Fund Size: £19.60m

Total screened & themed / SRI assets: £19.60

Total Responsible Ownership assets: £469.00

Total assets under management: £469.00

As at: 10/02/22

Overview

Filters

Fund information

Policy

At SVM we recognise the importance of socially responsible investing (SRI).  With the SVM All Europe SRI Fund, we are seeking to incorporate social, ethical, governance and environmental considerations into our investment process.

Our approach to SRI places emphasis on following a route of engagement.  We utilise the power that being a shareholder confers in the most constructive way possible.  We enter into a dialogue with every potential investment and company owned by the fund with a view to having a positive influence on the company concerned.  Using information derived from a combination of in-house research, dialogue with the company and external sources we identify the key issues and discuss them directly with company management, in order to affect change.

Positive screening involves the completion by our in house team of our proprietary template the content of which is derived from the principles and actions recommended by the UN Global Compact, Sustainable Development Goals and UN GRI Standards and form the basis for SVM’s ESG guidelines. Covering the environment, society and governance, we then use this information to score the company on the basis of the information they provide.  It is not our intention to set a minimum level below which a company is excluded from potential investment.  Indeed, these are the companies who often need the most assistance in formulating and implementing social and environmental policies or procedures.  However, we expect the company to demonstrate a commitment to the engagement process and to show some signs of improvement.  If after twelve months, of investment, we feel that no progress is being made we will divest of our holding.

All data collated is utilized to make sectoral comparisons to not only provide the basis for company engagement but also to allow the investment manager to assess the ESG risk embedded within the investment case.

There are some companies who already have excellent policies and procedures in place and deserve to be rewarded.  Whilst we still expect these companies to commit to the engagement process and demonstrate a willingness to improve further, we will not set any deadlines for progress.

Negative screening will be kept to a minimum as we believe that positive engagement is more influential in creating change within organisations.  By employing a minimal level of negative screening, we are giving ourselves the potential to influence more companies than a broader exclusionary policy would allow.  However, we do recognise that there are certain industries whose activities run contrary to the ideals of SRI investors.   Specifically, we do not invest in companies operating in any of the following three industries: Tobacco, Pornography and Armaments.

We recognise that investing in companies who have activities in countries with poor standards of human rights is also of major concern to investors.  Therefore, we have set out our position on this issue in our Risk Country Statement - also available on request.

Process

The fund’s ESG research process is undertaken in three stages. First, once a potential source of investment has been identified, a materiality check is conducted to identify issues of particular significance within the sector that the company operates. This process is aided by our materiality database which allows fund managers to assess the material ESG factors that are likely to impact any given investment. The data is broken down into 10 industrial sectors and 48 sub-sectors and contains the following;

• Brief ESG synopsis by sector
• Identification of material factors for environment, society and governance
• Most appropriate indicators to assess the material factors
• Links to informative research
• The UN Sustainable Development Goal or goals most negatively impacted by the material factor

The second stage is the completion of the ESG Research Template which serves as a tool and record for our engagement activities. The document allows us to address company specific ESG issues as opposed to the generic factors addressed in the materiality stage. Research conclusions are represented by a risk rating based on the perceived ESG risk for the investment as well as a commentary outlining the most relevant matters for the investment case. The score attributed is not intended to be used in the investment decision as we believe this is too crude a method to address this complex subject. Instead the scoring system is used internally as a guide for prioritising research and importantly, engagement.

The research template addresses 13 high level factors and 25 points of reference which we use as data reference points to seek better practices and policies from the companies in which we invest. All ESG analysis is undertaken in-house with the exception of governance where, due to the intensive nature of the work involved, we employ the services of proxy advisor ISS.

The culmination of this research and the final stage in the process is to reflect this work in the subsequent company engagement we undertake. Engagement not only allows us to check our research conclusions but also provides a valuable source of information not necessarily readily available in company documentation. It is through engagement that we can seek positive change as far as ESG policies, processes and strategies are concerned and by following this rigorous research process we are armed with the correct level of data and knowledge to make these discussions meaningful and successful. We believe this serves the interests of our clients in two ways from both a financial and more altruistic ESG perspective. It is a given that an investment with an unexpectedly market beating financial profile has the potential to outperform the market but at the same time there is growing evidence to suggest the same can be applied to those companies where environmental, social and governance factors show a similar positive trend. It is for this reason we use engagement to promote change and improvement where we have identified issues with the potential to be addressed. We view engagement as a long-term practice with any change achieved in terms of company practice and procedure often happening over a multi-year period. Where no progress is made the manager’s ultimate action would be to divest from the investment concerned where inaction is viewed as potentially impacting shareholder value. In practice this is a rare event as both parties are positioned to benefit from the engagement activities we undertake.

Resources, Affiliations & Corporate Strategies

Consistent with our investment philosophy and our commitment to be a responsible investor, SVM has been a signatory to the UK Stewardship Code since 2012 and the UN Principles for Responsible Investment since 2018. As part of our stewardship responsibilities we adhere to good governance principles and instruct our custodians to vote at all general meetings. We use the services of Institutional Shareholder Services (“ISS”) which provides analysis and recommendations on voting, while determining ourselves the way in which we will vote on behalf of our clients. Our votes, therefore, may differ from the ISS recommendation. SVM publish online all voting outcomes and reasons for any votes against management recommendations.

Literature

• Fund overview (including factsheet)
• SVM Responsible Investing Policy

Last amended: 08/01/24 09:05