus
Invest (or may invest) in clean / renewable energy companies and other assets. The proportion directly or indirectly invested in renewable energy may vary over time.
Encourage transition to low carbon through stewardship activity
Encourage the transition to lower carbon activities through asset selection and / or responsible ownership activity.
Energy efficiency theme
Has an energy efficiency theme - typically meaning that the manager is focused on investing in organisations that manage - or help others to manage - energy use more carefully and less wastefully - and so reduce greenhouse gas emissions.
Invests in clean energy / renewables
Invest in renewable energy companies and / or companies where renewable energy is a significant part of their business. Strategies vary.
Paris aligned strategy
Aims to ensure holdings will reduce their greenhouse gas emissions in line with targets set at COP21 in Paris. The core aim is to help achieve ‘net zero emissions by 2050’ and a ‘maximum global temperature increase of +1.5 to +2 degrees above preindustrial levels’. Strategies and opinions vary.
Require net zero action plan from all / most companies
Requires all, or most of, the assets they invest in to have a ‘net zero action plan’ - describing how they will reduce their greenhouse gas emissions. Social / Employment
Social policy
Has policies which set out their approach to social issues (e.g. human rights, labour standards, equal opportunities, child labour and/or adherence to internationally recognised codes such as the UN Global Compact). Strategies with social policies typically avoid companies with low standards and/or work to encourage higher standards. See fund information for detail.
Labour standards policy
Has a labour standards policy - likely to mean they will invest in / favour companies that have higher employment related standards and avoid those with low standards. Strategies vary. See eg https://www.ilo.org/international-labour-standards
Favours companies with strong social policies
Aims to invest in assets with high social values - this may include strong human rights, labour standards and equal opportunities or safety related practices. Ethical Values Led Exclusions
Ethical policies
Has policies that set out their position on ethical or 'personal values' based issues. Strategies vary.
Tobacco & related product manufacturers excluded
Companies are excluded if they are involved in any aspect of the production chain for tobacco products, including cigarettes, vaping, e-cigarettes, chewing tobacco and cigars.
Tobacco & related products - avoid where revenue > 5%
Companies are excluded if they make more than 5% of their revenue from the manufacture, sale or distribution of tobacco products including cigarettes, vaping, e-cigarettes, chewing tobacco and cigars.
Armaments manufacturers avoided
Avoids companies that manufacture weapons intended specifically for military use. Strategies vary - may or may not include non-strategic military products.
Civilian firearms production exclusion
Has a written civilian firearms exclusion policy - meaning that they will not invest in companies that make (or perhaps also sell) handguns made for non-military users.
Gambling avoidance policy
Avoids companies with significant involvement in the gambling industry. Some may allow a small proportion of revenues to come from this area.
Pornography avoidance policy
Avoids companies that derive significant income from pornography and related areas. Strategies vary. Human Rights
Human rights policy
Has policies relating to human rights issues. Typically require companies to demonstrate higher standards, although some managers work to encourage improvements. Investee companies are often judged against internationally agreed norms or standards. Strategies vary.
Child labour exclusion
Has policies to avoid companies that employ children. Gilts & Sovereigns
Does not invest in sovereigns
Does not invest in / excludes 'sovereigns' - debt issued by governments. See eg https://www.investopedia.com/terms/s/sovereign-debt.asp Banking & Financials
Invests in banks
Can include banks as part of their holdings / portfolio.
Invests in insurers
May invest in insurance companies. Governance & Management
Governance policy
Has 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. Strategies vary.
Avoids companies with poor governance
Avoids investing in companies with poor governance practices.(e.g. board structure, management practices etc.) Views may however vary on what counts as 'poor' practices - and funds may not immediately divest as they may prefer to work to encourage higher standards.
UN sanctions exclusion
Exclude companies that are subject to United Nations sanctions. See eg https://main.un.org/securitycouncil/en/content/un-sc-consolidated-list
Encourage board diversity e.g. gender
Encourage the companies they invest in to have more diverse board structures (e.g. more women on boards)
Encourage TCFD alignment for banks & insurance companies
Encourage the banks and insurance companies they invest in to publish climate change related financial information - as set out by the Task Force on Climate Related Financial Disclosures (with the aim of helping investors measure and respond to climate risk).
Encourage higher ESG standards through stewardship activity
Aim to encourage higher ESG standards through responsible ownership / stewardship / engagement /voting activity Asset Size
Over 50% large cap companies
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. Impact Methodologies
Measures positive impacts
Aims to measure the positive real world environmental and / or social benefits that are associated with their investment strategy. Investments that aim to deliver positive impacts and measure those impacts may be referred to as 'Impact' - although impact measurement is not restricted to Impact investments. Strategies vary.
Invests in environmental solutions companies
Directs investment towards companies where a major part of their business is about solving environmental challenges. e.g. companies helping to address climate change.
Aim to deliver positive impacts through engagement
Aims to deliver positive environmental and or social impacts (real world benefits) through its engagement with investee assets How The Fund/Portfolio Works
Positive selection bias
Focuses on finding and investing in companies with positive / beneficial attributes. This strategy can be applied in addition to exclusion criteria and engagement/stewardship activity.
ESG weighted / tilt
Invest more heavily in assets which have higher ESG ratings/standards or scores and less heavily in companies with lower ESG ratings. Where this is central to the strategy you should expect assets in most sectors. Strategies vary.
Data led strategy
Makes stock selection (and ongoing management) decisions based on ESG data or company ratings (normally supplied by third parties) rather than focusing on what individual companies do, how they operate or their plans for the future
Significant harm exclusion
Aims to avoid companies that do significant harm. This originates from the EU’s sustainable finance ‘DNSH’ (do no significant harm) work, which is not necessarily used by UK investors.
Combines ESG strategy with other SRI criteria
Invests in assets which have an ESG strategy (which is typically focused on avoiding companies that pose environmental, social or governance related risks) together with additional criteria such as positive and/or negative screens, themes and stewardship strategies.
SRI / ESG / Ethical policies explained on website
Publish explanations of their ethical, social and/or environmental policies online (i.e. investment decision making strategies/ buy/sell &/or asset management strategies). Unscreened Assets & Cash
Assets typically aligned to sustainability objectives 70 - 79%
Holds between 70-79% of assets which align to the sustainability objectives; which are not being held purely for risk management purposes, such as derivatives and cash equivalent assets.
Assets typically aligned to sustainability objectives 80 – 89%
Holds between 80-89% of assets which align to the sustainability objectives; which are not being held purely for risk management purposes, such as derivatives and cash equivalent assets.
Assets typically aligned to sustainability objectives > 90%
Holds at least 90% of assets which align to the sustainability objectives; which are not being held purely for risk management purposes, such as derivatives and cash equivalent assets.
No ‘diversifiers’ used other than cash
Only invests in cash to aid the practical management (buying and selling) of assets and so do not use additional financial instruments. Intended Clients & Product Options
Intended for clients interested in sustainability
Designed to meet the needs of individual investors with an interest in sustainability issues. Labels & Accreditations
SFDR Article 9 fund / product (EU)
Find options classified under Article 9 of the EU’s SFDR (Sustainable Finance Disclosure Requirements). Article 9 of the SFDR applies to financial products that have sustainable investment 'objectives' - including emissions reduction objectives. (These may currently be referred to as 'impact' funds or aiming to deliver clear, specific positive outcomes.) These rules do not currently apply in the UK so product managers may leave this field blank. Fund Management Company InformationAbout The Business
Responsible ownership / stewardship policy or strategy (AFM companywide)
Finds fund / asset management companies that have a published company wide stewardship, engagement and / or responsible ownership policy or strategy that covers all investments. Stewardship typically involves encouraging higher ESG standards through voting and dialogue.
ESG / SRI engagement (AFM companywide)
Find fund / asset management companies that actively encourage higher 'environmental, social and governance' and / or 'sustainable and responsible investment' practices across investee companies - typically where the aim is to encourage positive change that is aligned with the best interests of investors. Strategies vary. See additional information and options.
Vote all* shares at AGMs / EGMs (AFM companywide)
Find fund / asset managers that 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' demonstrating their support for or disagreement with management policy. (*situations can legitimately, occasionally occur where voting proves impossible, but in principle all shares should be voted.)
SDG aligned aims / objectives (AFM companywide)
Find fund / asset management companies that aim to align all their investments (across all funds) to help meet the aims of the UN Sustainable Development Goals.
In-house diversity improvement programme (AFM companywide)
Finds organisations / fund managers that have an in-house (company wide) diversity improvement programme - meaning that they are working to ensure that within their own businesses they employ people from diverse backgrounds - often typically focused on ethnicity and/or sex. Collaborations & Affiliations
PRI signatory
Find fund / asset management companies that have signed up to the UN backed 'Principles of Responsible Investment'.
Investment Association (IA) member
Fund management entity is a member of the Investment Association https://www.theia.org/ Resources
In-house responsible ownership / voting expertise
Find fund / asset management companies that employ people to steer and support fund managers in voting shares at company AGM's and EGMs in ways that are consistent with encouraging higher ESG/sustainability standards.
Employ specialist ESG / SRI / sustainability researchers
Find a fund / asset management company that directly employs specialist ESG/SRI/sustainability researchers or analysts. This allows asset managers to discuss environmental, social and governance risks and opportunities directly with companies.
Use specialist ESG / SRI / sustainability research companies
Find fund / asset management companies that makes use of expert external research companies. This can help deliver specialist expertise and means resources are pooled with other investors. Accreditations
UK Stewardship Code signatory (AFM companywide)
Find fund / asset managers that are signatories to the FRC UK Stewardship Code, which sets out a framework for constructive investor / investee relations where managers are encouraged to behave like responsible, typically longer term 'company owners'. Engagement Approach
Engaging on climate change issues
Fund / asset manager has stewardship /responsible ownership strategy that is focused on addressing climate change with investee assets.
Engaging with fossil fuel companies on climate change
Fund / asset manager has a stewardship /responsible ownership strategy that involves working with fossil fuel companies on climate change related issues. See fund manager website for details.
Engaging to reduce plastics pollution / waste
Fund / asset manager has stewardship /responsible ownership strategy with involves encouraging investee asset to reduce plastic waste and pollution.
Engaging to encourage responsible mining practices
Fund / asset manager has a stewardship / responsible ownership policy that means they are working to encourage more responsible mining practices - where environmental and social issues are properly dealt with by the companies they invest in.
Engaging on biodiversity / nature issues
The fund / asset manager has a responsible ownership / stewardship strategy that focuses on biodiversity and nature issues relating to the assets they invest the aim of which will be to reduce harm and or deliver improvement. Strategies vary. https://tnfd.global
Engaging to encourage a Just Transition
Fund / asset manager has a responsible ownership / stewardship strategy which means they are working to encourage the shift to more sustainable business practices in ways that respect and are sensitive to social issues and the impact change has on people effected by the changes that are taking place. https://www.transitionpathwayinitiative.org/ https://transitiontaskforce.net/
Engaging on human rights issues
Fund / asset manager has responsible ownership / stewardship strategy in place which aims to address human rights issues in investee companies (and potentially their suppliers) with the aim of raising standards
Engaging on labour / employment issues
Fund / asset manager has responsible ownership / stewardship strategy in place that aims to improve labour standards for the benefit of employees in investee companies (and potentially their suppliers)
Engaging on diversity, equality & / or inclusion issues
Fund / asset management company has a stewardship strategy in place which involves working to raise diversity, equality and inclusion standards across investee assets
Engaging to stop modern slavery
Fund / asset manager is working with the assets they hold to help stamp out modern slavery - where direct or indirect company employees are exploited for business benefits.
Engaging on governance issues
Fund / asset managers have stewardship strategies in place that focus on improving governance standards across investee assets
Engaging on responsible supply chain issues
Has a stewardship / responsible ownership strategy that encourages responsible supply chain - ie the managers will discuss environmental, social and governance issues with investee companies with the aim of raising standards
Engaging on the responsible use of AI
Working to address sustainability, ESG and related concerns around artificial intelligence.
Split voting policy
This fund / asset manager may vote differently for different clients or regions. See fund manager stewardship policy for further information.
Stewardship escalation policy
Escalation policies describe how a manager will proceed if stewardship / engagement activity is not successful in the short term. Company Wide Exclusions
Controversial weapons avoidance policy (AFM companywide)
Find fund / asset management companies (not funds) that avoid investment in 'controversial weapons' across all of their funds and other investment vehicles. Climate & Net Zero Transition
Net Zero commitment (AFM companywide)
Fund / asset management organisations that have pledged to reduce their greenhouse gas emissions to ‘net zero’. Strategies vary - this area is changing rapidly.
Voting policy includes net zero targets (AFM companywide)
Fund / asset manager AGM / EGM voting strategy has processes in place that mean they will normally be expected to vote in a way that will encourage the transition to net zero greenhouse gas emissions.
Net Zero - have set a Net Zero target date (AFM companywide)
This fund / asset management company has set a date by which they plan to achieve net zero greenhouse gas / CO2e emissions.
Encourage carbon / greenhouse gas reduction (AFM companywide)
Find fund / asset management companies that are working with the companies they invest in to encourage reductions in carbon dioxide and other greenhouse gas emissions.
Carbon offsetting - offset carbon as part of net zero plan (AFM companywide)
This fund / asset management company plans to achieve net zero greenhouse gas (CO2e) emissions with the help of a scheme that will lock away an amount of carbon that is equivalent to the company’s own emissions – so that the end result is ‘net zero’. Calculations and scope vary. Transparency
Publish responsible ownership / stewardship report (AFM companywide)
Find fund / asset management companies that publish a report detailing their responsible investment ownership - also known as 'Stewardship' - activity.
Full stewardship / responsible ownership policy information on company website
Find fund / asset management companies that publish information about their sustainable and responsible investment strategies on their company website.
Publish full voting record (AFM companywide)
Fund / asset management companies that publish a full record of how they vote their shares at AGMs (annual general meetings) and EGMs (extraordinary general meetings). Voting strategies have an important role to play encouraging higher environmental, social and governance standards.
Dialshifter statement
Find fund / asset management companies that have supplied Dialshifter information. See Dialshifter tab within record for more information. CommentsCalvert Research and Management (Calvert or CRM) is part of Morgan Stanley Investment Management (MSIM), the asset management division of Morgan Stanley. As part of MSIM, Calvert has a distinctive investment philosophy, approach and viewpoint and provides ESG customized solutions to clients spanning the global markets. Calvert’s infrastructure support including portfolio implementation and trading is supported by MSIM and its affiliates. As such, the responses in this questionnaire will refer to both companies where appropriate. For the following responses in the Affiliations & Collaborations section, we have also included Morgan Stanley affiliations where appropriate: GFANZ member (AFM company wide), UN Net Zero Banking Alliance member (AFM company wide), Fund EcoMarket partner, UN Principles of Responsible Banking framework signatory (AFM company wide) and TNFD forum member (AFM company wide). Please note: MSIM Investment teams are subject to MSIM Sustainable Investing policy. However, MSIM’s individual investment teams and advisor entities (collectively, “investment teams”) may maintain additional policies related to sustainable investing, as appropriate. Some investment strategies may not consider ESG factors where it is not currently feasible or appropriate to do so as determined by an investment team, including but not limited to: passive investment strategies, certain asset allocation strategies, or where requested by clients.
Sustainable, Responsible &/or ESG Policy:Calvert broadly sees a multi-decade transformation of the global economic system defined by broad decarbonization efforts of the global energy system, endeavors to create business processes that are far more resource efficient and circular and an evolving social contract between individuals and institutions. This transformation must address investment risks from externalities, or impacts that companies have on the environment and society for which we do not currently have a pricing mechanism. Climate change is arguably the greatest of all externalities with once-in-a-generation events such as floods, droughts, hurricanes and heatwaves increasing in frequency. These externalities come with material negative economic impacts which raise the urgency with which to divert capital to tackle climate change and adapt to its impacts. As we look forward to the coming decades, we believe that capital markets are on the precipice of an increase in the impact of corporate environmental, social and governance (ESG) performance on security prices. We expect a corresponding acceleration of capital deployed to solve the environmental challenges we face today. With this future state in mind, leadership on issues of sustainability such as climate change requires companies across industries to evolve their product strategies, refine their corporate strategies and continually strengthen their abilities to provide effective oversight and execution of the sustainable transition before us. The Calvert Climate Aligned Fund seeks to invest in these companies and address climate related issues through Calvert’s proprietary Environmental, Social and Governance (ESG) research process, investment in climate aligned companies and corporate engagement. Success for the strategy will be determined by:
The Fund utilizes a quantitative and qualitative ESG research process that applies the Calvert Principles for Responsible Investment to define the investment universe while making sure that such companies do not significantly harm any environmental or social objective. The Calvert Principles for Responsible Investment can be found on www.morganstanleyinvestmentfunds.com and on www.morganstanley.com/im. The Investment Adviser may engage company management around financially material ESG issues that it deems to have a positive impact on society or the environment. Process:The Climate Aligned Strategy seeks to identify companies we consider climate aligned in areas that are material to long term performance. Our approach consists of three distinct parts:
The portfolio construction process takes the following steps:
Step 1 – Quantitative Research/Security Selection The goal of security selection is to identify companies from the Calvert Global Developed Markets universe that are most Climate Aligned. Climate Aligned companies are ones that we believe are:
The starting point of this process is the Calvert Global Developed Markets Universe which is defined by the Calvert ESG Research Process. This universe is made up of global companies in developed markets that meet Calvert’s Principles for Responsible Investment and exhibit environmental sustainability, resource efficiency, support for equitable societies and human rights, and accountable governance and transparent operations. This universe is made up of companies that manage their financially ESG issues, including climate, well and are largely free from controversies and controversial activities. Calvert’s ESG Research Process already identifies and typically removes companies involved in controversies however we apply a specific set of screens largely focusing on revenues to ensure compliance with EU Paris Aligned Benchmark (PAB) requirements including:
Step 2 – Qualitative Overlay The second step of the process is a qualitative review performed by the ARIS and ESG Research Teams. The Qualitative Overlay provides quality control on the initial portfolio to ensure that included companies are climate aligned and show a distinct leadership position on climate issues. The security selection process is highly effective at identifying these companies, however we believe best practice is to review the portfolio for accuracy and consistency. The qualitative overlay ensures: Companies Demonstrate Leadership
Removal of Companies
Inclusion of Improving Companies
Step 3 – Optimization With a confirmed portfolio of climate aligned companies, the portfolio management team then seeks to create a risk-controlled portfolio that tilts toward companies with better climate and environmental impacts. The team does this through a multipronged optimization approach that aligns with Net Zero goals and promotes decarbonization. The team uses Barra Optimizer to apply a standard mean-variance optimization on the initial portfolio of climate aligned stocks using a number of investment and environmental goals and constraints. Common goals we may use in optimizing securities positions include: Investment Goals
ESG Goals
The optimizer reallocates to different securities within the portfolio to create an allocation that maximizes the portfolio’s ability to meet the goals described above. Data Sources Calvert’s team of ESG analysts leads the ESG research process for Calvert’s portfolios, working closely with the respective fundamental investment teams for each strategy. We use the Calvert Research System to capture multiple sources of ESG data and evaluate this information, with roughly 200 peer group models. All of Calvert’s ESG research is conducted internally. Calvert’s ESG analysts review a wealth of data from diverse sources to evaluate a company’s ESG practices, policies and track record. Calvert currently uses data and information from more than 20 specialist ESG data providers that are incorporated into data and information we also receive from NGO’s, traditional investment research resources, information from investor networks and information from issuers themselves. We most frequently source third party vendor data from MSCI, Sustainalytics, ISS, Asset4, and Trucost. We rigorously test vendor ESG data to ensure that the KPI’s work as the vendor describes, are accurate, are financially material to issuers and provide consistent results over time. Our data testing might lead us to use different vendors and data sets for different issues at different times. It is important to note that Calvert does not use ESG ratings from other companies. We incorporate data from these sources to form our own view of how companies are managing their financially material ESG exposures. All ESG rankings are stored in FactSet’s RMS system. Additionally, an intranet portal allows ESG analysts to share their industry and company models as well as other data and written material with the fundamental analysts and portfolio managers. Resources, Affiliations & Corporate Strategies:ESG/SRI Resources The team uses its proprietary ESG scorecard, the Material Risk Indicator (MRI), which aims to identify and assess potentially financially material ESG risks and opportunities facing each company; and the Pay X-Ray (where relevant and possible), which we use as a tool to try to assess whether a company’s pay practices are aligned with management’s intention and/or ability to deliver sustainably high long-term returns on operating capital. Given our bottom-up fundamental approach to research, in most instances, the main source for our ESG analysis is a company’s own disclosures. Our well-resourced team conducts in-depth analysis of companies, including how potentially financially material ESG issues are approached, drawing on Annual Reports and, where relevant, additional ESG-related reports such as sustainability reports, cyber security reports or human resources-related reports. Our investment team may also engage with companies to further assess potentially financially material ESG issues relevant to companies and to understand their strategies to address these, to monitor progress, and to encourage companies towards better ESG practices where relevant to manage these potentially financially material risks and opportunities. To support our research, the team may also use vendor applications and systems. In particular, the team uses FactSet Research Systems, a financial database and analytical tool that allows customised screenings of global companies according to various financial characteristics that may be associated with a strong business franchise. We also have access to ESG data and information from third party sources which we may use as additional points of reference during our research process. We have access to a broad set of mainstream ESG data providers including MSCI ESG, ISS, Sustainalytics and Trucost, as well as other more specialised data providers such as Equileap, a comprehensive global database on gender equality. We might also use external research from not-for-profit organisations that assess companies’ performance and management on key ESG issues where such issues are potentially financially material, such as the World Benchmarking Alliance (WBA), Forest 500, Zoological Society of London’s (ZSL’s) company assessment on key commodities such as Palm Oil, and KnowTheChain’s assessment of companies’ performance on forced labour in global supply chains. No single data source is used to make a final investment decision but may contribute to the overall fundamental analysis of the company if considered relevant. Please note, external data is updated based on the provider. Data sourced from third party data providers may be subject to methodological limitations and may be subject to data lags, data coverage gaps or other issues impacting the quality of the data. ESG-related information, including where obtained from third-party data providers, is often based on qualitative or subjective assessment, and any one data source may not in itself present a complete picture relating to the ESG metric that it represents. MSIM takes reasonable steps to mitigate the risk of these limitations. However, it does not make any representation or warranty as to the completeness or accuracy of such data. Any such data may also be subject to change by the third party provider without notice. As such, MSIM may choose to take such action (or inaction) based on any change in data provided by a third party data provider as it deems appropriate in the circumstances. Governance Structure & Responsibilities The investment team is headed by Managing Director and portfolio manager William Lock. Other portfolio managers include Managing Directors Bruno Paulson, Nic Sochovsky, Marcus Watson, Alex Gabriele and Richard Perrott, and Executive Directors Isabelle Mast, Anton Kryachok and Marte Borhaug (Head of ESG). The International Equity team subscribes to a flat organizational culture; each team member has global sector research responsibilities and participates in investment decisions. The team also includes research analysts Alessandro Vaturi, Helena Miles, Sora Utzinger (ESG), Bart Dziedzic, Jinny Hyun and Toyosi Somoye. In addition to the bottom-up ESG research conducted by team members, our team’s Head of ESG and Portfolio Manager Marte Borhaug and Senior ESG Research Analyst Sora Utzinger add sustainability expertise and specialist research to the investment debate and our engagement with companies, where required. Marte reviews and contributes to ESG strategy for the team, liaises with Morgan Stanley, MSIM and external ESG resources, and co-ordinates ESG matters for the team. Sora focuses on supporting research, engagement strategy and proxy voting on potentially financially material ESG issues across the team’s strategies. Proxy Voting MSIM’s Proxy Voting Policy outlines our proxy voting procedures and high-level, principles-based voting guidelines while providing investment teams with adequate flexibility to make informed voting decisions in line with their investment goals and client expectations. The MSIM Global Stewardship Team (GST) analyses proxies and provides vote recommendations to MSIM investment teams in accordance with the Proxy Voting Policy. Subsequently, vote recommendations along with rationales are then escalated to the relevant investment team, who have the ultimate decision on how to vote. MSIM obtains research on issuers and selected environmental and social issues from its investment teams’ own research, as well as two independent advisers, Institutional Shareholder Services and Glass Lewis. MSIM does not outsource proxy voting decision-making to either firm. ESG related affiliations and membership Through its various businesses and internal functions, MSIM and Morgan Stanley participate in, belong to or take a leading role in many ESG-related initiatives and organizations. This includes participating in industry conference panels, exploring joint research, and supporting the work of groups focused on ESG-related issues. Please refer to our 2023 UK Stewardship Code Report, under "MSIM Collaborative Initiatives" - https://www.morganstanley.com/im/publication/resources/ukstewardshipcode_msim_en.pdf?1734703336999
Dialshifter (Fund)This fund is helping to ‘shift the dial from brown to green’ by… Offering clients a portfolio that primarily invests in companies that are involved in economic activities that address climate transition and/or are aligned to the long-term de-carbonisation objectives of the Paris Agreement. The Fund will maintain a carbon profile that follows the net zero objectives of the Paris Agreement, as reflected in the appropriate Paris-Aligned benchmark, or in the absence of an approved Paris-Aligned benchmark it will maintain a substantially lower carbon footprint, of at least 50% less than that of the underlying market benchmark and taking into account the long-term carbon reduction objectives of the Paris Agreement.
Dialshifter (Corporate)Our organisation is helping to support the Paris Climate Agreement and the Race to Net Zero by… …being one of the 17 global financial firms testing the Paris Agreement Capital Transition Assessment, which enables users to measure the alignment of financial portfolios with climate scenarios. This tool, developed by the 2° Investing Initiative, helps financial institutions understand how their corporate loan portfolios align with the international goals set by the Paris Agreement. Morgan Stanley became the first U.S.-based global bank to join the Partnership for Carbon Accounting Financials (PCAF) and its Steering Committee as part of the firm’s commitment to measuring and disclosing its approach to climate change risk and opportunity. SDR Labelling:Not eligible to use label (out of scope) Key Performance Indicators:
LiteratureFund HoldingsVoting RecordDisclaimerWhile every care has been taken in preparing the information provided in this document, such information and materials are provided "as is" without warranty of any kind, either express or implied; in particular, no warranty regarding accuracy or completeness. There is no guarantee that any investment strategy will work under all market conditions, and each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market. Prior to investing, investors should carefully review the relevant strategy / product offering document. There are important differences in how the strategy is carried out in each of the investment vehicles. Prior to investing, investors should carefully review the relevant offering document for the strategy/product. Please consider the investment objectives, risks and fees of the strategy/product carefully before investing. This material is a general communication, which is not impartial and has been prepared solely for informational and educational purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy, and any such offering is subject to the execution of a written contract. All investments involve risks, including the possible loss of principal. The information herein has not been based on a consideration of any individual investor circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal or regulatory advice. To that end, investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision. Except as otherwise indicated, the views and opinions expressed herein are those of the portfolio management team, are based on matters as they exist as of the date of preparation and not as of any future date, and will not be updated or otherwise revised to reflect information that subsequently becomes available or circumstances existing, or changes occurring, after the date hereof. They are subject to change based on market, economic and other conditions. Certain information contained herein constitutes forward-looking statements, which can be identified by the use of terms such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” or “believe” (or the negatives thereof) or other variations thereon. Due to various risks and uncertainties, including, but not limited to, those set forth herein, actual events or results or actual performance of any investments may differ materially from those reflected or contemplated in such forward-looking statements. The information presented represents how the portfolio management team generally implements its investment process under normal market conditions. Forecasts and/or estimates provided herein are subject to change and may not actually come to pass. Information regarding expected market returns and market outlooks is based on the research, analysis and opinions of the authors. These conclusions are speculative in nature, may not come to pass and are not intended to predict the future performance of any specific Morgan Stanley Investment Management product. Any performance information provided in this document is not indicative of future performance or investment returns, and you should not view such performance information as an indicator of the future performance of a particular investment. Any strategy weights and/or number of holdings referenced herein represent typical ranges and are not a maximum number. The portfolio may exceed this from time to time due to market conditions and outstanding trades. The targets, turnovers and exposures presented for pooled vehicles are typical ranges. There is no assurance that these targets will be attained. Risk management implies an effort to monitor risk, but should not be confused with and does not imply low risk. Any index referred to herein is the intellectual property (including registered trademarks) of the applicable licensor. Any product based on an index is in no way sponsored, endorsed, sold or promoted by the applicable licensor and it shall not have any liability with respect thereto. This document is intended solely for the use of the person to whom it has been delivered (including such person’s employees, representatives, agents, or advisors, as applicable). MSIM has not authorized financial intermediaries to use and to distribute this document, unless such use and distribution is made in accordance with applicable law and regulation. Additionally, financial intermediaries are required to satisfy themselves that the information in this document is appropriate for any person to whom they provide this document in view of that person’s circumstances and purpose. MSIM shall not be liable for, and accepts no liability for, the use or misuse of this document by any such financial intermediary. This document may be translated into other languages. Where such a translation is made this English version remains definitive. If there are any discrepancies between the English version and any version of this document in another language, the English version shall prevail. The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without MSIM’s express written consent. Please refer to the most recent fund factsheet which provides product specific risk disclosures. All information contained herein is proprietary and is protected under copyright law. |
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