As at: 30/09/21

Contact: adam.kelly@edentreeim.com

Overview

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Fund information

Policy

The Fund seeks to avoid investment in certain areas such as companies 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.

The Fund will seek to avoid companies with material operations in oppressive regimes. The Fund has a proprietary means of assessing oppressive regime risk, and operates this on a case by case basis.

It will also seek to avoid companies that have exposure to the manufacture of unconventional weapons where these are defined as nuclear, biological and chemical weapons, land mines and cluster bombs. Finally, the Fund will seek to avoid companies using animals to test cosmetic, beauty or household products. It will invest in pharmaceuticals companies that may conduct animal testing but will encourage the adoption of the 3R principles: refine, reduce, and replace.

Our responsible and sustainable screening captures the quality and strength of a company’s approach to sustainable business. This includes assessing a diverse range of indicators including environment and climate change, conflict minerals, custody of supply in raw materials sourcing (e.g. timber) and pollution etc. By way of example when specifically assessing corporate sustainability as it relates to climate change we would analyse key indicators such as emissions disclosure, how targets are set, whether they are science based and ambitious enough to demonstrate commitment to a low carbon economy and whether the company is providing solutions that support climate resilience, mitigation and / or adaptation.

The Fund favours companies that follow good Business Ethics, Corporate Governance, Employment & Labour practices, Environment and Climate Change Management, Human Rights, and Community Relations and is particularly positive on companies that contribute to Education, Health & Wellbeing, Social Infrastructure and Sustainable Solutions.

Process

EdenTree is a pioneer of responsible and sustainable investing and launched one of the first ethical equity funds available in the UK, in 1988. To be considered suitable for inclusion within our Responsible & Sustainable range of funds, an investment idea must meet the criteria laid out by our responsible and sustainable screening model.

Our responsible and sustainable criteria form a core part of our investment approach and are integrated into our stock selection and management processes. Our dedicated in-house team of responsible investment (RI) analysts considers each of our investments on the basis of their Environmental, Social and Governance (ESG) credentials and long-term sustainable return potential. We believe that those companies which have a well-developed approach to managing ESG risk are more likely to offer good quality, long term investment potential.

EdenTree has been a long term proponent of investing with the aim of spreading risk. Our portfolios are well diversified and comprising 50-70 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.

Research

Our RI team regularly publish expert briefs and opinion pieces, which help to inform our clients and drive 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

EdenTree has a specialist, dedicated RI Team which comprises five people.

• Neville White, Head of RI Policy & Research – Neville is the RI Team Governance lead and is responsible for policy and strategy.
• Rita Wyshelesky, Senior Responsible Investment Analyst – Rita leads on Thematic, Sustainability and Impact supporting the team with screening, engagement and research.
• Carlota Esguevillas, Senior Responsible Investment Analyst – Carlota leads EdenTree’s work on social topics such as human rights, diversity and workforce issues supporting the team with screening, engagement and research.
• Amelia Gaston, Responsible Investment Analyst – Amelia supports the team with screening, engagement and research and is the environment and climate change lead.
• Cordelia Dower-Tylee, Responsible Investment Analyst – Cordelia supports the team in all aspects of responsible investing.

Responsible and sustainable factors are fully integrated into the investment management process, with our Fund Managers and RI Team working side by side to generate ideas, analyse opportunities, create meaningful and diversified portfolios, and undertake ongoing evaluation and engagement.

Our basic ESG risk analysis is provided by ISS-ESG which provides core ESG disclosure data as well as rating each company within an industrial sector peer group across E, S & G pillars; this rating is used solely as a guide as suitability is driven by our in-house screening process.

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

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

EdenTree has been a proud signatory of the PRI since 2012. For more information on how EdenTree works with the PRI please see our PRI transparency report here and PRI Assessment Report here
Whilst asset managers are able, and often choose, to omit or hide specific sections of the PRI Transparency Report, EdenTree publish the full report for complete transparency. For the PRI Assessment Report, we also publish the full report here. In 2021, EdenTree achieved a 4 star rating for our Investment & Stewardship Policy.

Other signatory partnerships include:

• Principles of Responsible Investing;
• Institutional Investors Group on Climate Change (IIGCC);
• CDP (formerly Carbon Disclosure Project);
• Access to Nutrition Index (ATNI);
• Access to Medicines Index (ATMI);
• Business Benchmark on Farm Animal Welfare (BBFAW);
• Corporate Human Rights Benchmark (CHRB);
• Farm Animal Investment Risk & Return;
• Workforce Disclosure Initiative (WDI);
• Montréal Pledge;
• Paris Pledge;
• LSE Financing a Just Transition Alliance;
• UK Sustainable Investment & Finance Association;
• 30% Club on Diversity;
• Global Impact Investing Network;
• World Benchmarking Alliance;

We believe that these key signatory partnerships signals our commitment to having an active and positive role in our investment community, achieving more than which we can achieve ourselves. Collaborations are critical to achieving this, whilst learning from expert sources allows us to provide more for our clients and supporting initiatives truly helps to gain momentum. We have been a signatory to the UK Stewardship Code since inception (Tier I).

Responsible Investment Panel Review

The Responsible Investment Advisory Panel (“Panel”) meet three times each year to review the Responsible & Sustainable Fund portfolios, the 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 in a number of ways:

• 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:

• The Right Reverend Dr Nigel Peyton – Panel Chair
• Mike Barry – Former Director of Sustainable Business
• Julie McDowell – Independent Consultant
• Julian Parrott – Client Member, Ethical Futures
• Bill Seddon – Former CEO CFB Methodist Church
• 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)

Literature

• Fund Factsheets
• Fund Policy details
• Approach
• Insights

Last amended: 08/02/24 11:28