Sarasin & Partners (Corporate Activity)
SRI / Ethical Overview
Environmental, social and governance concerns are fully integrated into our investment process.
ESG issues are part of the assessment conducted by each analyst on every stock considered for inclusion on our buy list. The impact of ESG issues considered as part of modelling the revenue and cost projections of every stock, as well as how we consider threats to the business case. Our Stewardship analysts undertake research into specific ESG issues and manage policy engagement and governance.
Sarasin & Partners has managed ethical mandates for over 20 years, predominantly for charity clients, and has extensive experience throughout the firm of implementing ethical and socially responsible policies. Within our client teams we have considerable experience of how ethical issues have evolved and the different ways in which they may be considered by different interest groups.
SRI Policies (Primary strategy in bold)
- ESG/SRI engagement Find funds and fund management companies that actively encourages higher 'environmental, social and governance' and/or 'sustainable and responsible investment' practices amongst investee companies - when positive change is aligned with the best interest of investors. This may apply to a single fund or a group of funds. Read fund literature for further information.
- Responsible Ownership policy for non SRI funds Find funds run by fund managers that apply Responsible Ownership or 'Stewardship' policies to all or most of their investment assets. This means that active involvement (e.g. voting, dialogue) with the companies they invest in across funds (not normally limited to ethical or SRI options.) Read fund literature for further information.
- Integrates ESG factors into all/most fund research Find fund management companies that research environmental, social and governance (ESG) issues when deciding whether or not to invest in a company. This typically applies to all funds, not only those which are promoted as being 'ethical' or 'SRI themed'. This is increasingly often used as a risk management tool.
- 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.
- Review(ing) carbon/fossil fuel exposure for all funds Find funds / fund managers that are reviewing or have reviewed their exposure to carbon intensive industries including (but not only) mining, oil and gas companies. This work is being carried out in the context of climate change related concerns, and may often reference international agreements.
- Regularly lead collaborative ESG initiatives Find funds managed by fund management companies that regularly initiate or help run industry wide (collaborative) investor projects aimed at raising environmental, social and governance standards amongst investee companies.
- PRI signatory Find fund management companies that have signed up to the UN backed 'Principles of Responsible Investment' initiative.
SRI / Ethical Policy
Sarasin & Partners are active owners and devote considerable time to actively monitoring and staying close to the companies we hold on behalf of clients. While we aim to invest in companies where we believe executives are acting in our clients’ long-term interests, in certain instances concerns may arise over a company’s strategy, operational performance, treatment of minority shareholders, or particular activities. Where we believe the issues could have material ramifications for performance, and place our clients’ capital at risk, we do not hesitate to speak directly with the company’s executives and Board directors.
Where our interests are aligned with other shareholders, and we believe we will have greater impact by working with others, we may engage with companies as part of a larger group of investors. As far as possible, we report on our engagement activity (recognising that managements can, on occasion, respond best when issues are tackled in confidence).
We also believe a considered approach to voting is vital because it is key avenue through which we can express our views to a company and because it keeps us close to companies’ leadership. Our votes are guided by our Corporate Governance and Voting Policy, which sets out the broad principles that guide how we vote on individual company resolutions from director nominations, executive remuneration, corporate financing, to common environmental and social matters. This policy is publicly available and regularly reviewed to ensure it continues to reflect our views on best practice. An overview of our votes is made available quarterly on our website, with disaggregated records provided to clients on request. In the case of segregated accounts, clients may decide to vote differently.
Our intention is to purchase securities for the long-term. There will be cases, however, where our investee companies do not live up to our expectations, the commercial environment changes such that the investment case is significantly weakened, or security prices move above our view of fair value. Where the value proposition no longer applies, and/or problem(s) are unlikely to be resolved by management, we sell the position on behalf of our clients.
Resources, Affiliations & Corporate Strategies
These range from our support for membership organisations, to investor discussion groups that allow for regular information sharing amongst like-minded investors, to active investor coalitions focused on specific company or policy matters.
Membership organisations and investor discussion groups related to responsible investment include:
- UN Principles for Responsible Investment (UNPRI)
- The Pensions and Lifetime Savings Association (formerly the National Association of Pension Funds, NAPF) – active in promoting Stewardship within the UK.
- International Corporate Governance Network (ICGN) – Natasha Landell-Mills is a member of the Accounting and Auditing Practices Committee
- Global Investors Governance Network (GIGN) - an informal network of investors on governance matters
- Asian Corporate Governance Association – providing current research on Asian corporate governance matters, and a platform for engagement with companies and policy-makers in the region.
- The UK Sustainable Investment and Finance Association (UKSIF) – promotes responsible investment and other forms of finance that support sustainable economic development.
- Centre for the Study of Financial Innovation – hosts regular roundtable discussions with thought-leaders on key issues facing the financial sector, from stewardship, to financial sector litigation or carbon risks.
- The Local Authority Pension Fund Forum – We have actively supported for many years
Investor coalitions/initiatives related to responsible investment include:
- Institutional Investors Group on Climate Change (IIGCC) – Brings together investors keen to promote a more robust action to counter climate change.
- Energy Futures – A facilitated investor–corporate dialogue which explored the key long-term energy challenges facing the world, and implications for investors.
- The Investor Forum – constituted as a Community Interest Company to represent the interest of the entire investment chain
- Investor coalition on Audit - to promote high quality and independent audits. This group was coordinated by Natasha Landell-Mills since its formation in 2012, and culminated in a position paper (signed by over 30 institutions representing over EUR 2 trillion in assets) and outreach in the European Union to deliver audit market reform.
- Investor coalition on International Financial reporting Standards (IFRS) and Going Concern – This group coordinated by Natasha Landell-Mills was formed in 2012, and is reaching out to policy-makers in the UK and EU to ensure an accounting framework that supports and promotes stewardship for the long-term.
- Corporate Reporting and Auditing Group convened by the IMA – bringing together representatives from the largest long-term investor associations to discuss topical accounting and auditing issues, and feed into government consultations.
- Banking Futures – A facilitated investor-company dialogue around a vision for a sustainable banking sector for the future. This involves thought leaders in long-term investment sector as well as senior executives from large UK based banks.