Fund Name | SRI Style | Product | Region | Asset Type | Launch Date | |
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Rathbone Ethical Bond |
Ethical | OEIC/Unit Trust | UK | Fixed Interest | 06/05/2002 | |
Fund Size: £2160.92m Total screened & themed / SRI assets: £2427.64 Total assets under management: £11400.00 As at: 31/03/23 Contact: rutm@rathbones.com |
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OverviewOur fund’s ethical and sustainability criteria are applied by Rathbone Greenbank Investments, an ethical research division of our company, which cannot be influenced by our fund managers. Companies are assessed against positive and negative social and environmental criteria. For us to invest in a company, it must satisfy at least one of the following: strong employment practices, sustainable environmental practices or community engagement and commitment to human rights.
Every investment that goes into the fund needs to be fundamentally sound, from a financial perspective. Therefore, no investments are in the fund only because of their social and environmental outcomes. However, the fund does aim to have a positive social/environmental impact. |
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FiltersFund informationSustainabilityEnvironmental policy Sustainability policy Limits exposure to carbon intensive industries Resource efficiency policy or theme Sustainable transport policy or theme Environmental damage and pollution policy Waste management policy or theme Favours cleaner, greener companies Nature & BiodiversityDeforestation / palm oil policy Plastics policy / reviewing plastics Unsustainable / illegal deforestation exclusion policy Biodiversity / nature policy Responsible palm oil policy Genetic engineering exclusion Climate Change & EnergyNuclear exclusion policy Coal, oil & / or gas majors excluded Climate change / greenhouse gas emissions policy Invests in clean energy / renewables Fracking and tar sands excluded Clean / renewable energy theme or focus Arctic drilling exclusion Fossil fuel reserves exclusion Energy efficiency theme TCFD reporting requirement Fossil fuel exploration exclusion - direct involvement Fossil fuel exploration exclusion – indirect involvement Targeted Positive InvestmentsInvests > 5% in green bonds Human RightsHuman rights policy Child labour exclusion Oppressive regimes (not free or democratic) exclusion policy Modern slavery exclusion policy Social / EmploymentSocial policy Diversity, equality & inclusion Policy (fund level) Labour standards policy Favours companies with strong social policies Mining exclusion Meeting Peoples' Basic NeedsWater / sanitation policy or theme Demographic / ageing population theme Invests > 5% in social housing Ethical Values Led ExclusionsEthical policies Animal welfare policy Animal testing exclusion policy Tobacco and related product manufacturers excluded Armaments manufacturers avoided Alcohol production excluded Gambling avoidance policy Pornography avoidance policy Gilts / government bonds - exclude some Civilian firearms production exclusion Banking & FinancialsPredatory lending exclusion Exclude banks with significant fossil fuel investments Governance & ManagementAvoids companies with poor governance UN sanctions exclusion Fund GovernanceESG integration strategy Employ external (fund) oversight or advisory committee External (fund) committee has veto powers Asset Size & MetricsOver 50% large cap companies Invests in small, mid and large cap companies Invests mostly in large cap companies Invest in supranationals How The Fund WorksStrictly screened ethical fund Positive selection bias Negative selection bias Norms focus Combines norms based exclusions with other SRI criteria Combines ESG strategy with other SRI criteria Significant harm exclusion SRI / ESG / Ethical policies explained on website All assets (except cash) meet published sustain'y criteria Participated in sustainability solutions IPOs or new issuances Impact MethodologiesAims to generate positive impacts (or 'outcomes') Positive environmental impact theme Positive social impact theme Invests in environmental solutions companies Invests in social solutions companies Invests in sustainability / ESG disruptors Labels & AccreditationsRSMR rated (OEIC funds only) Eurosif Transparency SFDR Article 8 fund / product (EU) Intended Clients & Product OptionsFaith friendly Intended for investors interested in sustainability Available via an ISA (OEIC only) Fund management company informationAbout The BusinessESG / SRI engagement (AFM company wide) Responsible ownership / stewardship policy or strategy (AFM company wide) Diversity, equality & inclusion engagement policy (AFM company wide) Vote all* shares at AGMs / EGMs (AFM company wide) In-house diversity improvement programme (AFM company wide) Vulnerable client policy on website (AFM company wide) Invests in new sustainability linked bond issuances (AFM company wide) Offer unstructured intermediary sustainable investment training ResourcesIn-house responsible ownership / voting expertise Employ specialist ESG / SRI / sustainability researchers Use specialist ESG / SRI / sustainability research companies Collaborations & AffiliationsPRI signatory UKSIF member Climate Action 100+ or IIGCC member Fund EcoMarket partner GFANZ member (AFM company wide) TNFD forum member (AFM company wide) Investment Association (IA) member AccreditationsUK Stewardship Code signatory (AFM company wide) PRI A+ rated (AFM company wide) Engagement ApproachEngaging on climate change issues Engaging with fossil fuel companies on climate change Engaging to reduce plastics pollution / waste Engaging to encourage responsible mining practices Engaging on biodiversity / nature issues Engaging to encourage a Just Transition Engaging on human rights issues Engaging on labour / employment issues Engaging on diversity, equality and / or inclusion issues Engaging on governance issues Engaging on mental health issues Engaging on responsible supply chain issues Company Wide ExclusionsControversial weapons avoidance policy (AFM company wide) Tobacco avoidance policy (AFM company wide) Fossil fuel exclusion policy (AFM company wide) Climate & Net Zero TransitionEncourage carbon / greenhouse gas reduction (AFM company wide) Net Zero commitment (AFM company wide) ‘Forward Looking Climate Metrics’ published / ITR (AFM company wide) Carbon offsetting – do NOT offset carbon as part of net zero plan (AFM company wide) Net Zero - have set a Net Zero target date (AFM company wide) Voting policy includes net zero targets (AFM company wide) Committed to SBTi / Science Based Targets Initiative TransparencyPublish full voting record (AFM company wide) Publish responsible ownership / stewardship report (AFM company wide) Full SRI policy information available on request Paris Alignment plan publicly available (AFM company wide) Net Zero transition plan publicly available (AFM company wide) |
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PolicyIn general terms, we define ESG (environmental, social and governance) as an investment strategy which believes that long-term growth can be achieved by companies which conduct their business and apply capital responsibly, giving full consideration to a range of social, environmental and ethical issues as they might affect interested parties (employees, customers, share/bond holders, etc) as well as wider society.
The Rathbone Ethical Bond Fund offers the opportunity to invest in a fixed income fund with high-quality investment grade bonds while applying a broad range of both positive and negative screening criteria that will appeal to consumers with ethical concerns.
The fund applies key negative exclusion criteria to issuers of corporate bonds before ensuring that any issuers not in breach of these satisfy at least one of the fund’s positive activity requirements. The fund manager uses the services of Rathbone Greenbank Investment’s (Greenbank) in-house Ethical, Sustainable and Impact (ESI) research team.
The fund’s ethical criteria were developed prior to the launch of the fund in May 2002 with significant guidance from Greenbank. The criteria continue to be reviewed and, where necessary, evolved as part of a formal annual review process. The last substantive changes to the fund’s criteria were made in 2017.
Greenbank’s ESI research team maintains a proprietary database of company ethical profiles. The fund manager can access this database at all times and may purchase a bond from a company which has been previously reviewed and approved.
Companies are assessed against a number of positive and negative top-level social and environmental criteria, comprising over a 100 distinct sub-criteria.
Ratings are assigned on a scale of 1-3 for sub-criteria (each weighted for relevance according to the company’s sector in terms of its social and/or environmental impacts) and a cumulative score is then derived for each of the top-level criteria, again on a scale of 1-3. Assessment is carried out on both a bottom-up (looking in detail at the specific merits of their individual activities and how they address corporate responsibility issues) and a top-down basis (evaluating this performance in comparison to their peers in terms of the range of corporate responsibility issues covered and quality of response).
The ESI research team also applies a sustainability overlay to its assessment of companies. This recognises key sustainable development trends and seeks to identify investable companies with significant exposure. These themes are aligned with the 17 UN Sustainable Development Goals, but focus on eight aspects of greatest relevance to companies and the private sector.
While this detailed methodology is applied with respect to all companies screened by the Ethical, Sustainable & Impact Research Team (for whatever purpose), it is simplified when applied to the fund’s universe as the fund’s ethical criteria require a simple ‘Yes/No’ evaluation when considering if an issuer is in breach of any of the exclusion criteria, or meets any of the positive aspects.
In addition, an annual review meeting is attended by the fund manager, the Ethical, Sustainable & Impact Research Team and senior investment and marketing directors from both Rathbone Unit Trust Management and Rathbone Greenbank.
In regard to intended positive environmental or social impacts and outcomes, we believe in our risk based approach to investment management, and it is clear that ESG factors are key risks, so must be considered at all times, irrespective of the ethical stance of the mandate or the underlying investor. However, from an anecdotal standpoint we have seen many companies underperforming or even defaulting because of ESG issues, and the manager of the Ethical Bond Fund often cites Enron as an example, “Governance in particular has led companies such as Enron to default. Taking into consideration environmental and social factors also give us a better idea of a potential threat to cash flows, and therefore credit fundamentals. Because of the asymmetry of risk/return of bond investments, we believe considering ESG factors enhances risk/adjusted returns.”
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ProcessA summary of the decision making flow on the fund is included below for illustrative purposes:
The fund manager has the ultimate control of investment decisions on the fund but inclusion in the fund is dependent on the adherence of the relevant investment to the funds ethical criteria.
ESG Research The fund’s ethical investment criteria are applied by Greenbank’s Ethical, Sustainable and Impact (ESI) Research Team. This team is part of the wider Rathbones group but is independent from Rathbone Unit Trust Management, ensuring that ethical screening decisions are independent from the investment team. Companies are assessed against a number of positive and negative top-level social and environmental criteria, comprising over a hundred distinct sub-criteria.
Companies are assessed on both a bottom-up (looking in detail at the specific merits of their individual activities and how they address corporate responsibility issues) and a top-down approach (evaluating this performance in comparison to their peers in terms of the range of corporate responsibility issues covered and quality of response).
The ESI research team maintains a proprietary database containing profiles on all issuers held by the fund, or which have been proposed for screening. Research is conducted using a range of sources including specialist ESG research, third party ESG data, companies’ own disclosures, company meetings, NGO insights and daily news monitoring. These also include all of the below:
When considering if a company’s products and services meet the fund’s positive criteria relating to the “Provision of beneficial products and services” we look for activity alignment with one or more of Greenbank’s eight sustainable development themes.
In addition, the ESI Research Team subscribes to MSCI’s ESG Manager and has access to its ESG Controversies and ESG Ratings tools. These are used as an adjunct to the team’s in-house research rather than relied on in their raw form.
We currently integrate MSCI and Fitch ESG data as part of our credit work and fully include ESG risk data in the credit selection process. We also use ESG data to shape our investment themes and to identify material risks / opportunities. For example, we used banks fossil fuel lending data in order to reduce the banks most exposed to climate change risk.
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Resources, Affiliations & Corporate Strategiesa) Ethical research for the fund is carried out by researchers working for Rathbone Greenbank Investments, the specialist ethical, sustainable and impact (ESI) investment unit of Rathbones Group Plc. The team at Rathbone Greenbank has been at the forefront of developments in the ethical investment industry since 1992, launching one of the first bespoke ethical portfolio services in 1997. The fund’s ethical and sustainability framework and methodology have been developed with Rathbone Greenbank, utilising their many years’ experience of managing private client portfolios as well as providing screening services for the other Rathbones’ sustainable funds (including Rathbone Greenbank Multi-Asset Portfolio funds and the Rathbone Greenbank Global Sustainability Fund).
(b) The fund’s policy and strategy are reviewed annually at a meeting which takes place before the annual short report is issued in May. This involves the ethical researchers, fund manager and representatives from Rathbone Greenbank Investments and Rathbone Unit Trust Management. The portfolio, ethical criteria, investment process and research process are all reviewed at this time. The fund manager will initially identify corporate bonds that represent an attractive investment proposition. The entities issuing these bonds will then be investigated by Rathbone Greenbank’s ethical researchers. Issuers identified as being suitable will then be subject to the consensus approval of at least two senior members of the Rathbone Greenbank team.
(c) The investment team for the Rathbone Ethical Bond Fund is headed up by Fund Manager Bryn Jones who is also Head of Fixed Income. Bryn Jones has been managing the Rathbone Ethical Bond Fund since November 2004 and reports to Tom Carroll Chief Investment Officer.
Bryn Jones is supported in his duties by a ‘deep team’, the most immediate element of which is the wider fixed income investment team, which is comprised of Stuart Chilvers (Fund Manager), Emmanouil Makrygiannakis, Elisa Bellantonio, Adoo Narang (Credit Analysts) and Sally Hoang (Fixed Income Research Analyst – maternity cover). The investment team also utilises the resources of the wider group, leveraging from areas such as our investment committee structure and dedicated research function.
Bryn is the Head of Fixed Income for Rathbones and is lead manager on the Rathbone Ethical Bond Fund, the Rathbone Strategic Bond Fund and manager of institutional mandates. He joined Rathbones in November 2004 from Merrill Lynch, where he managed $2 billion of fixed income assets.
Bryn is a member of the Rathbone Strategic Asset Allocation Committee, Non-Executive Chairman of Rathbones’ Fixed Income Committee, and adviser to the Rathbone Banking Committee. He is a WMA representative for the HMT DMO’s (Her Majesty’s Treasury- Debt Management Office) Gilt market consultation process.
Stuart works with Bryn Jones, assisting in the management of the Rathbone Ethical Bond Fund and the Rathbone Strategic Bond Fund. He is also the lead fund manager of the Rathbone High Quality Bond Fund.
Stuart joined Rathbones in September 2017 and was made an Assistant Fund Manager in January 2020, then Fund Manager in January 2022. Previously, he gained three years industry experience at Brown Shipley.
He graduated from Bath University with a first-class Bachelor’s degree in Mathematics. He is a CFA Charterholder and also holds the CISI Chartered Wealth Manager qualification, having won the CISI Financial Markets & CISI Chartered Wealth Manager Qualification awards at the annual CISI awards in 2016 & 2017 respectively. He was named in the 2018 Citywire Top 30 under 30 investment management awards.
Rathbone Greenbank ESI research team –specialists responsible for the ethical research conducted for the fund
Kate is head of Rathbone Greenbank’s ethical, sustainable and impact research team. She oversees the development and implementation of the team’s sustainability assessment framework, analysing investments against a range of environmental, social and governance criteria. She also monitors emerging sustainability themes, sets priorities for Greenbank’s stewardship and engagement activities and has developed the team’s systems for the measurement and reporting of portfolio sustainability and impact performance. She joined Rathbones in 2007 after graduating from the University of Bristol with a masters in Philosophy and Mathematics.
Sophie joined Rathbone Greenbank in January 2020 as a senior ethical, sustainable and impact researcher and has recently moved into a new role as Greenbank’s Stewardship and Engagement Lead. She is responsible for the delivery of key engagement projects, building relationships with external partner organisations, and shaping Greenbank’s engagement strategy, priorities and reporting. She started her career at Barclays Bank in 2013 and most recently spent three years at KKS Advisors, a strategy consultancy in London where she led a team specialising in sustainable and impact investment. She holds an MSc from Imperial College London in Environmental Technology and a BSc in Geographical Sciences from the University of Bristol.
Perry joined Rathbones in 1999 after a career in the IT industry. He acts as adviser to Rathbone Greenbank’s ethical, sustainable and impact research team, which he headed until 2021. He was responsible for establishing the team’s proprietary research database and continues to be involved in its development. He also conducts thematic research into key responsible investment issues as well as monitoring corporate performance on environmental, social and governance matters. Perry was a founder member of Rathbone Greenbank in 2004.
Emma joined Greenbank in September 2022 and is responsible for analysing investments against a range of environmental, social and governance criteria, as well as for conducting thematic research into key responsible investment issues. Emma has over 10 years’ experience working in business valuation, sustainability and social investment, predominantly within professional services firms PwC and Grant Thornton. Emma holds a BSc (Hons) in Natural Sciences (Physics with Philosophy) from Durham University and is also a chartered accountant (ACA).
Kai joined the Ethical, Sustainable & Impact Research Team in March 2019 after graduating from the University of Cambridge with a BA in Law. He responsible for assessing the social and environmental performance of companies.
Katherine joined the investment team at Rathbone Greenbank as an intern in March 2020 before moving into the ethical, sustainable and impact research team in January 2021. She is responsible for analysing investments against a range of environmental, social and governance criteria as well as assisting with engagement projects. She holds a BSc in Anthropology from Durham University and a CFA Institute Certificate in ESG Investing.
Charlie joined Rathbone Greenbank in January 2021 after graduating from the University of Warwick with a BASc (Bachelor of Arts and Sciences) in Economic Studies and Global Sustainable Development. He is responsible for assessing the social and environmental performance of companies.
Rathbones Stewardship team
Matt Crossman is the Stewardship Director for the Rathbones group. Overseeing the work of the Stewardship Committee, he ensures active voting at company AGMs, whilst also being the group leading on the integration of Environmental, Social and Governance (ESG) factors into the investment process. He also leads thematic engagement with companies on ESG issues, especially those undertaken via the UN backed through the Principles for Responsible Investment’s Collaboration Platform. Matt is a graduate of the University of Bristol where he studied law, with a particular interest in the administration of environmental law, and also has post-graduate qualifications in Sustainable Development theory and practice. He is a trustee of LoveBristol, and urban regeneration charity, and served on the board of the Ecumenical Council for Corporate Responsibility between 2007 and 2012.
The Stewardship team is led by Matt Crossman and comprises of:
List of RI affiliations/memberships:
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Literature
Last amended: 09/03/24 09:00 |
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05/03/2024