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Kames Global Sustainable Equity Fund (OEIC/Unit Trust)

Logo for Kames Global Sustainable Equity Fund
SRI Style: Sustainability Themed
Fund Type: OEIC/Unit Trust
Region: Global
Asset Type: Equity
Launch Date: 21/04/2016

SRI / Ethical Overview

We launched our first ethical equity fund in 1989. Since then, we have broadened our responsible investment capabilities to include ethical corporate bond, cautious managed and sustainable equity funds. Today we are distinctive among fund providers in offering such a broad suite of responsible investment products. Here is a reminder of some of the characteristics of our responsible investment proposition:

Commitment to responsible investing

We have publicly reaffirmed our commitment to managing responsible investment portfolios and we are now also offering a sustainable investment solution. Today we manage £2.51 billion* in responsible investments and we aim to be a leader in responsible investment.

*Source: Kames Capital as at 31 December 2017.


Sustainable companies make good investments

Across both mainstream and specialist responsible investment portfolios we ensure that we identify and understand the key environmental, social and governance risks for the companies in which we invest for our clients. Evidence shows that companies which rank among the leaders and improvers in ESG achievements tend to outperform as investments over the long term.


Our approach to sustainability is disciplined, clear and transparent.

Our sustainability process seeks to leverage our excellent record in corporate governance and global equities to generate alpha by increasing our exposure to sustainably managed companies.  We will consider the environmental and social impacts of a company’s products, services and capital deployment as well as the quality of governance as a key part of the fundamental investment considerations.  We deploy a consistent and rigorous approach to our sustainability analysis and seek to communicate the rationale for our decisions with the market and clients in an open and transparent way.


Our responsible investment approach is highly regarded

A 2015 survey named Kames Capital as one of only four responsible investment providers to be used by over 70% of financial advisers which are members of the Ethical Investment Association. The Kames Ethical Equity Fund was also named as one of the top five sustainable investment funds in the UK.


Active stewardship of clients assets

Kames is a signatory to the UK Stewardship Code and the UN backed Principles for Responsible Investment (PRI). In the most recent PRI Annual assessment, Kames scored A+ for its overall approach to responsible investment and A+ for Active Equity Ownership.



SRI / themed / ethical assets under management – overview  

  • Fund Size (GBP):   £61 million (at 31 Dec 2017)
  • Total value of SRI/ethical/environmental/ social/ environmental or sustainability themed funds:    £2.51 billion (at 31 Dec 2017)
  • Total value of assets covered by any additional ESG or responsible ownership policy
  • Total assets under management:   £44.17 billion (at 31 Dec 2017)



SRI Policies (Primary strategy in bold)

  • 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.
  • 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.
  • Animal welfare policy Find ethical fund options that have policies that require specific animal welfare standards to be adopted by investee companies in order for them to be considered for inclusion within the fund.
  • 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.
  • Animal testing exclusion policy Find ethical investment options that avoid companies that are involved in testing their products on animals. Ethical fund strategies vary - some exclude all companies that test on animals, others allow companies that test for medical purposes or where required by law. Read fund details for fund specific information.
  • 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.
  • 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.
  • 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.
  • 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.
  • 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

SRI Features

  • Norms focus Find funds that use internationally agreed standards, conventions and 'norms' to help direct where the fund can and cannot invest (e.g. the UN Global Compact, UN Sustainable Development Goals). Read fund literature 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.
  • 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.
  • 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.
  • 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

Corporate Activity

  • 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.
  • 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.
  • PRI signatory Find fund management companies that have signed up to the UN backed 'Principles of Responsible Investment' initiative.
  • UKSIF member The fund management company is a member of UKSIF - the UK Sustainable Investment and Finance association
  • Fund EcoMarket sponsor/partner Fund management company is supporting this website which aims to raise the profile of and help explain sustainable, responsible and ethical fund strategies. Sponsor funds are listed ahead of other funds and display their company logos.
  • 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 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
  • Use specialist ESG/SRI/sustainability research companies The company makes use of expert external research

SRI / Ethical Policy

Our investment approach seeks to identify the best bottom-up investment ideas available globally while focusing our exposure to companies that have strong sustainability characteristics, as identified by our detailed in-house sustainability analysis.

The fund applies a limited number of absolute exclusions as follows:


  • Tobacco -  Firms which derive more than 10% of revenue from tobacco.
  • Weapons - Firms which produce or sell civilian firearms and firms which manufacture or sell armaments, nuclear weapons or associated strategic products.
  • Nuclear power - Firms which own a nuclear power facility.
  • Gambling - Firms which derive more than 10% of revenue from gambling.
  • Animal welfare - Firms that engage in the production and sale of animal tested cosmetics.
  • Adult entertainment - Firms which own an adult entertainment company or produce adult entertainment.
  • Genetic modification - Firms which conduct genetic modification for agricultural purposes.


This process involves inputting our potential investible universe from which we will eliminate the majority of companies that we believe are inappropriate for the fund, based on the criteria provided above.

We undertake detailed bottom-up qualitative sustainability analysis. 

When a potential investment idea is identified, we undertake detailed bottom-up qualitative sustainability analysis to determine the key sustainability risks and opportunities for the company.  Our sustainability analysis will consider the nature of the products and services that a company makes (‘what a company does’) and also its operational practices and standards (‘how it does it’) and finally whether it has a track record of improving or has meaningful ambitions to improve.

As a result of this analysis, companies are classified into three categories:



  • Companies that meet a large amount of our absolute sustainability criteria and are demonstrably leaders in their sub-sector.


  • Companies where material  sustainability issues have been identified and the company is showing clear evidence of significant improvements in its sustainability performance.


  • Companies that are either excluded due to a combination of poor product exposure (e.g. tobacco or defence manufacturers), poor sustainability disclosure and performance and/or with little evidence of a desire to improve.


Only companies designated as sustainability ‘leaders’ or ‘improvers’ are suitable for inclusion in the portfolio.  The rationale for investing in both sustainability leaders and improvers is that empirical evidence suggests that identifying and investing in sustainability improvers is one of the most effective ways of generating alpha by incorporating sustainability data into the investment process.


Our approach to socially responsible investing


As active investors we believe it is our responsibility to encourage companies to maximise investment returns through good governance, including respect for society and the environment. As a significant shareholder in many companies, we are well-placed to actively promote best-practice in environmental, social and governance (ESG) matters.

Our investment managers and ESG Research team work together to monitor and engage with the companies in which we invest. This activity covers all asset classes, including equities, fixed income and property.

We believe that our commitment to ESG integration brings three main benefits for our clients:


Deepens our understanding - Our focus on ESG means we better understand the environments in which companies operate. This helps us to quantify risks and opportunities


Strengthens our conviction -  Kames Capital is an active investment manager with a fundamental, research-driven approach. Our ESG analysis supports the management of concentrated, high-conviction portfolios.


Promotes a long-term focus -  Evidence shows that companies which rank among the leaders in governance and sustainability are more likely to outperform as investments over the long term. Integrating ESG factors in our research helps us to avoid short-term distractions and stay focused on the long-term prospects for companies and sectors.


Our Responsible Investment Policy provides a framework for overseeing the performance of the companies in which we invest. In particular, it deals with our responsibilities, as set out by the Financial Reporting Council’s UK Stewardship Code and the Japanese Stewardship Code, although we endeavour to apply the same principles to all client holdings regardless of their listing or domicile.

Further details of our approach to responsible investment are available on our website at www.kamescapital.com.


Resources, Affiliations & Corporate Strategies

We do not believe in using third-party ESG screens as a driver of our investment decisions, but rather as a system to identify potential areas of concern to help us focus our own research. As a result, we employ a sustainability screen created by proprietarily weighting ESG rating data from a number of third parties. We adjust the output of this data by ranking each company in the universe based on the product or service they provide.  Products and services that have positive sustainability characteristics (e.g. electric vehicles) will rank positively and those with less sustainable products (e.g. coal mining and production) will rank poorly.

This process provides a good starting point from which to assess the universe more broadly and what to consider when beginning our bottom-up analysis. Investment ideas are identified by the investment team and the sustainability analysis is undertaken by our in-house ESG Research team, who make the final decision on whether the company is ranked as a Leader, Improver or Laggard.

Our in-house ESG Research team is responsible for the ethical screening and the analysis of environmental, social and governance (ESG) issues. The ethical screening process is undertaken independently from our investment managers. Our ESG Research team focuses on the screening and research, freeing our investment managers to focus solely on stock selection and portfolio construction.

We use a range of data sources for ESG research purposes and these resources have increased significantly in the last few years as the quality of the data available has improved. Resources currently include:


  •  Bloomberg
  • MSCI ESG Manager – company ESG research platform
  • EIRIS Portfolio Manager – company ESG research platform
  • ISS Quickscore – Corporate governance research
  • Empirical Research – ESG ratings data
  • ISS ProxyExchange – proxy voting research and processing
  • The Investment Association (IA) IVIS proxy voting research service
  • BoardEx - corporate board and remuneration database
  • Specialist databases, such as UN backed Principles for Responsible Investment (PRI), Carbon Disclosure Project (CDP) and Extractives Industry Transparency Directive (EITI)
  • Specialist research from brokers and academics
  • Various specialist journal subscriptions


A strong relationship exists between our ESG Research team and our investment managers, which enables material non-financial information to be incorporated into our investment processes. ESG research reports produced by our ESG Research team sit alongside all the other existing investment research undertaken by our investment managers on a given security. The ESG Research team also provide relevant news-flow and commentary on ESG issues to our investment managers that they might not receive from other sources. 

Our investment managers consider ESG research alongside other relevant financial and non-financial factors in the investment decision-making process. The importance that the investment manager attaches to ESG issues is in proportion to their ability to influence security prices.

As a subsidiary of the Aegon NV Group, Kames Capital contributes to and participates in Aegon’s
broader responsible investment activities. As an active member of both the UK Investment Association’s Governance and Engagement Committee and its Sustainability and Responsible Investment Committee we are closely involved in formulating best practice for responsible investment.

Kames Capital is a member of or supports a range of other responsible investment initiatives, including the UN-backed Principles for Responsible Investment, the UK Sustainable Investment and Finance Association, the Extractives Industry Transparency Initiative, Carbon Disclosure Project, Climate Action 100+ and the Farm Animal Investment Risk and Return initiative. Our participation in these initiatives helps us to deepen our knowledge and maximise our influence on ESG issues.


Important Note

For Professional Clients only and not to be distributed to or relied upon by retail clients.

The principal risk of this product is the loss of capital. Please refer to the KIID and/or prospectus or offering documents for details of all relevant risks.

All data is sourced to Kames Capital unless otherwise stated. The document is accurate at the time of writing but is subject to change without notice.

This document does not constitute an offer or solicitation to buy any funds mentioned, and no promotion or offer is intended in jurisdictions other than those where the fund(s) is/are authorised for distribution.

Kames Capital Investment Company (Ireland) plc (KCICI plc) is an umbrella type open-ended investment company with variable capital, registered in the Republic of Ireland (Company No. 442106) at 25-28 North Wall Quay, International Financial Services Centre, Dublin 1. Board of Directors: M Kirby and B Wright (both Ireland), A Bell (UK). KCICI plc is regulated by the Central Bank of Ireland.

Kames Capital plc is the investment manager and promoter for KCICI plc. Kames Capital plc is authorised and regulated by the Financial Conduct Authority.


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