Fund Size: £671.00m

Total screened & themed / SRI assets: £14550.00

Total Responsible Ownership assets: £14550.00

Total assets under management: £14550.00

As at: 31/03/23

Overview

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Fund information

Policy

The Stewart Investors investment team only invests in high-quality companies that are well positioned to both contribute to, and benefit from, sustainable development. This means that companies with material exposure to harmful or controversial products and services are naturally avoided. Investing in companies that fail to discharge their environmental stewardship and human rights responsibilities is also inconsistent with the team investment philosophy. 

All harmful business activities are defined and publicly disclosed on our website. We have established a materiality threshold for harmful or controversial activities at 5% of revenues – 0% threshold for manufacture of tobacco products and controversial weapons. In exceptional circumstances, we may invest in companies where the exposure is above the 5% threshold. In these cases there will be full disclosure on the rationale for investment. The reasons might include indirect involvement, for example, providing safety products to the fossil fuel or defence industry. Exceptions may also relate to legacy activities which are being wound down. In these cases the analysts will engage with the company and encourage them to exit those activities. There is also a group-wide policy prohibiting investments that do not adhere to international conventions, including cluster munitions, land mine manufacturers, sanctioned and high-risk countries and tobacco manufacturers.

The investment team screens the portfolios quarterly using Sustainalytics to ensure that each company held continues to meet the global norms for best business practices and is not breaching the list of harmful or controversial products and services. Checks are also completed pre and post-trade using the order management system, these include breaches of the UN Human Rights Norms for Businesses and the UN Global Compact Principles. The team receives controversy reporting from RepRisk on all shortlisted and held companies. Where issues are flagged by these services, the analysts will investigate the controversy and, if genuine, will engage with the company to improve practices. If the engagement is unsuccessful the team will divest.

We aim to create positive environmental and social outcomes across a broad range of factors by avoiding companies that are directly involved in harmful and controversial products and services and investing in companies that contribute to, and benefit from, sustainable development. Companies are selected from the bottom-up and have exposure to a broad range of themes including climate action, renewable energy, energy, waste and water efficiency, health and wellbeing, financial inclusion, education and employment, fair wages, sanitation, diversity, equity and inclusion.

Stewardship, engagement and voting, is also used to improve outcomes. Recent engagement topics have included climate change, remuneration, gender diversity, sustainability of soy and palm oil, lead and VOC levels in paint, living wage, recycling and packaging, plastic pellets and deforestation.

Process

Sustainability is core to our investment philosophy and integrated into our investment process. We do not have a separate team that looks at sustainability – every investment team member analyses the sustainability positioning of a business, and is also responsible for engaging with companies.

We only invest in high-quality companies that contribute to, and benefit from, sustainable development. We define development as sustainable if it furthers human development and has an ecological footprint that respects planetary boundaries. All members of the investment team sign our Hippocratic Oath, pledging to uphold the principles of stewardship.

We approach sustainability as a means to mitigate risks and as a driver of investment returns. Integrating sustainability into our analysis is a natural extension of having a long-term investment horizon; the sustainability headwinds and tailwinds that affect companies are different to the shorter-term risks that businesses face.

Our consideration of sustainability is holistic; it includes ESG but is more than ESG. We consider financial sustainability – conservatism around the balance sheet, for example – and stewardship by management – the treatment of all stakeholders through a crisis, for example – to be as essential to the sustainability positioning of a company as the product or service the company sells.

When assessing a company’s sustainability we ask ourselves the following questions:

• Products and services
  Do the products and services make a valuable contribution to sustainable development?
• Context
  Can the company benefit from sustainability tailwinds and negative headwinds?
• Company ethos
  Do the culture and values embody sustainability and continuous improvement?
• Operational impact
  Is the company trying to reduce impacts from its operations?

We avoid companies that do not contribute to sustainable development and we engage with companies to improve sustainability outcomes.

We have established a materiality threshold for harmful or controversial activities at 5% of revenues – 0% for tobacco production and controversial weapons. At Stewart Investors, we explicitly seek to invest in companies that are making a positive contribution to society. You can read our position statement in full on the website.

We supplement our internal research around sustainability using Sustainalytics. At the end of each quarter, portfolios are checked to ensure companies meet global norms for best practices and raise no exceptions against our thresholds for harmful activities. We also receive controversy reporting from RepRisk.

Issues such as climate change, biodiversity and water, human rights and modern slavery, and diversity and inclusion are integrated into our investment selection and engagement and voting processes. Our approach to climate change is explained in detail in our recently published report. Our approach to biodiversity and water is reflected in our selection of companies that mitigate their impact on the natural environment or provide services/products that improve efficiencies. We have engaged on a number of related issues such as palm oil, deforestation, plastic waste and the use of harmful chemicals. Human rights and modern slavery are a risk throughout the supply chain of our investee companies. Our approach is to focus on quality companies that treat their employees well and manage the risks in their supply chain effectively. Where we identify problems we engage. Our recent collaborative engagement on conflict minerals in the semi-conductor supply chain is a good example of this. Our approach to diversity is explained in our statement and article about what we have done so far. We will provide updates on related activities on these issues, amongst others, in our annual report.

Resources, Affiliations & Corporate Strategies

The investment analysts are responsible for all company analysis including ESG, identifying engagement priorities, monitoring and engaging our investments and for making all voting decisions. There is no specific dedicated resource purely for ESG/RI considerations. We carry out the majority of research ourselves. Specialist third-party research is commissioned to deepen and broaden the team's understanding of complex sustainability issues.

Stewart Investors is involved with the following initiatives:

Supporting a longer-term, more inclusive industry

• Altiorem – supporting the world's first community-built sustainable finance library since 2020
• Future Asset – helping to promote careers in finance to high school girls
• GAIN – (Girls Are Investors) improving gender diversity in asset management
• Intentional Endowments Network
• Mission Investor Exchange
• Pensions for Purpose
• The Big Exchange – Founding supporter

Supporting collaborative action

• Access to Medicine
• IAST APAC – Investors Against Slavery and Trafficking Asia Pacific
• India Plastics Pact – commissioned research and engagement on plastics waste in India
• Tobacco-Free Finance Pledge
• PRI Collaborative Platform leading collaborations on micro-insurance, plastic pellets and conflict minerals

Supporting the community and resource conservation

• The Maitri Trust – grant-making charity established by Stewart Investors that supports improvement in government school and pre-school education sectors in India and South Africa
• The Tar-Ra Fund (Maitri’s Australian equivalent) which was also independently founded
• The Centre for Science and Environment (CSE) and the seeding of their training centre
• Net Zero Asset Managers Initiative
• Following on from commissioned research and engagement on plastics waste in India we have part-funded WRAP to develop and launch an India Plastics Pact
• Carbon Disclosure Project
• FAIRR – collaborative investor network that raises awareness of the ESG risks and opportunities brought about by intensive livestock production
• Investor Support for Deforestation
• Parivaar – humanitarian organisation providing care and overall development to highly vulnerable children
• Leuchie – provides respite care for patients with neuro-degenerative conditions in the UK

Supporting industry transparency

• Portfolio Explorer
• Responsible Investment Association of Australasia (RIAA)
• Responsible Investment Association of Canada (RIAC)
• UK Sustainable Investment and Finance Association (UKSIF)
• EUROSIF – Signatory
• Towards Sustainability – making sustainability in finance the norm

More widely, at a First Sentier Investors Group level, we support a number of industry and trade groups that are focused on developing and improving Responsible Investment. These include:

• Cambridge University Investment Leaders Group – Founder member & chair of working group
• Climate Action 100+ – Supporting investor for 3 companies
• EUROSIF – Chair
• Finance for Biodiversity pledge – Signatory
• Financial Services Council – Director of board and member of ESG working group, investment expert group and fund management board committee
• First Sentier MUFG Sustainable Investment Institute
• IGCC – Member
• Institute Chartered Accounts in England and Wales (ICAEW) – Member
• Investors Against Slavery & Trafficking (APAC) – Chair
• Japan Stewardship Initiative - Signatory
• Japan Sustainable Investment Forum - Signatory
• London Stock Exchange Group – Member of ESG advisory committee, Member of Sustainable Investment Committee
• Net Zero Asset Managers Initiative
• PRI – Signatory
• Prince’s Accounting for Sustainability (A4S) – Expert panel member
• Responsible Investment Association of Australasia – Member
• TCFD supporter
• Tobacco Free Portfolios Pledge – Signatory
• UK Investment Association – Member of sustainability & responsible investment committee and chair of standards & definitions working group
• UK Stewardship Code – Signatory
• UK Sustainable Investment Forum – Member
• Women in Sustainable Finance - Member
• 30% Club, Australia – Member
• 40:40 Vision – Member
• In November 2022 First Sentier Investors became a certified B Corporation (B Corp)

A list of the initiatives First Sentier Investors actively support and engage with is available on the First Sentier Investors website.

Dialshifter

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

• Investing in companies contributing to sustainable development
• Avoiding companies engaged directly in harmful and controversial products and services
• Engaging and voting to improve companies’ environmental and social policies and processes and practices (including leading collaborative engagements)
• Promoting transparency and accountability
• Researching and knowledge sharing on sustainable investing.

Our organisation is helping to support the Paris Climate Agreement and the Race to Net Zero by…

engaging with investee companies on their net zero targets and action plans. Creating transparent climate change reporting and sharing our learning with clients, prospects and the industry. Given our investment approach is committed to allocating capital to high-quality companies that are developing and implementing solutions to alleviate climate change and biodiversity loss, while not investing in fossil fuel companies, our portfolio are c.90% lower in carbon than their corresponding benchmarks, free of fossil fuel extraction companies, and have more than 50% of companies contributing to climate change solutions.

Literature

• Fund literature (including factsheet)
• Fund Policy
• ESG Policies
• Hippocratic Oath
• Sustainable Funds Group Microsite

Please Note:

SRI Policy information is outlined in the prospectus under the investment strategy section. A copy of the prospectus can be found on our website:

https://www.stewartinvestors.com/uk/en/intermediary/our-strategies.html

Large cap companies are considered to those with a market capitalisation value of more than US$10bn.

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Disclaimer

This material is for general information purposes only. It does not constitute investment or financial advice and does not take into account any specific investment objectives, financial situation or needs. This is not an offer to provide asset management services, is not a recommendation or an offer or solicitation to buy, hold or sell any security or to execute any agreement for portfolio management or investment advisory services and this material has not been prepared in connection with any such offer. Before making any investment decision you should conduct your own due diligence and consider your individual investment needs, objectives and financial situation and read the relevant offering documents for details including the risk factors disclosure. Any person who acts upon, or changes their investment position in reliance on, the information contained in these materials does so entirely at their own risk.

We have taken reasonable care to ensure that this material is accurate, current, and complete and fit for its intended purpose and audience as at the date of publication. To the extent this material contains any measurements or data related to environmental, social and governance (ESG) factors, these measurements or data are estimates based on information sourced by Stewart Investors from third parties including portfolio companies and such information may ultimately prove to be inaccurate. No assurance is given or liability accepted regarding the accuracy, validity or completeness of this material and we do not undertake to update it in future if circumstances change.

Selling restrictions

In the EU, this material is a marketing communication. The fund(s) mentioned here may or may not be registered for marketing to investors in your location. If registered, marketing may cease or be terminated in accordance with the terms of the EU Cross Border Distribution Framework.

Certain funds referred to in this material are identified as sub-funds of First Sentier Investors Global Umbrella Fund plc, an umbrella investment company registered in Ireland (“VCC”). Further information is contained in the Prospectus and Key Information Documents (KID) which are available in English, German, French, Danish, Spanish, Italian, Dutch, Norwegian and Swedish, along with a summary of investor’s rights, free of charge by writing to: Stewart Investors, 1 Grand Canal Square, Grand Canal Harbour, Dublin 2, Ireland or by telephoning +353 1 635 6798 between 9am and 5pm (Dublin time) Monday to Friday or by visiting www.stewartinvestors.com. Telephone calls may be recorded.

About First Sentier Investors

References to ‘we’, ‘us’ or ‘our’ are references to First Sentier Investors, a global asset management business which is ultimately owned by Mitsubishi UFJ Financial Group, Inc (MUFG). Our investment team operates under the trading name of Stewart Investors which is part of the First Sentier Investors Group.

This material may not be copied or reproduced in whole or in part, and in any form or by any means circulated without the prior written consent of Stewart Investors.

We communicate and conduct business through different legal entities in different locations. This material is communicated:

• in the United Kingdom by First Sentier Investors (UK) Funds Limited, authorised and regulated by the Financial Conduct Authority (FCA ref no. 143359; Registered office: Finsbury Circus House, 15 Finsbury Circus, London EC2M 7EB; Company no. 2294743).
• in the European Economic Area by First Sentier Investors (Ireland) Limited, authorised and regulated in Ireland by the Central Bank of Ireland (CBI ref no. C182306; Registered office: 70 Sir John Rogerson’s Quay, Dublin 2, Ireland; Company no. 629188).
• in other jurisdictions, where this document may lawfully be issued, by First Sentier Investors International IM Limited, authorised and regulated in the UK by the Financial Conduct Authority (FCA ref no. 122512; Registered office: 23 St. Andrew Square, Edinburgh, EH2 1BB; Company no. SC079063).

To the extent permitted by law, MUFG and its subsidiaries are not liable for any loss or damage as a result of reliance on any statement or information contained in this document. Neither MUFG nor any of its subsidiaries guarantee the performance of any investment products referred to in this document or the repayment of capital. Any investments referred to are not deposits or other liabilities of MUFG or its subsidiaries, and are subject to investment risk, including loss of income and capital invested.

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Last amended: 28/08/23 02:13