Fund Size: £4.64m

Total screened & themed / SRI assets: £1638.79

Total Responsible Ownership assets: £1403.01

Total assets under management: £3041.81

As at: 30/04/25

Contact: adam.kelly@edentreeim.com

Overview

Filters

Fund information

Policy

Sustainability Approach

In assets with sustainable characteristics

The Fund seeks to invest at least 70% in assets with sustainable characteristics. These include the units of collective investment schemes (including EdenTree’s range of funds) and direct holdings which meet EdenTree’s Sustainability Approach.

Investment in Funds and Collective Investment in Vehicles:

To be considered sustainable, an underlying fund needs to satisfy one of the following conditions:

1. The fund has a label under the FCA’s Sustainability Disclosure Requirements (“SDR”).
2. The fund is classified as having sustainable characteristics under SDR or a recognised overseas sustainability regulatory framework, such as the European Commission’s Sustainable Finance Disclosure Regulation (SFDR).

Investment in other Asset Classes

Any investment held by the Fund directly will need to meet EdenTree’s Sustainability Approach. Under EdenTree’s Sustainability Approach, companies and issuers are assessed in a systematic way, considering multiple dimensions of social and environmental sustainability to encompass a rounded assessment of a company’s practices.

The suitability of potential assets is assessed across six key areas of sustainable business practice: Climate Change & Environment, Employment & Labour, Human Rights, Business Ethics, Community and Corporate Governance. In addition, investments aligned to the following sustainability themes are also favoured: Education & Financial Inclusion, Health & Wellbeing, Sustainable Solutions, and Social Infrastructure.

Excluded sectors and activities:

• The Fund will avoid investment in companies and issuers which have a material involvement (10% or more) in alcohol and tobacco production, conventional weapon production, gambling, publication of violent or explicit materials, intensive farming, fossil fuel exploration and production and high interest (sub-prime) lending.
• It will also avoid companies and issuers that have exposure to the manufacture of unconventional weapons, where these are defined as nuclear, biological and chemical weapons, land mines and cluster bombs.
• The Fund will seek to avoid companies and issuers using animals to test cosmetic, beauty or household products.

Oppressive Regimes

• The Fund will avoid companies and governments with material operations in oppressive regimes.
• The Fund’s proprietary means of assessing oppressive regime risk is based on an assessment by Freedom House and Transparency International and operates on a case-by-case basis.
• For further information on our screening process please see Oppressive Regimes.

Process

With the aim of spreading risk our portfolios are well diversified and comprising up to 95-100 stocks, with a typical new holding being around 1% and no stock accounting for more than 5% of a fund. We use a broad spread of counterparties and do not participate in stock lending. We strongly believe in the merits of low portfolio turnover, believing that high trading activity acts as a drag on performance.

We pride ourselves on our independent thought and analysis, and are not afraid to adopt positions which do not conform to conventional thinking or prevailing consensus.

We do not have model portfolios or preferred stock lists, preferring to give Fund Managers the flexibility and responsibility to implement investment strategies that best match the needs of our investors. Finally, our investment process places a strong emphasis on portfolio diversification at all levels, including geographical, sector, company size and investment theme, with the aim of reducing risk.

We look for businesses that are capable of strong secular growth, but where that growth is underrated by the market and an appreciation of this will lead to a rating. Thus we expect to benefit from both underlying growth and rerating driving superior returns.

Our objective is to buy companies with high margins, high returns on capital and strong free cash flow as well as high growth. We avoid any form of creative accounting, especially the lack of conversion of profits into cash. We believe that significant leverage is toxic for shareholder returns and thus focus on low levels of leverage. We rate highly those companies that return excess capital to shareholders and avoid the temptation to make value destroying acquisitions. We take a long-term view and make investments on this basis. However, circumstances change and we keep all of our investments under review to ensure they continue to deliver against the Fund’s objectives.

Research

We undertake detailed fundamental analysis of our investments believing that structural mispricing is prevalent in small and mid-cap companies and that we can add significant value by our own due diligence and forecasting. We place a strong emphasis on company visits to really understand the value drivers of our companies. Investments are identified through a broad range of research resources both through trusted brokers and our own research.

Our Responsible Investment (RI) team regularly publish expert briefs and opinion pieces, which help to inform our clients and drive an idea generation within our investment team. The RI team also produces our flagship EdenTree Insight publications from time to time, which provide a sustainable perspective on some of the biggest challenges facing our world today and how we, as responsible and sustainable investors, can be a part of the solution. Our fund managers also regularly write on a range of industry topics, from macro-economic and geo-political viewpoints through to individual stock ideas and how they are finding opportunities that align with our responsible and sustainable investment approach. As well as our own in-house research (including special thematic reports) we use a range of sources, including independent data from ISS ESG in respect of Environmental, Social, Governance (ESG) issues, although we do not rely on ISS ratings for our decision-making process.

Resources, Affiliations & Corporate Strategies

The five person Responsible Investment (RI) Team is part of the wider Investment Team, and provides the specialist in-house resource for ESG screening, engagement, voting and thought-leadership. All members of the Investment Team are required to have an understanding of responsible and sustainable investing, and to include this into their thinking and analysis for the Responsible & Sustainable & Green fund range. The RI analysis is subject to peer review by the whole team with agreed sign off to ensure quality control and consistency. Our dedicated RI Team biographies are detailed below:  

• Carlota Esguevillas, Head of Responsible Investment – Prior to joining the firm, Carlota worked for a leading sustainability consultancy advising global companies on their ESG strategies and disclosures. She holds a First-Class Honours BA in Geography from Oxford University, a master’s certificate with distinction in Business & Human Rights from Bergen University, and the Investment Management Certificate (IMC). She is also a member of the UK Sustainable Investment and Finance Association’s (UKSIF) Industry Development Committee.
• Amelia Gaston, Senior Responsible Investment Analyst – Amelia holds a BA in Geography from Durham University and previously worked as a Responsible Investment Analyst at LGPS Central, one of the UK Pension Pools. Amelia holds the Investment Management Certificate (IMC) and CFA Certificate in ESG Investing. She leads EdenTree’s work on climate and environmental issues.
• Hayley Grafton, Senior Responsible Investment Analyst – Hayley leads on the firm's approach to corporate governance and proxy voting. She holds the Investment Management Certificate (IMC), and is a member of the StePs (Stewardship Professionals) Association. Previously, Hayley worked at Mercer, where she focused on the firm's stewardship approach and activity across portfolio funds in her role as a Sustainable Investment Specialist.
• Cordelia Dower-Tylee, Responsible Investment Analyst – Cordelia holds an MA in History from the University of Edinburgh, and a Certificate in Sustainable Finance from the University of Cambridge. She has previously worked with the International Water Management Institute and has experience in a green-focused corporate advisory firm. She leads EdenTree’s environmental work, with an emphasis on water, and supports the company’s work on governance.
• Aaron Cox, Impact Strategist – Aaron joined EdenTree in June 2022 and is Impact Strategist within the Responsible Investment Team. Prior to joining EdenTree, Aaron had roles at First State Investments (now First Sentier), Jupiter and Majedie and as a writer and researcher with a focus on ESG and sustainable investing. He started his career as a derivatives broker in Sydney.  Aaron has a BA in English from the University of New South Wales, Post Grad Certificate in Environmental Economics from SOAS and Certificate in Sustainable Investing from Harvard Business School.  He is currently undertaking a post graduate research project at Birmingham University on computational linguistic methods to identify sustainability stretch goal tensions and the risk of greenwashing and corporate misbehaviour.

ESG risk exposure is constantly monitored by our data providers, ISS & Sustainalytics, who flag potential violations of global norms. In addition, if any of our holdings breach our screens, we are immediately notified by our data providers and can then review the breach with the ultimate sanction of divestment if we deem it necessary. Furthermore, periodically stocks and instruments held within our funds are reviewed by the RI Team to ensure that they remain suitable, whilst the team monitors any negative news flow, engaging with companies to provide clarity and assess the risk level involved.

Our Responsible Investment Team hold overall responsibility of the ESG process. Whilst this involves some input from senior management, we view it as a crucial component of our investment decision-making process vis-à-vis determining a security’s suitability for portfolio inclusion on responsible grounds, that this ownership sits with the RI Team.

Our RI team conducts research and analysis from publicly available materials including:

• Company literature (annual reports, websites and sustainability reports)
• Industry or trade body publications and websites
• Non-governmental organisations (NGO) reports and websites e.g. Banktrack
• Government and academic research
• Investor benchmark initiatives

EdenTree plays a leading and longstanding role across multiple organisations. They are signatories, members and subscribers to a number of industry partnerships and initiatives including:  

Signatory organisations

• Principles of Responsible Investing (PRI);
• UK Sustainable Investment & Finance Association (UKSIF);
• Global Impact Investing Network;
• UK Stewardship Code FRC;
• Institutional Investors Group on Climate Change (IIGCC); 
• Farm Animal Investment Risk & Return (FAIRR);
• Financing a Just Transition Alliance;
• World Benchmarking Alliance; 
• Access to Nutrition Initiative;
• Access to Medicine Initiative;  

Collaborative engagement initiatives 

• PRI Advance Human Rights - Human Rights; 
• IIGCC Banks Working Group - Climate Change;
• CDP (formerly Carbon Disclosure Project); 
• Climate Action 100+ - Climate Change;
• Nature Action 100+  - Biodiversity;
• Investor Action Group on Anti-Microbial Resistance - Water & AMR;
• Valuing Water Initiative - Water;
• Investor Initiative on Hazardous Chemicals - Water & Chemicals;
• Microfibre pollution initiative - Plastics Pollution;
• 30% Club Investor Group - Diversity;
• WBA – Digital Inclusion Group - Digital rights;
• Good Work Coalition - Good work;
• Votes Against Slavery - Modern slavery
• Find it, Fix it, Prevent it initiative on modern slavery  

EdenTree believes these partnerships signals their commitment to having an active and positive role in the investment community. Collaborations are critical to driving change, whilst learning from expert sources allows them to provide more for their clients.    EdenTree also sits on UKSIF’s Analyst Committee, which advises on the development of UKSIF’s knowledge sharing programme on evolving sustainability issues. They also sit on the PRI’s Circular Economy Reference Group, which explores how investors can better integrate the principles of a circular economy into investment processes. EdenTree’s CIO, Charlie Thomas, sits on the IA’s Sustainability and Responsible Investment Committee.

Responsible Investment Advisory Panel Overview

In addition to the review provided by the RI Team, this team itself has independent oversight from an external advisory panel of senior industry practitioners with expertise in the field of responsible investment.   The EdenTree Responsible Investment Advisory Panel (“Panel”) meet three times each year to review the Responsible & Sustainable Fund portfolios, recent investment decisions and to discuss the latest responsible and sustainable research and trends.

The purpose of the Panel is to:

• Help to ensure that the EdenTree Responsible & Sustainable range of funds meet the stated aims and objectives.
• Provide advice in the formulation of policy in the light of changing social and environmental issues.   The Panel will provide advice to the RI Team including:
  • Advising on emerging issues or topics relevant to RI criteria.
  • Provide advice and guidance on individual companies or sectors, and engagement work.  

The Panel is made up of a number of industry experts, including:

• Will Oulton – Panel Chair, (former Head of RI at First Sentier)
• Mike Barry – Former Director of Sustainable Business
• Verity Mitchell - Independent Consultant, (former Director of Utilities for HSBC Global Research)
• Julian Parrott – Client Member, Ethical Futures 
• Sue Round – Chair of EdenTree Investment Management ACD Board and former CEO
• Annette Ferguson – Independent Consultant (former Head of Sustainable Business at Vodafone)
• Paul Simpson OBE – Strategic Advisor (former CEO of CDP).

Dialshifter

This fund is helping to ‘shift the dial from brown to green’ by…

Our responsibility criteria has six different considerations which assess ESG risks and reflect our commitment to responsible investment. One of the six criteria is environment and climate, including support for biodiversity, climate change impact and carbon footprint, water conservation, air pollution, manage waste, recycling, and support renewable energy.

We have four more thematic positive investment themes - one of which is sustainable solutions - this includes products and solutions, the circular economy, green finance, green buildings, renewable energy, water and waste.

Literature

• Fund overview
• Fund literature
• About EdenTree

Regulatory Notice             

To obtain further information please speak to your EdenTree representative, visit www.edentreeim.com or call our support team on 0800 011 3821. This document has been prepared by EdenTree Investment Management Limited for Financial Advisors, other intermediaries and other investment professionals only. It is not suitable for private individuals.

This document has been produced for information purposes only and as such the views contained herein are not to be taken as advice or recommendation to buy or sell any investment or interest thereto. A full explanation of the characteristics of the investments is given in the Key Investor Information Document (KIID). Any forecast, figures, opinions statements of financial market trends or investment techniques and strategies expressed are unless otherwise stated, EdenTree Investment Management’s own at the date of this document. There is no guarantee that any forecast made will come to pass. Please note that the value of an investment and the income from it can fall as well as rise as a result of market and currency fluctuations, you may not get back the amount originally invested. Past performance is not necessarily a guide to future returns.

Last amended: 11/10/23 10:10