FP WHEB Sustainability - C Share Acc (OEIC/Unit Trust)
SRI / Ethical Overview
The investment philosophy of the fund is built around sustainability, growth, quality and valuation. The fund is focused on nine sustainable investment themes; five environmental (cleaner energy, environmental services, resource efficiency, sustainable transport, and water management), and four social themes; (education, health, safety, and well-being). Individual stocks are selected through a ‘bottom-up’ stock-by-stock fundamental and rigorous research process.
- The fund is focused exclusively on companies providing solutions to sustainability challenges;
- We add value through expert understanding of the sustainability themes, new technologies and business models as well as through individual stock selection based on superior insights into companies in our portfolio.
- Focusing on companies that provide solutions to critical environmental and social pressures confronting society creates an investment universe with superior growth prospects.
- From this universe we invest in sectors and themes with high growth that are typically under- appreciated by the broader market.
- High quality companies are more likely to capture growth opportunities, and we believe that a company’s environmental, social and governance (ESG) profile is an important and under-appreciated indicator of quality.
- Our research combines ESG with traditional financial analysis at every stage of a methodical process revealing important information about a company’s growth potential and risk profile.
- We also believe that engaging with companies to challenge them on a range of ESG issues, and analysing their responses, further adds to our knowledge and understanding of a company.
Because our investment philosophy is centred on companies with a positive social or environmental impact, the Fund does not employ negative screens, the positive screening approach means that the fund has zero/immaterial exposure to controversial industries such as fossil fuel extraction, cigarette manufacturing, gambling, pornography and weapons manufacture as these industries do not form a part of the fund’s investment themes and so cannot be held in the fund. There have been no changes to screening in the last year although we have published a policy on ethical outcomes (see below).
SRI / themed / ethical assets under management – overview
- Fund Size (GBP): £262m at 30th September 2018
- Total value of SRI/ethical/environmental/ social/ environmental or sustainability themed funds: £273m
- Total value of assets covered by any additional ESG or responsible ownership policy: Nil
- Total assets under management: £273m
SRI Policies (Primary strategy in bold)
- Environmental policy Find investment funds with environmental policies - ie that consider issues such as pollution, climate change, resource management, environmental impact. This will include options from all of the different SRI Styles, including funds where their core strategy is to focus on other areas such as ethical funds. See fund information for fund specific policy details.
- Health & wellbeing policies Find ethical or sustainable investment fund options that have a policy which supports (ie aims to invest in) companies that are viewed as offering positive lifestyle, health or wellbeing related benefits.
- Limits exposure to carbon intensive industries Find environmental, sustainable investment, ethical fund and other options that aim to significantly reduce or limit exposure to carbon intensive industries (ie sectors which are major contributors to climate change). Funds vary - strategies may involve excluding sectors such as coal, oil & gas, mining or airlines - or may indicate a 'best in sector' approach is taken. See fund literature for details.
- Sustainability policy Find fund options that consider issues relating to the sustainability agenda (e.g. resource management, environmental impact, climate change and/or social issues such as equal opportunities, human rights and adherence to recognised codes). This will include funds from all of the different SRI Styles. See fund information for explanations of the different strategies.
- Ethical policies Find funds with 'traditional' ethical investment policies. These typically focus on avoiding companies that are involved in the armaments industry, tobacco, gambling and/or pornography. Options will include funds where their core strategy or style may be to focus other issues - like sustainability or the environment, not just 'ethical funds'. Strategies vary significantly. Check fund literature for details.
- Social policy Find fund options that consider social issues (e.g. human rights, labour standards, equal opportunities, child labour and adherence to internationally recognised codes such as the UN Global Compact). This will include funds in most of the different SRI Styles as this is considered a core issue. See fund information for detail.
- Governance policy Find fund options that have policies that relate to corporate governance issues such as board structure, executive remuneration, bribery and/or corporate corruption. These funds will typically avoid companies with poor practices.
- Nuclear exclusion policy Find ethical funds (and other options) that have a published policy that sets out the fund's position on avoiding or limiting exposure to nuclear power. See fund literature for details of their policy.
- Tobacco production avoided Find fund options that exclude manufacturers of tobacco (or related) products. This typically relates to ethical funds however funds from other SRI Styles commonly avoid this area also. Strategies vary and funds may invest in retailers of such products (e.g. supermarkets or hotels.) See fund information for further information.
- Armaments manufacturers avoided Find ethical fund (and other SRI) options that avoid avoids companies that manufacture products intended specifically for military use. Fund strategies vary - particularly with regard to non strategic military products. Read fund literature for specific details.
- Coal, oil &/or gas majors excluded Find sustainable investment and ethical fund options that avoid significant involvement in coal, oil and/or gas producing companies. Funds vary. See individual fund literature to confirm details.
- Climate change / GHG policy Find sustainable investment and ethical fund options that pay significant attention to climate change related issues such as greenhouse gas/carbon emissions. Strategies vary, see fund literature for individual fund information.
- Invests in clean energy/renewables Find ethical, sustainable investment and other environmentally aware fund options that aim to invest in companies in the clean technology and renewable energy sectors. Fund strategies vary. Some funds may have limited exposure to this area, others may have significant exposure. Check fund literature for details.
- Alcohol production excluded This filter helps you to find ethical funds - and other options - that avoid investment in alcohol production. See fund literature for further information.
- Fracking and tar sands excluded Find fund options that avoid companies involved in fracking and tar sands - which are widely regarded as more controversial methods of oil and gas extraction.
- Gambling avoidance policy Find ethical fund options (and other options) that avoid companies with significant involvement in the gambling industry. See fund policy for details.
- Pornography avoidance policy Find ethical fund option - and in some cases other options - that avoid companies that derive significant income from pornography. See fund details for further information.
- Human rights Find funds that consider human rights practices when approving companies for investment. Such funds will require decent standards of human rights to be demonstrated - which typically means adherence to international norms as a minimum standard.
- Child labour exclusion Find funds that have policies in place that ensure they do not invest in companies that employ children.
- Deforestation / palm oil policy Find funds that have policies in place that ensure they do not invest in companies that are significantly involved in deforestation, this typically relates to palm oil plantations.
- Water / sanitation policy Find funds that have policies that focus on the the water industry and/or sanitation.
- Resource efficiency policy or theme Find funds that have a a policy or theme that relates to managing natural resources more efficiently
- Sustainable transport theme or policy Find funds that have stated policies or thematic investment approaches that relate to supporting more sustainable (environmentally aware) transport
- Positive social impact theme Find funds that specifically state that they aim to deliver positive social (ie people related) impacts and/or outcomes
- Responsible supply chain policy or theme Find funds that have policies or a themed that considers the responsible management of supply chain related issues (these may relate to employment, product sourcing, sustainability or other issues)
- Positive environmental impact theme Find funds that specifically set out to help deliver positive environmental impacts, benefits or outcomes
- Plastics policy / reviewing plastics Find funds that are specifically managing or reviewing how they manage issues relating to the over use plastics (particularly single use plastics) as part of their investment processes
- RSMR Rated Find funds that are rated by research agency 'Rayner Spencer Mills Research' (awarded 'RSMR SRI Rated' status). Read fund literature on contact RSMR for further information.
- Positive selection bias Find funds where their main 'ethical approach' is to invest in companies that are considered to be positive/good or useful to people and/or the environment. The fund may also have negative avoidance criteria - see fund details to read more about fund strategies.
- Balances company 'pros and cons'/best in sector Find ethical funds and other options that consider both the 'positive' things companies do and the 'negative' things they do in order to make balanced, often complex decisions about where they might invest. Such funds often invest in the best/most ethical companies across most industries ('best in sector'), rather than excluding entire sectors. The fund manager may combine this with 'responsible engagement' activity to encourage better business practices. See fund literature for specific policy explanations.
- Eurosif transparency Find funds that meet the standards of the EUROSIF transparency Code. This means that they are a leading fund in terms of openness and transparency, publishing - for example - extensive information about where they invest and how they deal with companies.
- Sustainability themed Find funds where there is a significant emphasis on sustainability issues either as its primary strategy or as a core strategy that compliments other criteria. (This may apply to a number of different SRI Styles). Such funds will consider environmental and social issues when making stock selection decisions. Read fund literature for further information.
- Favours cleaner, greener companies Find funds that aim to nvest in companies with strong environmental policies and practices. This may mean it invests in smaller companies offering market leading environmental services or products and/or larger companies that are working towards the improved management of their negative impacts. Read fund literature for further information.
- Favours companies with strong social policies Find funds that invest in line with positive strategies that relate to 'people' issues - such as having strong human rights, labour standards and equal opportunities practices. Such funds are likely to invest in companies that have market leading standards with regard to employee and supplier practices. Read fund literature for further information.
- Faith friendly Find funds that have attributes that commonly suit the aims of investors of faith - although they may not be specifically marketed as being only for religious investors. Strategies vary (as do investor aims). Read fund literature for further information.
- Limited/few ethical exclusions* Funds with this label tend to avoid fewer companies than other ethical funds or other options with avoidance criteria. Strategies vary. The fund may only avoid companies in one or two areas (eg only exclude tobacco or armaments companies) or they may exclude only the very worst companies when measured against internationally accepted standards (across potentially a range of areas). Read fund literature for further information.
- Aims to generate positive impacts Find funds that aim to help deliver positive social or environmental impacts or outcomes through their investment decisions - which typically involves holding companies that are viewed as being necessary or beneficial. Strategies and approaches vary. A small number of funds have recently started to measure outcomes (see 'Measures Impacts' in the Policy filter). This is a new area - so most funds do not do this yet. See fund literature for further information.
- Available via an ISA Find funds that are available via a tax efficient ISA product wrapper
- Over 50% small/mid cap Find funds where more than half of the funds' assets are invested in smaller or medium sized companies (ie below around £5 -10 billion).
- Responsible ownership / stewardship policy Find funds that have a policy that sets out what they do with regard to responsible investment ownership - also known as 'stewardship'. This typically relates to issues such as dialogue with companies and shareholder voting.
- ESG integration strategy Find funds that factor in 'environmental, social and governance' issues as part of their investment decision making process. (These typically relate to improved risk management.)
- Combines ESG strategy with other SRI criteria Find funds that have an ESG strategy (which is typically focuses on avoiding companies that post environmental, social or governance related risks) with additional criteria such as positive and/or negative screens or engagement/stewardship strategies.
- Employ external oversight or advisory committee Find funds that have a external committee that helps steer or advise fund managers on SRI policy or strategy related issues. These people may be paid for their time but are not employees of the fund manager.
- Measures positive impacts Find funds that measure the positive effect of their investment decision making on society and/or the environment. (This may involve eg carbon saved or jobs supported.) Managers aim to quantify the benefits they deliver (relative to other strategies or other benchmarks) to ensure they are delivering positive benefiting. This is a new and evolving area. See fund literature for information
- ESG/SRI engagement Find funds and fund management companies that actively encourages higher 'environmental, social and governance' and/or 'sustainable and responsible investment' practices amongst investee companies - when positive change is aligned with the best interest of investors. This may apply to a single fund or a group of funds. Read fund literature for further information.
- Integrates ESG factors into all/most fund research Find fund management companies that research environmental, social and governance (ESG) issues when deciding whether or not to invest in a company. This typically applies to all funds, not only those which are promoted as being 'ethical' or 'SRI themed'. This is increasingly often used as a risk management tool.
- Vote all* shares at AGMs/EGMs This fund manager votes or aims to vote all* the shares they own at Annual General Meetings and Extraordinary General Meetings. A commitment to voting shares is a key indicator of 'responsible share ownership' - where fund managers consider - and express their views on - the key business issues effecting the companies they part own. (*Allowance is made for exceptional situations such as when shares are in the process of being sold.)
- In house responsible ownership/voting expertise Find fund / fund management companies where there is in-house expertise that enables the fund manager to make their own decisions on issues such as shareholder voting, setting of in-house guidelines - for example - particularly with regard to environmental, social and governance (ESG) issues.
- Responsible Ownership/ESG a key differentiator The fund managers have said they consider this area to be a key differentiator for their business
- UK Stewardship Code signatory Find fund managers that are signatories to the FRC UK Stewardship Code, which sets out a framework for constructive investor / investee relations where fund managers are encouraged to behave as responsible 'company owners'.
- Publish Responsible Ownership/Stewardship report Find fund management companies that publish information on their approach to responsible investment ownership - also known as 'Stewardship' - following the introduction of 'the Stewardship Code'. This sets out their approach to voting, dialogue with company management and any related activity. This is publicly available.
- Publish full voting record Find fund management companies that publishes a full record of how they vote at AGMs and EGMs. This information is publicly available.
- Regularly lead collaborative ESG initiatives Find funds managed by fund management companies that regularly initiate or help run industry wide (collaborative) investor projects aimed at raising environmental, social and governance standards amongst investee companies.
- PRI signatory Find fund management companies that have signed up to the UN backed 'Principles of Responsible Investment' initiative.
- Boutique/specialist fund manager Find options offered by smaller, more specialist fund management companies with a significant (or entire) emphasis on sustainable, responsible, ethical, ESG or responsible ownership related investment strategies. Note - strategies vary significantly. Check fund manager supplied links for further information.
- UKSIF member The fund management company is a member of UKSIF - the UK Sustainable Investment and Finance association
- Climate Action 100+ or IIGCC member Involved in collaborative institutional investor initiatives that are encouraging companies to address climate change (ie reduce carbon emissions)
- Encourage board diversity eg gender Fund managers encourage the companies they invest in to have more diverse board structures (eg more women on boards)
- Encourage responsible corporate taxation Fund management company is working with the companies it invests in to encourage more responsible corporate taxation
- Encourage carbon / GHG reduction The fund management company is working with the companies it invests in to encourage reductions of carbon dioxide and other greenhouse gas emissions.
- Employ specialist ESG/SRI/sustainability researchers The fund management company directly employs specialist ESG/SRI/sustainability researchers or analysts
- In house carbon/GHG reduction policy The fund management company is working to reduce its own carbon/greenhouse gas emissions.
- Specialist SRI / positive impact fund management company Find fund management companies that specialise in - or focus entirely on - delivering positive impacts or SRI related fund management options
- Full SRI policy information on company website All information that relates to the filter options that the fund manager has selected on this fund can be found on their company website
SRI / Ethical Policy
Ethical Outcomes from Impact Investing – the FP WHEB Sustainability Fund
WHEB Asset Management LLP’s mission is to advance sustainability and create prosperity through positive impact investments.
We are an impact investor; which means we consider the positive social and environmental impact of our investments as a critical part of our investment process. We also measure and report the impact of our investments. When we consider impact, we consider the products or services created by the company. We also consider the way in which the company creates those products and services. This includes environmental, social and governance considerations.
Impact Criteria for the FP WHEB Sustainability Fund
We are the manager of the FP WHEB Sustainability Fund (“the Fund”). The Fund invests in companies providing solutions to sustainability challenges and we apply this principle rigorously using fixed criteria:
· Specifically, at least one third of the company’s revenues must be derived from businesses with positive impact related to our sustainability investment themes. As a consequence, over 75% of companies in the MSCI World Index do not qualify as investments for the Fund.
· The provision of solutions to sustainability challenges is by definition a positive impact activity. With approximately 85% of aggregate revenues coming from sustainability solutions, we are confident that the Fund’s overall impact is strongly positive.
In addition, when we analyse companies, we consider potential negative impacts associated with their products and services as well as their operations. We only invest in companies where we are clear on the overall positive impact of the business.
As a result of this approach, we have never invested in any company with activities substantially related to the provision of: alcoholic beverages, cosmetics where animal testing has been involved, gambling products or services, intensive farming practices, nuclear power generation, pornographic materials, tobacco products, unsustainable timber products or weapons. Such activities as have related to these areas have never been material to the companies we invest in as a whole.
Our investment process actively reviews the environmental, social and governance quality of a business. Companies with persistently poor practices regarding equal employment opportunities, human rights and environmental management are highly unlikely to be selected for investment.
Consideration of impact is central to our investment process. Our experienced Investment Team carries out all analysis of impact and environmental, social and governance factors.
A current list of the Fund’s holdings, along with a brief impact rationale for them, is always available on our website.
Our internal Investment and Risk Committee reviews the Investment Team’s decisions on a monthly basis. Our independent Investment Advisory Committee reviews the decisions again every four months with a specific remit to consider the fund’s compliance with the stated positive impact philosophy, policies and objectives of the fund.
The minutes of the meetings of the Investment Advisory Committee are published on the website and include a summary of the committee’s discussions of each stock purchased for the fund.
Resources, Affiliations & Corporate Strategies
WHEB’s entire business is focused on sustainable, positive impact investing. The investment team of four comprising the Fund Manager, Head of Research, Associate Fund Manager and Senior Analyst all spend the vast majority of their time undertaking stock-level analysis including ESG and sustainability assessments. We prefer to conduct this research in-house as we believe that this research is too important to outsource to a third party research provider. We do however utilise specialist governance research which helps inform our voting decisions that are governed by our own bespoke voting policies.
We have received the top A+ rating from the UN PRI every year that the assessment has been done and are very involved with the work of groups like the IIGCC, UKSIF, Tomorrow’s Company and IIRC which we believe play an increasingly important role in encouraging the development of regulations, public policy and industry standards in the area of sustainability and ESG investing.
Ted Franks, Chartered Accountant, CFA (Partner, Fund Manager)
Ted is lead Fund Manager for the FP WHEB Sustainability Fund. He joined WHEB Asset Management in March 2009, shortly after it was founded, and helped to launch the Sustainability Fund in June of that year. He was Associate Fund Manager for the Fund from October 2011, and co-Fund Manager from June 2015 until March 2016.
Seb Beloe, DIC, CEnv (Partner, Head of Research)
Seb is Head of Research and leads the integration of sustainability analysis within the investment process, as well as overseeing engagement activities. Previously, Seb was Head of SRI Research at Henderson Global Investors and was the Vice President of Research and Advocacy at SustainAbility.
Ty Lee, CFA (Associate Fund Manager)
Ty joined the WHEB Asset Management team in March 2011. He carries out in-depth analysis of companies in the portfolio and potential stock ideas within the integrated team. Prior to joining WHEB, Ty worked as a Senior Associate at UOB Asia in Hong Kong, and at Morgan Stanley and Accenture.
Ben Kluftinger, CFA (Senior Analyst)
Ben works closely with the rest of the investment team carrying out in-depth analysis of companies in the portfolio and potential stock ideas. Before joining WHEB, Ben worked at both Macquarie Equity Research and Citigroup Equity Research in Senior Analyst roles.