Schroder International Selection Fund (ISF) Global Sustainable Growth Fund
SRI Style:
Sustainable Style
SDR Labelling:
Not eligible to use label (out of scope)
Product:
SICAV/Overseas
Fund Region:
Global
Fund Asset Type:
Equity
Launch Date:
23/11/2020
Last Amended:
Oct 2024
Dialshifter (
):
Fund/Portfolio Size:
£2830.00m
(as at: 31/03/2026)
Total Screened Themed SRI Assets:
£72500.00m
(as at: 31/03/2024)
Total Responsible Ownership Assets:
£647000.00m
(as at: 31/03/2024)
Total Assets Under Management:
£760400.00m
(as at: 31/03/2024)
ISIN:
LU0557290854, LU2363960886
Objectives:
The fund aims to provide capital growth in excess of the MSCI All Country World (Net Total Return) Index (after the deduction of fees) over any three to five year period by investing in equity and equity related securities of companies worldwide which meet the investment manager's sustainability criteria.
Sustainable, Responsible
&/or ESG Overview:
It is our belief that a strategy anchored around companies demonstrating positive sustainability characteristics should deliver outperformance against a broad basket of global equities through the economic and investment cycles. Our disciplined bottom-up approach based on proprietary fundamental analysis incorporates a thematic assessment to provide greater visibility and stronger conviction around companies' long-term structural growth trends. This allows us to capture both structural growth, frequently underestimated and undervalued from a purely ‘bottom-up’ approach, and cyclical growth, frequently overlooked within a ‘thematic’ framework.
While any style exposure is a derivative of our stock selection, we would expect a significant and persistent tilt towards growth, quality and ESG factors given our focus on identifying companies that demonstrate a long-term sustainable business model. In particular, we would expect to tilt towards companies exhibiting high returns on capital and consistent growth, as is consistent with our stated philosophy.
Primary fund last amended:
Oct 2024
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
Climate Change & Energy
Avoid investment in major coal, oil and/or gas (extraction) companies. Strategies vary.
Avoid companies involved in fracking and tar sands - which are widely regarded as controversial methods of oil and gas extraction. Strategies vary.
Avoid investing in companies / assets with coal, oil and gas reserves. See individual entry information for further details.
Excludes companies and other assets with direct involvement in fossil fuel exploration (eg coal, oil and gas companies)
Ethical Values Led Exclusions
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.
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.
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.
Excludes financial services companies with widely criticised, aggressive lending practices where interest rates are typically very high, (eg ‘doorstep lending’)
Avoids banks that have a large part of their loan book (or other assets) invested in fossil fuels companies - particular coal, oil and gas.
Governance & Management
Aim to encourage higher ESG standards through responsible ownership / stewardship / engagement /voting activity
Product / Service Governance
Find fund / asset managers that factor in 'environmental, social and governance' issues as part of their investment decision making process. A focus on 'ESG' typically means a fund is carrying out additional research to help reduce ESG related risks. It does not necessarily mean a focus on sustainability. Strategies vary. See fund literature.
Environmental, social and governance issues are part of this fund’s reporting of their ‘value’ to clients. AoV reporting is a statutory requirement. Including ESG factors in its calculation is not.
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.
Targeted Positive Investments
Invests in between 5-25% of capital in assets which meet the EU Taxonomy requirements. This will typically require adding up the proportion of each individual company's activity that is regarded as 'green' so that the manager can produce an overall total for the whole fund or portfolio.
Invests more than 25% of capital in assets which meet the EU Taxonomy requirements. This will typically require adding up the proportion of each individual company's activity that is regarded as 'green' so that the manager can produce an overall total for the whole fund or portfolio.
Impact Methodologies
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.
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.
Intended Clients & Product Options
Designed to meet the needs of individual investors with an interest in sustainability issues.
Only applicable for DFM’s & portfolio providers. Finds those that offer an SRI / ESG portfolio option
Only applicable for DFM’s & portfolio providers. Find service providers who offer multiple SRI / ESG portfolio options
Only applicable for DFM’s & portfolio providers. Find service providers who offer bespoke ('personalised') SRI / ESG portfolio options
Labels & Accreditations
Find options classified under Article 8 of the EU’s SFDR (Sustainable Finance Disclosure Requirements). Article 8 of the SFDR is a set of requirements that apply to financial products that 'promote' environmental or social characteristics together with high governance. These rules do not currently apply to UK products so many 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 consider environmental, social and governance (ESG) issues when deciding whether or not to invest in a company for all / almost all of their funds and other assets. This is increasingly seen as part of sound risk management.
Collaborations & Affiliations
Find fund / asset management companies that have partnered with Fund EcoMarket - meaning that they are helping to improve access to information on sustainable and responsible investment by paying an annual fee to us which enables us to publish information for free. Partner funds are listed ahead of other funds and have their logos displayed.
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.
Engagement Approach
Find fund / asset management companies that regularly initiate or run industry wide (collaborative) investor projects aimed at raising environmental, social and governance standards amongst investee companies.
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.
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 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 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
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.
Transparency
Find fund / asset management companies that have supplied Dialshifter information. See Dialshifter tab within record for more information.
Sustainable, Responsible &/or ESG Policy:
ESG is integral to the way in which we evaluate and appraise every stock that is under consideration for the fund. It is a core component of our modelling and analysis and is central to the investment decisions we make. We believe that ESG factors have a material bearing on both the alpha potential of a stock and the risks associated with owning the stock, and it is therefore incorrect to think about ESG as a separate investment discipline.
Schroder ISF Global Sustainable Growth reflects our belief that only companies demonstrating positive sustainability characteristics, which incorporate conventional ESG factors (e.g. environmental policies, human rights, labour standards, board structure, corporate strategy), will be able to maintain growth and returns over the long-term. To the managers of the fund, the sustainability assessment seeks to capture the impacts of a company’s operations and policies on its broader set of stakeholders (customers, suppliers, employees, society, the natural environment, regulators, and shareholders). Our analysis seeks to understand the strength of a company’s license to operate and pressures that could be exerted on the company which might affect future returns. Only those companies that are managed with due consideration for their stakeholders will be considered for the fund.
Across all of our funds globally, Schroders has committed to avoiding any companies deriving revenue from cluster munitions, anti-personnel mines, and chemical and biological weapons. We will apply this policy to all Schroders funds that we directly manage. On occasion there may be additional securities recognised by clients or local governments; these will be added to the Schroders group exclusion list for those relevant jurisdictions or specific mandates. Schroders has the ability to manage segregated accounts which can be tailored to individual client preferences with explicit exclusion lists.
While the underlying approach of the fund does not adopt blanket positive or negative screening, the design of the strategy, which seeks to impose a high bar for inclusion, leads to a natural exclusion (or negative screen) of stocks in industries evaluated as ‘unsustainable’. For example, hard exclusions apply to stocks with material exposure to alcohol, tobacco, controversial and conventional weapons, gambling, adult entertainment, climate change (tar sands and thermal coal), high interest rate lending and human embryonic cloning. Irrespective of this screen, it would be highly unlikely for companies operating in these industries to pass our SQ assessment.
In addition to Schroders group exclusion list, the strategy excludes any company with revenue exposures above the threshold set for each industry
- Human embryonic cloning: 0%
- Adult entertainment: 3%
- Fossil fuels extraction and production: 5%
- Tobacco: 10%
- Gambling: 10%
- Controversial Weapons: 0%
- Civilian firearms: 10%
- Conventional Weapons: 10%
- High interest rate lending: 10%
- Alcohol: 10%
Source: Schroders, as at 31 March 2021
Process:
Our investment process is team-based and driven by proprietary bottom-up fundamental stock selection. Expertise from both the Global & International Equity team and the Sustainability team provide a diversity of idea generation and high degree of scrutiny of ideas around the expected trajectory of long-term growth, ESG and sustainability characteristics.
Step 1: Idea Generation:
Idea generation is driven Schroders’ GSSs are the primary source of idea generation, focussing on the highest ranked stocks of our local analysts as well as ideas generated from their own analysis and insights. Irrespective of idea source, the GSS team assess the modelling, analysis and ESG assessment of the regional teams based on an independent view of growth- and risk- drivers. The GSS re-frame the investment recommendations relative to global sector dynamics and reflecting a global opportunity set. The investment team also uses a proprietary quant screen aligned to the team’s investment approach to highlight potential investment opportunities. In addition, ideas arising from thematic research and from inter-actions and engagement with company management by Schroders’ Sustainability team can also provide a source of new ideas.
The output harnessed at this stage of the process comprises detailed financial analysis including estimates of longterm growth, and a comprehensive analysis of fundamental risk which incorporates a wide range of financial and non-financial risk factors from operational and financial, to strategic and ESG. The view on risk will be informed by the GSSs’ financial modelling, analysis and insight from Schroder’s ESG team, and meetings with company management which are usually attended collectively by the relevant regional equity analysts, These stock recommendations will be characterized by a positive growth gap underpinning an expectation of share price outperformance and a detailed assessment of fundamental risk, including specific ESG analysis. This analysis is included within a formal research note provided by the GSS to the team which is stored centrally on our central research database. These research notes are periodically audited by the ESG team and suggestions for improvement are discussed where necessary.
Complementing the team's assessment of growth for a company, the team appraises the fundamental risk of each individual stock owned or being considered as a candidate for client portfolios. In its simplest form this is the risk of owning a stock in isolation (as distinct from risk within the context of a portfolio). As part of this analysis we seek to assess the financial and non-financial risks of owning a stock in terms of both the prospective market valuation of the stock but also the extent to which these risks may affect the trajectory or sustainability of future growth.
Quantitative and qualitative factors are used to evaluate risk and, in this context, ESG analysis is a significant determinant of our assessment of qualitative risk, along with aspects such as management quality, transparency and strategic objectives.
Our analysis of fundamental risk is dynamic, reflecting a real time assessment of the risks of holding individual stocks and our approach differentiated because it is systematic and brings the appraisal of stock specific risk to the forefront of stock recommendations and the investment decisions of the team. This approach is applied consistently across the team’s assets under management, irrespective of the mandate specifications for any one particular client. Fundamental risk constituents and weights:
- 45% Leverage
- 45% Quality and ESG Assessment
- 10% Country Risk.
Risk scores are dynamic and continually reassessed as part of the rigorous and vigorous monitoring and re-appraisal of stocks held be the team for client portfolios. Individual stocks and their weights within a portfolio are based on our level of conviction in the stock, upside potential, fundamental risk assessment and portfolio characteristics and orientation. Our proprietary fundamental risk framework is a critical component for determining the appropriate position size within our portfolios. Stocks with high fundamental risk scores are typically limited to smaller position sizes (all other things equal).
Complementing the team's assessment of growth for a company, the team appraises the fundamental risk of each individual stock owned or being considered as a candidate for client portfolios. In its simplest form this is the risk of owning a stock in isolation (as distinct from risk within the context of a portfolio). As part of this analysis we seek to assess the financial and non-financial risks of owning a stock in terms of both the prospective market valuation of the stock but also the extent to which these risks may affect the trajectory or sustainability of future growth.
Quantitative and qualitative factors are used to evaluate risk and, in this context, ESG analysis is a significant determinant of our assessment of qualitative risk, along with aspects such as management quality, transparency and strategic objectives.
Step 2: Stock selection:
Based on the ideas emanating from Stage 1 of the process, the Sustainable Growth Investor Group, a small subcommittee comprising the strategy’s two portfolio managers, a senior member of the Global & International Equity team and three members of the Sustainability Team meet to discuss the ideas being considered for inclusion by the two PMs. This group meet monthly with a primary aim to offer a proprietary and holistic assessment of a business’s long-term sustainability. In addition, this group will review existing holdings, corporate performance (financial and non-financial) and set objectives for longer term engagement.
These discussions are anchored around stakeholder relationships and how they feed into the long-term quality and durability of a company’s business model and from that the degree to which this will support long term earnings growth.
The team use its proprietary Sustainability Quotient ‘SQ’ framework developed to ensure companies sustainability characteristics are assessed and evaluated in a systematic way. This framework shapes further discussion and analysis.
The conclusion of this process seeks to deliver a list of approximately 60-80 stocks that meet a high bar for inclusion within the portfolio. However, our strategy and process does lead to a natural ‘exclusion’ of stocks in industries evaluated as ‘unsustainable’. In addition, hard exclusions apply to stocks with material exposure to alcohol, tobacco, controversial and conventional weapons, gambling, adult entertainment, climate change (tar sands and thermal coal), high interest rate lending and human embryonic cloning.
Step 3: Portfolio construction and risk control:
Using the short-listed stocks, portfolio construction is undertaken by our Portfolio Managers. A stock’s upside potential, downside risk (including ESG factors) and level of conviction around the presented investment thesis determines the position size of each stock. Stocks with a higher relative upside, lower fundamental risk profile (which incorporates views on ESG risks) and higher liquidity will receive higher active weights in the portfolio.
The portfolio managers aim to hold somewhere between 30-50 stocks within the portfolio. Stocks are bought with anticipation that these will be held for the long term, reflecting the longer-term growth trajectory that has been identified.
Stocks will be held until forward looking growth estimates have been fully discounted within consensus expectations, or where better opportunities have been identified. A material change in the thesis, or in the sustainability characteristics, will result in a review of our position size.
Our country and sector allocation are purely a by-product of our bottom-up stock selection process. From time to time we may control these allocations for risk management purposes.
A full program of reporting, voting and governance is also incorporated to ensure strong financial performance is mirrored by strong non-financial performance.
We use information from several external ESG research firms, but only ever as one input into our own company assessments to be questioned, examined and built on.
Our Sustainable Investment team has extensive networks within its respective field. Information is drawn from publicly available corporate information and company meetings, from broker reports, industry bodies, and research organizations, think tanks, legislators, consultants, Non-Governmental Organizations and academics; wherever it is felt the information would add value to our analysis.
Third party research may be used by the team; however, our analysts form a proprietary view on each of the companies we analyse. Financial analysts may also use third-party research to support their assessment of ESG issues when analysing companies, in addition to consulting with our in-house ESG specialists. Through this process, we aim to evaluate the relevance and materiality of a range of ESG factors on the sustainability of future earnings growth and as potential risk factors for a company.
We currently subscribe to the following external ESG research providers: MSCI ESG research, Bloomberg, EIRiS, Refinitiv, Sustainalytics and Morningstar. In addition, we subscribe to Institutional Shareholder Services and the Investment Association’s Institutional Voting Information Service for our proxy voting research.
CONTEXT
Our flagship ESG research tool, provides a systematic framework for analysing a company’s relationship with its stakeholders and the sustainability of its business model. Comprising over 260 metrics across over 13,000 companies, it is designed to support our investors’ understanding of the sustainability of companies’ business models and profitability, and provides structured, logical and wide-ranging data to support our analysts’ views. This consistent structure makes information sharing easier and allows us to identify market wide trends and insights.
The tool goes beyond a simple tick box approach – it is interactive and highly customizable, enabling analysts to select the most material ESG factors for each sector, weight their importance and apply relevant metrics. Analysts are then able to compare companies based on the metrics selected, their own company assessment scores or adjusted rankings (size, sector or region), with the flexibility to make company specific adjustments to reflect their detailed knowledge. The tool is fully integrated within Schroders’ global research platform, which is readily accessible across investment desks and geographies.
We have also developed a number of proprietary quantitative metrics that can be used to demonstrate and measure a portfolio’s sustainability characteristics.
Carbon value at risk (VaR)
We have developed a new way of looking at carbon risk: carbon footprints remain the dominant measure of carbon exposure but are an incomplete and sometimes misleading measure of investment risk. We focus on the ways value will be lost or created as policies strengthen, through financial analysis rather than environmental research. Our carbon value at risk (VaR) model assesses the effect of a significant rise in carbon prices on a company’s cost structure, industry prices, volumes and cash flows.
SustainEx
SustainEx is a proprietary model which scientifically combines measures of both the harm companies can do and the good they can bring to arrive at an aggregate measure of each firm’s social and environmental impact, allowing investors to target their ESG investments effectively. It quantifies the extent to which companies are in credit or deficit with the societies to which they belong, and the risks they face if the costs they externalize are pushed into
companies’ own costs.
Country Sustainability Dashboard
We recognize that the importance of ESG risks to nations is likely to increase as social and environmental challenges, such as social unrest or climate change – intensify and the world becomes increasingly connected. While many investors consider country risk when allocating capital, there have been few attempts to date that consider the long-term sustainability of countries’ growth and whether risks or opportunities are reflected in asset valuations.
Our Country Sustainability Dashboard aims to provide a structure lens through which to analyst the sustainability of sovereign GDP growth. By assessing the ESG risks and opportunities that have historically driven growth, as well as those that may be influential in the future, it aims to provide investors with a long-term view of countries’ GDP growth as well as an indication as to whether the market is pricing in country sustainability factors across various asset classes.
Resources, Affiliations & Corporate Strategies:
Sustainable Investment Team
Sustainability is fundamental to our investment principles at Schroders, and we have an experienced and well-resourced Sustainable Investment team comprised of more than 45 individuals* as at 30 June 2024, who are embedded within our Investment function. We are a global team, spread across four regional hubs in London, Paris, Singapore and New York, aiming to ensure that sustainability is embedded through our global investment teams and client functions.
*Source Schroders.
The team is led by Andrew Howard, Global Head of Sustainable Investment who is also a member of our Group Management Committee. As team head, he oversees our approach to ESG integration, active ownership, our sustainability research and tools, and our reporting and product strategy.
Our central Sustainable Investment team sits alongside investment teams rather than operating in a silo, which facilitates regular dialogue with our analysts and portfolio managers.
It is organised into four pillars:
- Sustainable Investment Management, incorporating advisory and integration, models and data, climate and nature and sustainable research.
- Active Ownership, encompassing engagement and voting.
- Impact.
- Regional experts in Asia Pacific, Europe and North America.
We outline their key responsibilities and areas of focus below.
1. Sustainable investment management
Our Advisory and Integration team acts as a central contact point and consultant for a range of stakeholders across the business. This includes advising investment teams on ESG integration best practice; compliance, risk and legal teams on ESG regulation; and working with our regional experts; across Asia Pacific, Europe and North America, as outlined under pillar three.
Our Models and Data team is responsible for the maintenance and evolution of our suite of proprietary tools. They are also responsible for ESG data, ensuring we harness sustainability data effectively from both conventional and unconventional sources.
Our Strategy and Research team is responsible for undertaking sustainability research to: inform firmwide strategy and commitments; provide insights for investment teams to analyse sustainability-related risks and opportunities; and provide research-related and technical support for other stakeholders across the firm.
2. Active ownership
Our Engagement team partners with investors to have dialogue with the companies in which we invest, seeking to understand how prepared they are for a changing world and pushing them towards more sustainable practices. The team track the progress of these engagements and hold companies to account.
Our Corporate Governance team is responsible for voting in line with our Voting Policy and Principles.
3. Impact
Our Impact team is responsible for scaling our impact product offering in line with best-practice impact principles. The team works closely with investment desks and is responsible for developing and implementing our impact management and measurement framework, including impact assessment and monitoring at transaction and portfolio level, product development, impact strategy and impact reporting.
4. Regional Expertise
Our Regional Experts based in Asia Pacific, Europe and North America have a deep understanding of local market characteristics and nuances, and are responsible for staying abreast of sustainability-related developments. Our experts work with clients and internal teams to navigate and support clients’ ESG aspirations and challenges, utilising Schroders’ proprietary tools and research to develop investment solutions that meet their needs. They also engage with regulators and industry bodies to shape and support the global sustainable finance agenda. Our regional experts are a critical extension of the central team in London as the firm continues to evolve its global ESG strategy.
Governance of our ESG strategy and policies
We have a number of governance structures in place for decision-making and oversight of our approach to sustainable investment. The Board of Schroders plc (the Board) has collective responsibility for the management, direction and performance of the Group, and is accountable for our overall business strategy. The Group Chief Executive is responsible for proposing the strategy for the Group and for its implementation, supported by the Group’s senior management team and a number of Committees, some of which are noted below.
The Group Sustainability and Impact (GSI) Committee provides advice to the Group Chief Executive on sustainability and impact matters. The Committee considers, reviews and recommends the overall global sustainability and impact strategy, including key initiatives, new commitments and policies for approval. The
Global Head of Sustainable Investment and Global Head of Corporate Sustainability are members of the Committee and report to the Group Management Committee (GMC) and the Board.
The Sustainability Executive Committee (ExCo) develops and oversees the delivery of our Group-level sustainable investment management strategy. The ExCo also advises on the development of our sustainability and impact investment and product frameworks. The ExCo has senior representation from across the business including Investment, Client Group, Wealth Management, Schroders Capital and Corporate Sustainability.
The Sustainability Regulations Steering Committee (Sustainability Reg SteerCo) oversees the progress of in-flight sustainability regulatory change programmes, as well as monitoring emergent sustainability regulations and determining their high-level impact on our Group sustainability strategy and supporting operations. The Sustainability Reg SteerCo receives input on planned or potential sustainability-related regulation from our Public Policy team, which actively engages with relevant regulators, industry trade associations and other bodies in the United Kingdom (UK) and European Union (EU). The Sustainability Reg Steerco has senior representation from across the business including Investment, Wealth Management, Schroders Capital, Legal, Risk & Compliance, Product and Operations Management.
Certain Schroders entities, businesses and Investment teams also have their own committees which consider their sustainable investment activities. For example, the Private Assets Sustainability and Impact Steering Committee (PA S&I SteerCo) develops and oversees the implementation of the Private Assets Sustainability and Impact strategy. In addition, the Wealth Management Sustainable Investment Committee (WMSIC), a sub-committee of the Wealth Management Investment Committee (WMIC), has delegated responsibility for recommending Wealth Management's Sustainability models, as well as providing investment strategy and direction for client portfolios that are linked to the sustainable models.
Alongside our central Sustainable Investment team, sustainable investing is also overseen and delivered by dedicated teams and expert individuals embedded throughout the firm (including across Investment teams and Client Group functions).
Industry involvement
We believe we have a particular role to play in sharing our expertise on different areas, supporting best practice but also learning from others.
We have a long-standing commitment to support and collaborate with several industry groups, organisations and initiatives to promote well-functioning financial markets. Our key stakeholders include exchanges, regulators and international and regional trade associations. For example, Schroders is a member of trade bodies such as the Investment Association in the UK, the European Fund and Asset Management Association (EFAMA), the Asia Securities Industry and Financial Markets Association (ASIFMA) in Hong Kong and the Securities Industry and Financial Markets Association (SIFMA) in the US.
Through this participation we share our insights to support the development of policy recommendations, share best practice and build coalitions of like-minded market participants to advocate for better functioning markets. We consider this to be key in improving responsible investment standards across sectors, establishing a consistent dialogue with companies, and in promoting the ongoing development and recognition of sustainability and ESG within the investment industry. A list of organisations and initiatives of which Schroders is a member or signatory is available on our website
SDR Labelling:
Not eligible to use label (out of scope)
Key Performance Indicators:
We do not use bespoke ESG KPIs or establish benchmark performance. However, our stakeholder-based analysis within the Context system allows us to analyze a company’s exposure against a wide range of metrics for each key stakeholder relative to their sector peers. While we do not have benchmark metrics, this analysis does help us identify areas of strength and weakness across the stakeholder value chain and incorporate that into our appraisal, risk assessment and often serve as a starting point for further engagement with the company. Also, the portfolio managers formally review portfolio level ESG characteristics within our risk and reporting toolkit. This review includes two proprietary measures of ESG risk, Carbon VaR and SustainEx, as well as MSCI and Sustainalytics scores. The portfolio’s absolute ESG scores as well as its relative profiles versus benchmark are reviewed, and holdings that contribute materially to scores are discussed. The information is accessed through our risk management system, Aladdin, and is available to the portfolio managers on a real time basis.
Disclaimer
Risk Considerations – Schroder International Selection Fund* Global Sustainable Growth Fund
The following risks may affect fund performance:
– Performance risk: Investment objectives express an intended result but there is no guarantee that such a result will be achieved. Depending on market conditions and the macro-economic environment, investment objectives may become more difficult to achieve.
– Liquidity risk: In difficult market conditions, the fund may not be able to sell a security for full value or at all. This could affect performance and could cause the fund to defer or suspend redemptions of its shares, meaning investors may not be able to have immediate access to their holdings.
– Currency risk / hedged share class: The currency hedging of the share class may not be fully effective and residual currency exposure may remain. The cost associated with hedging may impact performance and potential gains may be more limited than for unhedged share classes.
– Counterparty risk: The fund may have contractual agreements with counterparties. If a counterparty is unable to fulfil their obligations, the sum that they owe to the fund may be lost in part or in whole.
– Emerging markets & frontier risk: Emerging markets, and especially frontier markets, generally carry greater political, legal, counterparty, operational and liquidity risk than developed markets.
– Currency risk: If the fund’s investments are denominated in currencies different to the fund’s base currency, the fund may lose value as a result of movements in foreign exchange rates, otherwise known as currency rates. If the investor holds a share class in a different currency to the base currency of the fund, investors may be exposed to losses as a result of movements in currency rates.
– Operational risk: Operational processes, including those related to the safekeeping of assets, may fail. This may result in losses to the fund.
– Market risk: The value of investments can go up and down and an investor may not get back the amount initially invested.
– Concentration risk: The fund may be concentrated in a limited number of geographical regions, industry sectors, markets and/or individual positions. This may result in large changes in the value of the fund, both up or down.
– Capital risk / distribution policy: As the fund intends to pay dividends regardless of its performance, a dividend may represent a return of part of the amount you invested.
– Sustainability risk: The fund has environmental and/or social characteristics. This means it may have limited exposure to some companies, industries or sectors and may forego certain investment opportunities, or dispose of certain holdings, that do not align with its sustainability criteria chosen by the investment manager. The fund may invest in companies that do not reflect the beliefs and values of any particular investor.
– Derivatives risk: Derivatives, which are financial instruments deriving their value from an underlying asset, may be used to manage the portfolio efficiently. A derivative may not perform as expected, may create losses greater than the cost of the derivative and may result in losses to the fund.
*Schroder International Selection Fund is referred to as Schroder ISF throughout this document
Important Information
Marketing material for Professional Clients only.
This document does not constitute an offer to anyone, or a solicitation by anyone, to subscribe for shares of Schroder International Selection Fund (the “Company”). Nothing in this document should be construed as advice and is therefore not a recommendation to buy or sell shares. An investment in the Company entails risks, which are fully described in the prospectus.
For the UK, these documents may be obtained in English, free of charge, from the following link: www.eifs.lu/schroders.
Schroders may decide to cease the distribution of any fund(s) in any EEA country at any time, but we will publish our intention to do so on our website, in line with applicable regulatory requirements.
The fund has environmental and/or social characteristics within the meaning of Article 8 of Regulation (EU) 2019/2088 on Sustainability-related Disclosures in the Financial Services Sector (the “SFDR”). For information on sustainability-related aspects of this fund please go to www.schroders.com.
For UK investors only: This product is based overseas and is not subject to UK sustainable investment labelling and disclosure requirements.
Any reference to regions/ countries/ sectors/ stocks/ securities is for illustrative purposes only and not a recommendation to buy or sell any financial instruments or adopt a specific investment strategy.
The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations.
Past Performance is not a guide to future performance and may not be repeated.
The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of investments to fall as well as rise.
Performance data does not take into account any commissions and costs, if any, charged when units or shares of any fund, as applicable, are issued and redeemed.
Schroders has expressed its own views and opinions in this document, and these may change.
Information herein is believed to be reliable, but Schroders does not warrant its completeness or accuracy.
No Schroders entity accepts any liability for any error or omission in this material or for any resulting loss or damage (whether direct, indirect, consequential or otherwise), in each case save to the extent such liability cannot be excluded under applicable laws.
The data contained in this document has been sourced by Schroders and should be independently verified. Third party data is owned or licenced by the data provider and may not be reproduced, extracted or used for any other purpose without the data provider’s consent. Neither Schroders, nor the data provider, will have any liability in connection with the third-party data.
This material has not been reviewed by any regulator.
Schroders will be a data controller in respect of your personal data. For information on how Schroders might process your personal data, please view our Privacy Policy available at https://www.schroders.com/en/global/individual/footer/privacy-statement/ or on request should you not have access to this webpage.
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Issued by Schroder Investment Management (Europe) S.A., 5, rue Höhenhof, L-1736 Senningerberg, Luxembourg. Registration No B 37.799.
Distributed in the UK by Schroder Investment Management Ltd, 1 London Wall Place, London EC2Y 5AU. Registration No 1893220 England. Authorised and regulated by the Financial Conduct Authority.
Issued in August 2024. BDS006717.
| Fund Name | SRI Style | SDR Labelling | Product | Region | Asset Type | Launch Date | Last Amended |
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Schroder International Selection Fund (ISF) Global Sustainable Growth Fund |
Sustainable Style | Not eligible to use label (out of scope) | SICAV/Overseas | Global | Equity | 23/11/2020 | Oct 2024 | |
ObjectivesThe fund aims to provide capital growth in excess of the MSCI All Country World (Net Total Return) Index (after the deduction of fees) over any three to five year period by investing in equity and equity related securities of companies worldwide which meet the investment manager's sustainability criteria. |
Fund/Portfolio Size: £2830.00m (as at: 31/03/2026) Total Screened Themed SRI Assets: £72500.00m (as at: 31/03/2024) Total Responsible Ownership Assets: £647000.00m (as at: 31/03/2024) Total Assets Under Management: £760400.00m (as at: 31/03/2024) ISIN: LU0557290854, LU2363960886 Contact Us: Arvin.Bains@Schroders.com / Meriel.Turner@schroders.com |
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Sustainable, Responsible &/or ESG OverviewIt is our belief that a strategy anchored around companies demonstrating positive sustainability characteristics should deliver outperformance against a broad basket of global equities through the economic and investment cycles. Our disciplined bottom-up approach based on proprietary fundamental analysis incorporates a thematic assessment to provide greater visibility and stronger conviction around companies' long-term structural growth trends. This allows us to capture both structural growth, frequently underestimated and undervalued from a purely ‘bottom-up’ approach, and cyclical growth, frequently overlooked within a ‘thematic’ framework. While any style exposure is a derivative of our stock selection, we would expect a significant and persistent tilt towards growth, quality and ESG factors given our focus on identifying companies that demonstrate a long-term sustainable business model. In particular, we would expect to tilt towards companies exhibiting high returns on capital and consistent growth, as is consistent with our stated philosophy. |
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Primary fund last amended: Oct 2024 |
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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 Climate Change & Energy
Coal, oil & / or gas majors excluded
Avoid investment in major coal, oil and/or gas (extraction) companies. Strategies vary.
Fracking & tar sands excluded
Avoid companies involved in fracking and tar sands - which are widely regarded as controversial methods of oil and gas extraction. Strategies vary.
Fossil fuel reserves exclusion
Avoid investing in companies / assets with coal, oil and gas reserves. See individual entry information for further details.
Fossil fuel exploration exclusion - direct involvement
Excludes companies and other assets with direct involvement in fossil fuel exploration (eg coal, oil and gas companies) Ethical Values Led Exclusions
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.
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. 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.
Predatory lending exclusion
Excludes financial services companies with widely criticised, aggressive lending practices where interest rates are typically very high, (eg ‘doorstep lending’)
Exclude banks with significant fossil fuel investments
Avoids banks that have a large part of their loan book (or other assets) invested in fossil fuels companies - particular coal, oil and gas. Governance & Management
Encourage higher ESG standards through stewardship activity
Aim to encourage higher ESG standards through responsible ownership / stewardship / engagement /voting activity Product / Service Governance
ESG integration strategy
Find fund / asset managers that factor in 'environmental, social and governance' issues as part of their investment decision making process. A focus on 'ESG' typically means a fund is carrying out additional research to help reduce ESG related risks. It does not necessarily mean a focus on sustainability. Strategies vary. See fund literature.
ESG factors included in Assessment of Value (AoV) report
Environmental, social and governance issues are part of this fund’s reporting of their ‘value’ to clients. AoV reporting is a statutory requirement. Including ESG factors in its calculation is not. 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. Targeted Positive Investments
EU Sustainable Finance Taxonomy holdings 5-25% of assets
Invests in between 5-25% of capital in assets which meet the EU Taxonomy requirements. This will typically require adding up the proportion of each individual company's activity that is regarded as 'green' so that the manager can produce an overall total for the whole fund or portfolio.
EU Sustainable Finance Taxonomy holdings >25% of assets
Invests more than 25% of capital in assets which meet the EU Taxonomy requirements. This will typically require adding up the proportion of each individual company's activity that is regarded as 'green' so that the manager can produce an overall total for the whole fund or portfolio. Impact Methodologies
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. 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. Intended Clients & Product Options
Intended for clients interested in sustainability
Designed to meet the needs of individual investors with an interest in sustainability issues.
Portfolio SRI / ESG options available
Only applicable for DFM’s & portfolio providers. Finds those that offer an SRI / ESG portfolio option
Multiple SRI / ESG portfolio options available
Only applicable for DFM’s & portfolio providers. Find service providers who offer multiple SRI / ESG portfolio options
Bespoke SRI / ESG portfolios available
Only applicable for DFM’s & portfolio providers. Find service providers who offer bespoke ('personalised') SRI / ESG portfolio options Labels & Accreditations
SFDR Article 8 fund / product (EU)
Find options classified under Article 8 of the EU’s SFDR (Sustainable Finance Disclosure Requirements). Article 8 of the SFDR is a set of requirements that apply to financial products that 'promote' environmental or social characteristics together with high governance. These rules do not currently apply to UK products so many 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.
Integrates ESG factors into all / most research (AFM companywide)
Find fund / asset management companies that consider environmental, social and governance (ESG) issues when deciding whether or not to invest in a company for all / almost all of their funds and other assets. This is increasingly seen as part of sound risk management. Collaborations & Affiliations
Fund EcoMarket partner
Find fund / asset management companies that have partnered with Fund EcoMarket - meaning that they are helping to improve access to information on sustainable and responsible investment by paying an annual fee to us which enables us to publish information for free. Partner funds are listed ahead of other funds and have their logos displayed. 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. Engagement Approach
Regularly lead collaborative ESG initiatives (AFM companywide)
Find fund / asset management companies that regularly initiate or run industry wide (collaborative) investor projects aimed at raising environmental, social and governance standards amongst investee companies.
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 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 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 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 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. Transparency
Dialshifter statement
Find fund / asset management companies that have supplied Dialshifter information. See Dialshifter tab within record for more information. Sustainable, Responsible &/or ESG Policy:ESG is integral to the way in which we evaluate and appraise every stock that is under consideration for the fund. It is a core component of our modelling and analysis and is central to the investment decisions we make. We believe that ESG factors have a material bearing on both the alpha potential of a stock and the risks associated with owning the stock, and it is therefore incorrect to think about ESG as a separate investment discipline. Schroder ISF Global Sustainable Growth reflects our belief that only companies demonstrating positive sustainability characteristics, which incorporate conventional ESG factors (e.g. environmental policies, human rights, labour standards, board structure, corporate strategy), will be able to maintain growth and returns over the long-term. To the managers of the fund, the sustainability assessment seeks to capture the impacts of a company’s operations and policies on its broader set of stakeholders (customers, suppliers, employees, society, the natural environment, regulators, and shareholders). Our analysis seeks to understand the strength of a company’s license to operate and pressures that could be exerted on the company which might affect future returns. Only those companies that are managed with due consideration for their stakeholders will be considered for the fund.
Source: Schroders, as at 31 March 2021 Process:Our investment process is team-based and driven by proprietary bottom-up fundamental stock selection. Expertise from both the Global & International Equity team and the Sustainability team provide a diversity of idea generation and high degree of scrutiny of ideas around the expected trajectory of long-term growth, ESG and sustainability characteristics.
Idea generation is driven Schroders’ GSSs are the primary source of idea generation, focussing on the highest ranked stocks of our local analysts as well as ideas generated from their own analysis and insights. Irrespective of idea source, the GSS team assess the modelling, analysis and ESG assessment of the regional teams based on an independent view of growth- and risk- drivers. The GSS re-frame the investment recommendations relative to global sector dynamics and reflecting a global opportunity set. The investment team also uses a proprietary quant screen aligned to the team’s investment approach to highlight potential investment opportunities. In addition, ideas arising from thematic research and from inter-actions and engagement with company management by Schroders’ Sustainability team can also provide a source of new ideas. The output harnessed at this stage of the process comprises detailed financial analysis including estimates of longterm growth, and a comprehensive analysis of fundamental risk which incorporates a wide range of financial and non-financial risk factors from operational and financial, to strategic and ESG. The view on risk will be informed by the GSSs’ financial modelling, analysis and insight from Schroder’s ESG team, and meetings with company management which are usually attended collectively by the relevant regional equity analysts, These stock recommendations will be characterized by a positive growth gap underpinning an expectation of share price outperformance and a detailed assessment of fundamental risk, including specific ESG analysis. This analysis is included within a formal research note provided by the GSS to the team which is stored centrally on our central research database. These research notes are periodically audited by the ESG team and suggestions for improvement are discussed where necessary. Complementing the team's assessment of growth for a company, the team appraises the fundamental risk of each individual stock owned or being considered as a candidate for client portfolios. In its simplest form this is the risk of owning a stock in isolation (as distinct from risk within the context of a portfolio). As part of this analysis we seek to assess the financial and non-financial risks of owning a stock in terms of both the prospective market valuation of the stock but also the extent to which these risks may affect the trajectory or sustainability of future growth. Quantitative and qualitative factors are used to evaluate risk and, in this context, ESG analysis is a significant determinant of our assessment of qualitative risk, along with aspects such as management quality, transparency and strategic objectives. Our analysis of fundamental risk is dynamic, reflecting a real time assessment of the risks of holding individual stocks and our approach differentiated because it is systematic and brings the appraisal of stock specific risk to the forefront of stock recommendations and the investment decisions of the team. This approach is applied consistently across the team’s assets under management, irrespective of the mandate specifications for any one particular client. Fundamental risk constituents and weights:
Complementing the team's assessment of growth for a company, the team appraises the fundamental risk of each individual stock owned or being considered as a candidate for client portfolios. In its simplest form this is the risk of owning a stock in isolation (as distinct from risk within the context of a portfolio). As part of this analysis we seek to assess the financial and non-financial risks of owning a stock in terms of both the prospective market valuation of the stock but also the extent to which these risks may affect the trajectory or sustainability of future growth.
Based on the ideas emanating from Stage 1 of the process, the Sustainable Growth Investor Group, a small subcommittee comprising the strategy’s two portfolio managers, a senior member of the Global & International Equity team and three members of the Sustainability Team meet to discuss the ideas being considered for inclusion by the two PMs. This group meet monthly with a primary aim to offer a proprietary and holistic assessment of a business’s long-term sustainability. In addition, this group will review existing holdings, corporate performance (financial and non-financial) and set objectives for longer term engagement. These discussions are anchored around stakeholder relationships and how they feed into the long-term quality and durability of a company’s business model and from that the degree to which this will support long term earnings growth. The team use its proprietary Sustainability Quotient ‘SQ’ framework developed to ensure companies sustainability characteristics are assessed and evaluated in a systematic way. This framework shapes further discussion and analysis. The conclusion of this process seeks to deliver a list of approximately 60-80 stocks that meet a high bar for inclusion within the portfolio. However, our strategy and process does lead to a natural ‘exclusion’ of stocks in industries evaluated as ‘unsustainable’. In addition, hard exclusions apply to stocks with material exposure to alcohol, tobacco, controversial and conventional weapons, gambling, adult entertainment, climate change (tar sands and thermal coal), high interest rate lending and human embryonic cloning.
Using the short-listed stocks, portfolio construction is undertaken by our Portfolio Managers. A stock’s upside potential, downside risk (including ESG factors) and level of conviction around the presented investment thesis determines the position size of each stock. Stocks with a higher relative upside, lower fundamental risk profile (which incorporates views on ESG risks) and higher liquidity will receive higher active weights in the portfolio. Stocks will be held until forward looking growth estimates have been fully discounted within consensus expectations, or where better opportunities have been identified. A material change in the thesis, or in the sustainability characteristics, will result in a review of our position size. Our country and sector allocation are purely a by-product of our bottom-up stock selection process. From time to time we may control these allocations for risk management purposes. A full program of reporting, voting and governance is also incorporated to ensure strong financial performance is mirrored by strong non-financial performance. We use information from several external ESG research firms, but only ever as one input into our own company assessments to be questioned, examined and built on. Our Sustainable Investment team has extensive networks within its respective field. Information is drawn from publicly available corporate information and company meetings, from broker reports, industry bodies, and research organizations, think tanks, legislators, consultants, Non-Governmental Organizations and academics; wherever it is felt the information would add value to our analysis. We currently subscribe to the following external ESG research providers: MSCI ESG research, Bloomberg, EIRiS, Refinitiv, Sustainalytics and Morningstar. In addition, we subscribe to Institutional Shareholder Services and the Investment Association’s Institutional Voting Information Service for our proxy voting research.
Our flagship ESG research tool, provides a systematic framework for analysing a company’s relationship with its stakeholders and the sustainability of its business model. Comprising over 260 metrics across over 13,000 companies, it is designed to support our investors’ understanding of the sustainability of companies’ business models and profitability, and provides structured, logical and wide-ranging data to support our analysts’ views. This consistent structure makes information sharing easier and allows us to identify market wide trends and insights. We have also developed a number of proprietary quantitative metrics that can be used to demonstrate and measure a portfolio’s sustainability characteristics.
We have developed a new way of looking at carbon risk: carbon footprints remain the dominant measure of carbon exposure but are an incomplete and sometimes misleading measure of investment risk. We focus on the ways value will be lost or created as policies strengthen, through financial analysis rather than environmental research. Our carbon value at risk (VaR) model assesses the effect of a significant rise in carbon prices on a company’s cost structure, industry prices, volumes and cash flows.
SustainEx is a proprietary model which scientifically combines measures of both the harm companies can do and the good they can bring to arrive at an aggregate measure of each firm’s social and environmental impact, allowing investors to target their ESG investments effectively. It quantifies the extent to which companies are in credit or deficit with the societies to which they belong, and the risks they face if the costs they externalize are pushed into
Resources, Affiliations & Corporate Strategies:Sustainable Investment Team Sustainability is fundamental to our investment principles at Schroders, and we have an experienced and well-resourced Sustainable Investment team comprised of more than 45 individuals* as at 30 June 2024, who are embedded within our Investment function. We are a global team, spread across four regional hubs in London, Paris, Singapore and New York, aiming to ensure that sustainability is embedded through our global investment teams and client functions. *Source Schroders. The team is led by Andrew Howard, Global Head of Sustainable Investment who is also a member of our Group Management Committee. As team head, he oversees our approach to ESG integration, active ownership, our sustainability research and tools, and our reporting and product strategy. Our central Sustainable Investment team sits alongside investment teams rather than operating in a silo, which facilitates regular dialogue with our analysts and portfolio managers. It is organised into four pillars:
We outline their key responsibilities and areas of focus below. 1. Sustainable investment management Our Advisory and Integration team acts as a central contact point and consultant for a range of stakeholders across the business. This includes advising investment teams on ESG integration best practice; compliance, risk and legal teams on ESG regulation; and working with our regional experts; across Asia Pacific, Europe and North America, as outlined under pillar three. Our Models and Data team is responsible for the maintenance and evolution of our suite of proprietary tools. They are also responsible for ESG data, ensuring we harness sustainability data effectively from both conventional and unconventional sources. Our Strategy and Research team is responsible for undertaking sustainability research to: inform firmwide strategy and commitments; provide insights for investment teams to analyse sustainability-related risks and opportunities; and provide research-related and technical support for other stakeholders across the firm.
Our Engagement team partners with investors to have dialogue with the companies in which we invest, seeking to understand how prepared they are for a changing world and pushing them towards more sustainable practices. The team track the progress of these engagements and hold companies to account. Our Corporate Governance team is responsible for voting in line with our Voting Policy and Principles.
Our Impact team is responsible for scaling our impact product offering in line with best-practice impact principles. The team works closely with investment desks and is responsible for developing and implementing our impact management and measurement framework, including impact assessment and monitoring at transaction and portfolio level, product development, impact strategy and impact reporting.
Our Regional Experts based in Asia Pacific, Europe and North America have a deep understanding of local market characteristics and nuances, and are responsible for staying abreast of sustainability-related developments. Our experts work with clients and internal teams to navigate and support clients’ ESG aspirations and challenges, utilising Schroders’ proprietary tools and research to develop investment solutions that meet their needs. They also engage with regulators and industry bodies to shape and support the global sustainable finance agenda. Our regional experts are a critical extension of the central team in London as the firm continues to evolve its global ESG strategy.
We have a number of governance structures in place for decision-making and oversight of our approach to sustainable investment. The Board of Schroders plc (the Board) has collective responsibility for the management, direction and performance of the Group, and is accountable for our overall business strategy. The Group Chief Executive is responsible for proposing the strategy for the Group and for its implementation, supported by the Group’s senior management team and a number of Committees, some of which are noted below. The Group Sustainability and Impact (GSI) Committee provides advice to the Group Chief Executive on sustainability and impact matters. The Committee considers, reviews and recommends the overall global sustainability and impact strategy, including key initiatives, new commitments and policies for approval. The The Sustainability Executive Committee (ExCo) develops and oversees the delivery of our Group-level sustainable investment management strategy. The ExCo also advises on the development of our sustainability and impact investment and product frameworks. The ExCo has senior representation from across the business including Investment, Client Group, Wealth Management, Schroders Capital and Corporate Sustainability. The Sustainability Regulations Steering Committee (Sustainability Reg SteerCo) oversees the progress of in-flight sustainability regulatory change programmes, as well as monitoring emergent sustainability regulations and determining their high-level impact on our Group sustainability strategy and supporting operations. The Sustainability Reg SteerCo receives input on planned or potential sustainability-related regulation from our Public Policy team, which actively engages with relevant regulators, industry trade associations and other bodies in the United Kingdom (UK) and European Union (EU). The Sustainability Reg Steerco has senior representation from across the business including Investment, Wealth Management, Schroders Capital, Legal, Risk & Compliance, Product and Operations Management. Certain Schroders entities, businesses and Investment teams also have their own committees which consider their sustainable investment activities. For example, the Private Assets Sustainability and Impact Steering Committee (PA S&I SteerCo) develops and oversees the implementation of the Private Assets Sustainability and Impact strategy. In addition, the Wealth Management Sustainable Investment Committee (WMSIC), a sub-committee of the Wealth Management Investment Committee (WMIC), has delegated responsibility for recommending Wealth Management's Sustainability models, as well as providing investment strategy and direction for client portfolios that are linked to the sustainable models. Alongside our central Sustainable Investment team, sustainable investing is also overseen and delivered by dedicated teams and expert individuals embedded throughout the firm (including across Investment teams and Client Group functions). Industry involvement We believe we have a particular role to play in sharing our expertise on different areas, supporting best practice but also learning from others. We have a long-standing commitment to support and collaborate with several industry groups, organisations and initiatives to promote well-functioning financial markets. Our key stakeholders include exchanges, regulators and international and regional trade associations. For example, Schroders is a member of trade bodies such as the Investment Association in the UK, the European Fund and Asset Management Association (EFAMA), the Asia Securities Industry and Financial Markets Association (ASIFMA) in Hong Kong and the Securities Industry and Financial Markets Association (SIFMA) in the US. Through this participation we share our insights to support the development of policy recommendations, share best practice and build coalitions of like-minded market participants to advocate for better functioning markets. We consider this to be key in improving responsible investment standards across sectors, establishing a consistent dialogue with companies, and in promoting the ongoing development and recognition of sustainability and ESG within the investment industry. A list of organisations and initiatives of which Schroders is a member or signatory is available on our website
Dialshifter (Corporate)Our organisation is helping to support the Paris Climate Agreement and the Race to Net Zero by… As a firm, we have made a number of climate and nature-related commitments to support achieving net zero by 2050, or sooner. We have committed our listed equity and corporate bond holdings, which equated to over 60% of assets under management, to become in line in with an implied temperature score of 1.5°C by 2040 (using the methodology developed by the CDP and WWF). Our target is for 100% of all assets under management to become aligned with our targets by 2050. Further information on our climate change strategy can be found here: Schroders Climate (TCFD) Report 2023
SDR Labelling:Not eligible to use label (out of scope) Key Performance Indicators:
We do not use bespoke ESG KPIs or establish benchmark performance. However, our stakeholder-based analysis within the Context system allows us to analyze a company’s exposure against a wide range of metrics for each key stakeholder relative to their sector peers. While we do not have benchmark metrics, this analysis does help us identify areas of strength and weakness across the stakeholder value chain and incorporate that into our appraisal, risk assessment and often serve as a starting point for further engagement with the company. Also, the portfolio managers formally review portfolio level ESG characteristics within our risk and reporting toolkit. This review includes two proprietary measures of ESG risk, Carbon VaR and SustainEx, as well as MSCI and Sustainalytics scores. The portfolio’s absolute ESG scores as well as its relative profiles versus benchmark are reviewed, and holdings that contribute materially to scores are discussed. The information is accessed through our risk management system, Aladdin, and is available to the portfolio managers on a real time basis. DisclaimerRisk Considerations – Schroder International Selection Fund* Global Sustainable Growth Fund The following risks may affect fund performance: – Performance risk: Investment objectives express an intended result but there is no guarantee that such a result will be achieved. Depending on market conditions and the macro-economic environment, investment objectives may become more difficult to achieve.
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