Scottish Widows Schroder Sustainable Multi-Factor Equity Pn
SRI Style:
Sustainability Tilt
SDR Labelling:
-
Product:
Pension
Fund Region:
Global
Fund Asset Type:
Equity
Launch Date:
23/11/2020
Last Amended:
Jan 2025
Dialshifter (
):
Fund Size:
£m
ISIN:
GB00BKYS0C12
Objectives:
We are factor investors leveraging financial and statistical principles to generate returns, focusing on factors like value, momentum, profitability, and low volatility. ESG data is integral to our approach, offering new signals for improving portfolios’ risk/return profiles. Using a scientific framework, we assess both traditional and sustainability factors to ensure their effectiveness. ESG influences investment decisions by defining the investable universe, excluding unsustainable industries (e.g., tobacco, weapons, coal), and embedding sustainability into portfolio construction. For example, portfolios are constrained to maintain a carbon footprint below 50% of the benchmark. ESG factors, consuming about 25% of the active risk budget, enhance stock selection through SustainEx™ and governance metrics. Governance tilts the portfolio toward companies addressing management-shareholder agency issues. Overall, our ESG integration and exclusions deliver sustainability outcomes while avoiding exposure to socially irresponsible areas. This systematic integration aligns with our mission to provide diversified, differentiated, and responsible investment portfolios.
Sustainable, Responsible
&/or ESG Overview:
This Pension product is linked to the "Schroder Sustainable Multi-Factor Equity" fund. The following information refers to the primary (OIEC) fund.
The Schroder Sustainable Multi-Factor Equity (‘SMFE’) Fund is a systematic global equity fund in which the manager aims to deliver an improved ESG outcome whilst also achieving excess return over the MSCI All Country World Index on a rolling 3–5 year basis and limiting index-relative risk although this is not guaranteed over this, or any other, period.
We incorporate ESG into the investment process in several ways to deliver a diverse set of ESG outcomes to clients:
- Sustainability as a factor: Full integration of SustainExTM, a systematic process to calculate and examine the social impact of corporate activities.
- Diversified Governance factor: Quantitatively assess corporate governance strengths and weaknesses.
- 50% Carbon footprint reduction: Limit overall carbon intensity less than half that of the benchmark.
- Stock exclusions: Exclusion of the following industries and sources of revenues: Tobacco, Weapons, Gambling, Tar sands, Thermal Coal and Coal-Fired Power Generation.
Primary fund last amended:
Jan 2025
Information directly from fund manager.
Fund Filters
Sustainability - General
Funds that have policies that consider (environmental and social) sustainability issues. Strategies vary but are likely to consider environmental issues like climate change, carbon emissions, biodiversity loss, resource management, environmental impacts; and social issues like equal opportunities, human rights, labour standards, diversity and adherence to internationally recognised codes. See fund information.
Environmental - General
Funds that have policies which relate to environmental issues. These will typically set out the fund's stance on issues such as pollution, climate change, resource management, biodiversity loss, carbon emissions, plastics and/or additional environmental impacts. Strategies vary. See fund information for further information.
Funds that limit or 'reduce' their exposure to carbon intensive industries (ie sectors which are major contributors to climate change. Funds vary - some funds may be 'underweight' in this area which means they may have some investment in highly carbon intensive areas. Funds of this kind may choose companies they consider to be 'best in sector' and encourage ever higher standards. Strategies vary. See fund information for further details.
Climate Change & Energy
Funds that have policies (documented strategies that explain their position on) climate change related issues such as greenhouse gas/carbon emissions, net zero, transitioning to lower carbon. Strategies vary. Read fund details for further information.
Funds that avoid companies involved in fracking and tar sands - which are widely regarded as controversial methods of oil and gas extraction. Strategies vary. See fund information for further information.
Funds that avoid investing in companies with coal, oil and gas reserves. See fund information for further details.
A core element of these funds will aim to encourage the transition to lower carbon activities through responsible ownership / stewardship / engagement / voting activity
Ethical Values Led Exclusions
Companies are excluded if they are involved in any aspect of the production chain for tobacco products, including cigarettes, vaping, e-cigarettes, chewing tobacco and cigars.
Companies are excluded if they make more than 5% of their revenue from the manufacture, sale or distribution of tobacco products including cigarettes, vaping, e-cigarettes, chewing tobacco and cigars.
Banking & Financials
Find funds that include banks as part of their holdings / portfolio.
Funds that do or may invest in insurance companies.
Fund Governance
Find funds that factor in 'environmental, social and governance' issues as part of their investment decision making process. A focus on 'ESG' typically means a fund is carrying out additional research to help reduce ESG related risks. It does not necessarily mean a focus on sustainability. Strategies vary. See fund literature.
Asset Size
Find funds that invests more than half of their money into what are commonly regarded as 'large companies'. This will typically mean that the market capitalisation (or value) of the companies they hold is in excess of £5 to £10 billion.
Impact Methodologies
Funds that aim to help or support the delivery of positive social or environmental impacts (or societal/real world outcomes) by investing in companies they regard as beneficial to people and / or the planet. Strategies vary. See fund literature for further information.
How The Fund Works
Find funds that focus on finding and investing in companies with positive / beneficial attributes. This strategy can be applied in addition to exclusion criteria and engagement/stewardship activity.
Find funds with few exclusions - typically for example exclude tobacco or companies that breach commonly adopted standards or norms such as the UN Global Compact.
Find funds that invest more heavily in those that have higher ESG ratings/standards or scores and less heavily in companies with lower ESG ratings. Where this is central to a fund's strategy you should expect it to invest in most sectors. Strategies vary.
Find funds that make stock selection (and ongoing fund management) decisions based on ESG data or company ratings (normally supplied by third parties) rather than focusing on what individual companies do, how they operate or their plans for the future
Aims to avoid companies that do significant harm. This originates from the EU’s sustainable finance ‘DNSH’ (do no significant harm) work, which is not necessarily used by UK investors.
This fund does not use stock lending for performance or risk purposes.
Unscreened Assets & Cash
The percentage of assets held within the fund that match the fund’s sustainability objectives and are not being held purely for risk management purposes, such as derivatives and cash equivalent assets.
Fund that only invest in cash to aid the practical management (buying and selling) of assets. These funds do not use additional financial instruments.
Intended Clients & Product Options
Finds funds designed to meet the needs of individual investors with an interest in sustainability issues.
Fund Management Company Information
About The Business
Finds fund management companies that have a published company wide stewardship, engagement and / or responsible ownership policy or strategy that covers all investments. Stewardship typically involves encouraging higher ESG standards through voting and dialogue.
Find fund management companies that actively encourage higher 'environmental, social and governance' and/or 'sustainable and responsible investment' practices across investee companies - typically where the aim is to encourage positive change that is aligned with the best interests of investors. Strategies vary. See additional information and options.
Find fund managers that vote all* the shares they own at Annual General Meetings and Extraordinary General Meetings. A commitment to voting shares is a key indicator of 'responsible share ownership' demonstrating their support for or disagreement with management policy. (*situations can legitimately, occasionally occur where voting proves impossible, but in principle all shares should be voted.)
Find fund managers that consider responsible ownership and ESG to be a key differentiator for their business.
This asset management company invests in companies which have recently listed on a stock exchange (which is important as it can help grow new businesses).
Asset management company has investments in bonds designed to meet sustainability requirements - however these assets may not be 'ringfenced' for this purpose. See fund manager website for details.
Fund management entity offers unstructured intermediary training on sustainable investment (ie for financial advisers and wealth managers)
Fund management entity offers unstructured intermediary training on sustainable investment (ie for financial advisers and wealth managers)
Collaborations & Affiliations
Find fund management companies that have signed up to the UN backed 'Principles of Responsible Investment'.
Find fund management companies that are members of UKSIF - the UK Sustainable Investment and Finance association
Find fund management companies that have partnered with Fund EcoMarket - meaning that they are helping to improve access to information on sustainable and responsible investment by paying an annual fee to us which enables us to publish information for free. Partner funds are listed ahead of other funds and have their logos displayed.
A member of the Taskforce for Nature Related Financial Disclosures group which aims to aid risk management and shift money towards nature-positive outcomes.
Fund management entity is a member of the Investment Association https://www.theia.org/
Engagement Approach
Fund manager has stewardship /responsible ownership strategy that is focused on addressing climate change with investee assets.
Asset manager has a stewardship /responsible ownership strategy that involves working with fossil fuel companies on climate change related issues. See fund manager website for details.
Asset manager has stewardship /responsible ownership strategy with involves encouraging investee asset to reduce plastic waste and pollution.
Asset manager has a stewardship / responsible ownership policy that means they are working to encourage more responsible mining practices - where environmental and social issues are properly dealt with by the companies they invest in.
The asset manager has a responsible ownership / stewardship strategy that focuses on biodiversity and nature issues relating to the assets they invest the aim of which will be to reduce harm and or deliver improvement. Strategies vary. https://tnfd.global
Asset manager has a responsible ownership / stewardship strategy which means they are working to encourage the shift to more sustainable business practices in ways that respect and are sensitive to social issues and the impact change has on people effected by the changes that are taking place. https://www.transitionpathwayinitiative.org/ https://transitiontaskforce.net/
Asset manager has responsible ownership / stewardship strategy in place which aims to address human rights issues in investee companies (and potentially their suppliers) with the aim of raising standards
Asset manager has responsible ownership / stewardship strategy in place that aims to improve labour standards for the benefit of employees in investee companies (and potentially their suppliers)
Asset management company has a stewardship strategy in place which involves working to raise diversity, equality and inclusion standards across investee assets
working with the assets they hold to help stamp out modern slavery - where direct or indirect company employees are exploited for business benefits.
Climate & Net Zero Transition
See https://sciencebasedtargets.org/
Transparency
This asset management company has published a plan that explains how they will align to the climate change commitments made at the Paris Climate Talks, COP21.
This asset management company has published a plan that explains how they are going to achieve net zero greenhouse gas / CO2e emissions.
Sustainable, Responsible &/or ESG Policy:
We are factor investors: we believe that applying the scientific method to investment by using financial and statistical principles is an efficient and effective way to generate returns for our investors. Our mission is to provide diversified and differentiated portfolios of scientifically validated factor exposures for our investors. Some traditional factors used by investors include, but are not limited to, value, momentum, profitability and low volatility. Corresponding to each broad “factor” there may be many underlying “signals” of greater or lesser effectiveness. A key feature of our use of the scientific method is our participation in the scientific conversation: in general, we will place greater reliance on factors or signals supported by a greater body of academic research than those with more restricted evidence.
The use of ESG data constitutes a natural extension of our investment beliefs. ESG data provide an exciting set of information from which we seek to construct diversifying and differentiated signals, and potentially factors. We apply our established research framework to these signals to assess the ability of these signals to improve the expected risk/return profile of our portfolios. When selecting the factors that drive our stock selection, we apply the same research and selection process to both traditional financial factors and the sustainability factors. The sustainability signals used broadly across our product range have been empirically shown to improve the expected risk return profile of our strategies.
There are several key ways in which ESG considerations impact all investment decisions in the Fund.
- They define the universe – we employ an array of industry and revenue-based screens to avoid companies involved in unsustainable activities including Tobacco, Weapons, Gambling, Tar sands and Thermal Coal.
- Portfolio construction – the final portfolio is constrained to ensure the portfolio’s carbon footprint is less than 50% of the level of the benchmark
- Embedded in bottom-up stock selection – roughly a quarter of the Fund’s active risk budget is consumed by ES&G factors (ES through SustainEx and G from Governance)
The Fund’s range of systematically integrated ESG features described above delivers a range of Sustainability outcomes.
As of 31 March 2021, the carbon intensity of the Fund was below 50% of the benchmark. The reading was 72 for the Fund compared to 158 for the MSCI AC World Index, a 54% reduction[1].
With respect to SustainEx, Schroders proprietary measure of Sustainability impact we recorded improvements driven both by our suite of exclusions and integrating SustainEx alongside traditional factors in our bottom up multi-factor stock selection process. The overall SustainEx improvement of Fund over the benchmark was more than 5% with the benchmark showing a negative SustainEx to sales impact of -1.5% [2]. This SustainEx improvement translates to between $5-6 of relative social value benefits for every $100 of revenues generated by the underlying portfolio companies.
Similarly, inclusion of our Governance factor tends to tilt the portfolio towards companies that compare favourably with their industry cohorts on addressing the agency problem between management and shareholders.
Finally, our range of industry exclusions helps the portfolio avoid exposure to companies operating in unsustainable, socially irresponsible areas.
[1] Source: Schroders, 31 March 2021. Tonnes of scope 1 and scope 2 carbon emissions per $million of sales. Scope 1 emissions are direct emissions from owned or controlled sources. Scope 2 emissions are indirect emissions from the generation of purchased energy.
[2] Schroders, 31 March 2021. The aggregate social and environmental impacts of portfolio and benchmark company business activities as measured by SustainEx and shown as a percentage of sales.
Process:
The Fund is designed to provide investors with ongoing access to the best thinking in two increasingly important fields of investment: factor investing and sustainability. Our approach to factor investing enables us to seamlessly integrate a number of sustainability criteria, including SustainEx (Schroders’ proprietary measure of ESG impact), sophisticated and material quantitative measures of corporate governance, and a 50% reduction in carbon intensity, compared to MSCI ACWI.
Our approach to factor investing – and to integrating sustainability – is as differentiated from most ESG funds as our approach to measuring sustainability. Factor investing involves the application of quantitative techniques to investment problems, both in seeking sources of return and in building the portfolio.
Schroders’ factor investing philosophy is predicated on a bottom-up approach to multi-factor portfolio construction. This means that we combine information about many factors (such as value, momentum, profitability, low volatility, governance and SustainEx) at the stock level and then build a single portfolio that maximises exposure to the set of factors collectively, subject to limits on risk. This advanced approach contrasts with first-generation factor investing, which combines a number of portfolios, each one corresponding to stocks favoured on the basis of only a single factor.
The starting point for the investment process is to analyse all of the stocks in the ACWI IMI universe as potential candidates for inclusion in the final portfolio. Our process for analysing each stock is systematic and involves calculating proprietary factor metrics that enable us to identify stocks with attractive characteristics across multiple factors. For each of the 9,000 companies in the MSCI ACWI IMI universe from which we draw our investments, we calculate an overall sustainability impact, measured in dollars. That value combines analysis of its impact in each of the below areas, including both positive and negative values.
We divide the total value by each company’s sales to yield a ratio on which companies are assessed against sector peers to calculate the sustainability score used in our factor analysis. This covers the E and S of ESG. For exposure to governance, we look to our enhanced, diversified Quality factor, which includes both profitability and governance signals within the factor analysis. The portfolio utilizes objective measures of the agency problem between management and shareholders, to determine the impact of governance on investment returns. By focussing on the agency problem between management and shareholders, we seek to exploit objectively observable signs of the extent to which the agency problem has been solved or at least mitigated. We focus on observable outcomes of good governance rather than more conventional analysis of governance characteristics, where evidence of efficacy is lower.
Resources, Affiliations & Corporate Strategies:
Sustainable Investment Team
Sustainability is fundamental to our investment principles at Schroders, and we have an experienced and well-resourced (40+ members) Sustainable Investment team, who are embedded within our Investment function. We are a global team, spread across four regional hubs in London, Paris, Singapore and New York, aiming to ensure that sustainability is embedded through our global investment teams and client functions.
The team is led by Andrew Howard, Global Head of Sustainable Investment who is also a member of our Group Management Committee. As team head, he oversees our approach to ESG integration, active ownership, our sustainability research and tools, and our reporting and product strategy.
Our central Sustainable Investment team sits alongside investment teams rather than operating in a silo, which facilitates regular dialogue with our analysts and portfolio managers.
It is organised into four pillars:
- Sustainable Investment Management, incorporating advisory and integration, models and data, climate and nature and sustainable research
- Active Ownership, encompassing engagement and voting
- Impact
- Regional experts in Asia Pacific, Europe and North America.
We outline their key responsibilities and areas of focus below.
A. Sustainable investment management
Our Advisory and Integration team acts as a central contact point and consultant for a range of stakeholders across the business. This includes advising investment teams on ESG integration best practice; compliance, risk and legal teams on ESG regulation; and working with our regional experts; across Asia Pacific, Europe and North America, as outlined under pillar four.
Our Models and Data team is responsible for the maintenance and evolution of our suite of proprietary tools. They are also responsible for ESG data, ensuring we harness sustainability data effectively from both conventional and unconventional sources.
Our Strategy and Research team is responsible for undertaking sustainability research to: inform firmwide strategy and commitments; provide insights for investment teams to analyse sustainability-related risks and opportunities; and provide research-related and technical support for other stakeholders across the firm.
B. Active ownership
Our Engagement team partners with investors to have dialogue with the companies in which we invest, seeking to understand how prepared they are for a changing world and pushing them towards more sustainable practices. The team track the progress of these engagements and hold companies to account.
Our Corporate Governance team is responsible for voting in line with our Voting Policy and Principles.
C. Impact
Our Impact team is responsible for scaling our impact product offering in line with best-practice impact principles. The team works closely with investment desks and is responsible for developing and implementing our impact management and measurement framework, including impact assessment and monitoring at transaction and portfolio level, product development, impact strategy and impact reporting.
D. Regional Expertise
Our Regional Experts based in Asia Pacific, Europe and North America have a deep understanding of local market characteristics and nuances, and are responsible for staying abreast of sustainability-related developments. Our experts work with clients and internal teams to navigate and support clients’ ESG aspirations and challenges, utilising Schroders’ proprietary tools and research to develop investment solutions that meet their needs. They also engage with regulators and industry bodies to shape and support the global sustainable finance agenda. Our regional experts are a critical extension of the central team in London as the firm continues to evolve its global ESG strategy.
Governance of our ESG strategy and policies
We have a number of governance structures in place for decision-making and oversight of our approach to sustainable investment. The Board of Schroders plc (the Board) has collective responsibility for the management, direction and performance of the Group, and is accountable for our overall business strategy. The Group Chief Executive is responsible for proposing the strategy for the Group and for its implementation, supported by the Group’s senior management team and a number of Committees, some of which are noted below.
The Group Sustainability and Impact (GSI) Committee provides advice to the Group Chief Executive on sustainability and impact matters. The Committee considers, reviews and recommends the overall global sustainability and impact strategy, including key initiatives, new commitments and policies for approval. The Global Head of Sustainable Investment and Global Head of Corporate Sustainability are members of the Committee and report to the Group Management Committee (GMC) and the Board.
The Sustainability Executive Committee (ExCo) develops and oversees the delivery of our Group-level sustainable investment management strategy. The ExCo also advises on the development of our sustainability and impact investment and product frameworks. The ExCo has senior representation from across the business including Investment, Client Group, Wealth Management, Schroders Capital and Corporate Sustainability.
The Sustainability Regulations Steering Committee (Sustainability Reg SteerCo) oversees the progress of in-flight sustainability regulatory change programmes, as well as monitoring emergent sustainability regulations and determining their high-level impact on our Group sustainability strategy and supporting operations. The Sustainability Reg SteerCo receives input on planned or potential sustainability-related regulation from our Public Policy team, which actively engages with relevant regulators, industry trade associations and other bodies in the United Kingdom (UK) and European Union (EU). The Sustainability Reg Steerco has senior representation from across the business including Investment, Wealth Management, Schroders Capital, Legal, Risk & Compliance, Product and Operations Management.
Certain Schroders entities, businesses and Investment teams also have their own committees which consider their sustainable investment activities. For example, the Private Assets Sustainability and Impact Steering Committee (PA S&I SteerCo) develops and oversees the implementation of the Private Assets Sustainability and Impact strategy. In addition, the Wealth Management Sustainable Investment Committee (WMSIC), a sub-committee of the Wealth Management Investment Committee (WMIC), has delegated responsibility for recommending Wealth Management's Sustainability models, as well as providing investment strategy and direction for client portfolios that are linked to the sustainable models.
Alongside our central Sustainable Investment team, sustainable investing is also overseen and delivered by dedicated teams and expert individuals embedded throughout the firm (including across Investment teams and Client Group functions).
Industry involvement
We believe we have a particular role to play in sharing our expertise on different areas, supporting best practice but also learning from others.
We have a long-standing commitment to support and collaborate with several industry groups, organisations and initiatives to promote well-functioning financial markets. Our key stakeholders include exchanges, regulators and international and regional trade associations. For example, Schroders is a member of trade bodies such as the Investment Association in the UK, the European Fund and Asset Management Association (EFAMA), the Asia Securities Industry and Financial Markets Association (ASIFMA) in Hong Kong and the Securities Industry and Financial Markets Association (SIFMA) in the US.
Through this participation we share our insights to support the development of policy recommendations, share best practice and build coalitions of like-minded market participants to advocate for better functioning markets. We consider this to be key in improving responsible investment standards across sectors, establishing a consistent dialogue with companies, and in promoting the ongoing development and recognition of sustainability and ESG within the investment industry. A list of organisations and initiatives of which Schroders is a member or signatory is available on our website (Industry involvement| Schroders global).
Voting Record
| Fund Name | SRI Style | SDR Labelling | Product | Region | Asset Type | Launch Date | Last Amended |
|
|---|---|---|---|---|---|---|---|---|
Scottish Widows Schroder Sustainable Multi-Factor Equity Pn |
Sustainability Tilt | - | Pension | Global | Equity | 23/11/2020 | Jan 2025 | |
ObjectivesWe are factor investors leveraging financial and statistical principles to generate returns, focusing on factors like value, momentum, profitability, and low volatility. ESG data is integral to our approach, offering new signals for improving portfolios’ risk/return profiles. Using a scientific framework, we assess both traditional and sustainability factors to ensure their effectiveness. ESG influences investment decisions by defining the investable universe, excluding unsustainable industries (e.g., tobacco, weapons, coal), and embedding sustainability into portfolio construction. For example, portfolios are constrained to maintain a carbon footprint below 50% of the benchmark. ESG factors, consuming about 25% of the active risk budget, enhance stock selection through SustainEx™ and governance metrics. Governance tilts the portfolio toward companies addressing management-shareholder agency issues. Overall, our ESG integration and exclusions deliver sustainability outcomes while avoiding exposure to socially irresponsible areas. This systematic integration aligns with our mission to provide diversified, differentiated, and responsible investment portfolios. |
ISIN: GB00BKYS0C12 |
|||||||
Sustainable, Responsible &/or ESG OverviewThis Pension product is linked to the "Schroder Sustainable Multi-Factor Equity" fund. The following information refers to the primary (OIEC) fund.
The Schroder Sustainable Multi-Factor Equity (‘SMFE’) Fund is a systematic global equity fund in which the manager aims to deliver an improved ESG outcome whilst also achieving excess return over the MSCI All Country World Index on a rolling 3–5 year basis and limiting index-relative risk although this is not guaranteed over this, or any other, period. We incorporate ESG into the investment process in several ways to deliver a diverse set of ESG outcomes to clients:
|
||||||||
|
Primary fund last amended: Jan 2025 |
||||||||
|
Information received directly from Fund Manager |
||||||||
|
Please select what you would like to read:
Fund FiltersSustainability - General
Sustainability policy
Funds that have policies that consider (environmental and social) sustainability issues. Strategies vary but are likely to consider environmental issues like climate change, carbon emissions, biodiversity loss, resource management, environmental impacts; and social issues like equal opportunities, human rights, labour standards, diversity and adherence to internationally recognised codes. See fund information. Environmental - General
Environmental policy
Funds that have policies which relate to environmental issues. These will typically set out the fund's stance on issues such as pollution, climate change, resource management, biodiversity loss, carbon emissions, plastics and/or additional environmental impacts. Strategies vary. See fund information for further information.
Limits exposure to carbon intensive industries
Funds that limit or 'reduce' their exposure to carbon intensive industries (ie sectors which are major contributors to climate change. Funds vary - some funds may be 'underweight' in this area which means they may have some investment in highly carbon intensive areas. Funds of this kind may choose companies they consider to be 'best in sector' and encourage ever higher standards. Strategies vary. See fund information for further details. Climate Change & Energy
Climate change / greenhouse gas emissions policy
Funds that have policies (documented strategies that explain their position on) climate change related issues such as greenhouse gas/carbon emissions, net zero, transitioning to lower carbon. Strategies vary. Read fund details for further information.
Fracking and tar sands excluded
Funds that avoid companies involved in fracking and tar sands - which are widely regarded as controversial methods of oil and gas extraction. Strategies vary. See fund information for further information.
Fossil fuel reserves exclusion
Funds that avoid investing in companies with coal, oil and gas reserves. See fund information for further details.
Encourage transition to low carbon through stewardship activity
A core element of these funds will aim to encourage the transition to lower carbon activities through responsible ownership / stewardship / engagement / voting activity Ethical Values Led Exclusions
Tobacco and related product manufacturers excluded
Companies are excluded if they are involved in any aspect of the production chain for tobacco products, including cigarettes, vaping, e-cigarettes, chewing tobacco and cigars.
Tobacco and related products - avoid where revenue > 5%
Companies are excluded if they make more than 5% of their revenue from the manufacture, sale or distribution of tobacco products including cigarettes, vaping, e-cigarettes, chewing tobacco and cigars. Banking & Financials
Invests in banks
Find funds that include banks as part of their holdings / portfolio.
Invests in insurers
Funds that do or may invest in insurance companies. Fund Governance
ESG integration strategy
Find funds that factor in 'environmental, social and governance' issues as part of their investment decision making process. A focus on 'ESG' typically means a fund is carrying out additional research to help reduce ESG related risks. It does not necessarily mean a focus on sustainability. Strategies vary. See fund literature. Asset Size
Over 50% large cap companies
Find funds that invests more than half of their money into what are commonly regarded as 'large companies'. This will typically mean that the market capitalisation (or value) of the companies they hold is in excess of £5 to £10 billion. Impact Methodologies
Aims to generate positive impacts (or 'outcomes')
Funds that aim to help or support the delivery of positive social or environmental impacts (or societal/real world outcomes) by investing in companies they regard as beneficial to people and / or the planet. Strategies vary. See fund literature for further information. How The Fund Works
Positive selection bias
Find funds that focus on finding and investing in companies with positive / beneficial attributes. This strategy can be applied in addition to exclusion criteria and engagement/stewardship activity.
Limited / few ethical exclusions
Find funds with few exclusions - typically for example exclude tobacco or companies that breach commonly adopted standards or norms such as the UN Global Compact.
ESG weighted / tilt
Find funds that invest more heavily in those that have higher ESG ratings/standards or scores and less heavily in companies with lower ESG ratings. Where this is central to a fund's strategy you should expect it to invest in most sectors. Strategies vary.
Data led strategy
Find funds that make stock selection (and ongoing fund management) decisions based on ESG data or company ratings (normally supplied by third parties) rather than focusing on what individual companies do, how they operate or their plans for the future
Significant harm exclusion
Aims to avoid companies that do significant harm. This originates from the EU’s sustainable finance ‘DNSH’ (do no significant harm) work, which is not necessarily used by UK investors.
Do not use stock / securities lending
This fund does not use stock lending for performance or risk purposes. Unscreened Assets & Cash
Assets typically aligned to sustainability objectives 70 - 79%
The percentage of assets held within the fund that match the fund’s sustainability objectives and are not being held purely for risk management purposes, such as derivatives and cash equivalent assets.
No ‘diversifiers’ used other than cash
Fund that only invest in cash to aid the practical management (buying and selling) of assets. These funds do not use additional financial instruments. Intended Clients & Product Options
Intended for investors interested in sustainability
Finds funds designed to meet the needs of individual investors with an interest in sustainability issues. Fund Management Company InformationAbout The Business
Responsible ownership / stewardship policy or strategy (AFM company wide)
Finds fund management companies that have a published company wide stewardship, engagement and / or responsible ownership policy or strategy that covers all investments. Stewardship typically involves encouraging higher ESG standards through voting and dialogue.
ESG / SRI engagement (AFM company wide)
Find fund management companies that actively encourage higher 'environmental, social and governance' and/or 'sustainable and responsible investment' practices across investee companies - typically where the aim is to encourage positive change that is aligned with the best interests of investors. Strategies vary. See additional information and options.
Vote all* shares at AGMs / EGMs (AFM company wide)
Find fund managers that vote all* the shares they own at Annual General Meetings and Extraordinary General Meetings. A commitment to voting shares is a key indicator of 'responsible share ownership' demonstrating their support for or disagreement with management policy. (*situations can legitimately, occasionally occur where voting proves impossible, but in principle all shares should be voted.)
Responsible ownership / ESG a key differentiator (AFM company wide)
Find fund managers that consider responsible ownership and ESG to be a key differentiator for their business.
Invests in newly listed companies (AFM company wide)
This asset management company invests in companies which have recently listed on a stock exchange (which is important as it can help grow new businesses).
Invests in new sustainability linked bond issuances (AFM company wide)
Asset management company has investments in bonds designed to meet sustainability requirements - however these assets may not be 'ringfenced' for this purpose. See fund manager website for details.
Offer structured intermediary training on sustainable investment
Fund management entity offers unstructured intermediary training on sustainable investment (ie for financial advisers and wealth managers)
Offer unstructured intermediary sustainable investment training
Fund management entity offers unstructured intermediary training on sustainable investment (ie for financial advisers and wealth managers) Collaborations & Affiliations
PRI signatory
Find fund management companies that have signed up to the UN backed 'Principles of Responsible Investment'.
UKSIF member
Find fund management companies that are members of UKSIF - the UK Sustainable Investment and Finance association
Fund EcoMarket partner
Find fund management companies that have partnered with Fund EcoMarket - meaning that they are helping to improve access to information on sustainable and responsible investment by paying an annual fee to us which enables us to publish information for free. Partner funds are listed ahead of other funds and have their logos displayed.
TNFD forum member (AFM company wide)
A member of the Taskforce for Nature Related Financial Disclosures group which aims to aid risk management and shift money towards nature-positive outcomes.
Investment Association (IA) member
Fund management entity is a member of the Investment Association https://www.theia.org/ Engagement Approach
Engaging on climate change issues
Fund manager has stewardship /responsible ownership strategy that is focused on addressing climate change with investee assets.
Engaging with fossil fuel companies on climate change
Asset manager has a stewardship /responsible ownership strategy that involves working with fossil fuel companies on climate change related issues. See fund manager website for details.
Engaging to reduce plastics pollution / waste
Asset manager has stewardship /responsible ownership strategy with involves encouraging investee asset to reduce plastic waste and pollution.
Engaging to encourage responsible mining practices
Asset manager has a stewardship / responsible ownership policy that means they are working to encourage more responsible mining practices - where environmental and social issues are properly dealt with by the companies they invest in.
Engaging on biodiversity / nature issues
The asset manager has a responsible ownership / stewardship strategy that focuses on biodiversity and nature issues relating to the assets they invest the aim of which will be to reduce harm and or deliver improvement. Strategies vary. https://tnfd.global
Engaging to encourage a Just Transition
Asset manager has a responsible ownership / stewardship strategy which means they are working to encourage the shift to more sustainable business practices in ways that respect and are sensitive to social issues and the impact change has on people effected by the changes that are taking place. https://www.transitionpathwayinitiative.org/ https://transitiontaskforce.net/
Engaging on human rights issues
Asset manager has responsible ownership / stewardship strategy in place which aims to address human rights issues in investee companies (and potentially their suppliers) with the aim of raising standards
Engaging on labour / employment issues
Asset manager has responsible ownership / stewardship strategy in place that aims to improve labour standards for the benefit of employees in investee companies (and potentially their suppliers)
Engaging on diversity, equality and / or inclusion issues
Asset management company has a stewardship strategy in place which involves working to raise diversity, equality and inclusion standards across investee assets
Engaging to stop modern slavery
working with the assets they hold to help stamp out modern slavery - where direct or indirect company employees are exploited for business benefits. Climate & Net Zero Transition
Committed to SBTi / Science Based Targets Initiative
See https://sciencebasedtargets.org/ Transparency
Paris Alignment plan publicly available (AFM company wide)
This asset management company has published a plan that explains how they will align to the climate change commitments made at the Paris Climate Talks, COP21.
Net Zero transition plan publicly available (AFM company wide)
This asset management company has published a plan that explains how they are going to achieve net zero greenhouse gas / CO2e emissions. Sustainable, Responsible &/or ESG Policy:We are factor investors: we believe that applying the scientific method to investment by using financial and statistical principles is an efficient and effective way to generate returns for our investors. Our mission is to provide diversified and differentiated portfolios of scientifically validated factor exposures for our investors. Some traditional factors used by investors include, but are not limited to, value, momentum, profitability and low volatility. Corresponding to each broad “factor” there may be many underlying “signals” of greater or lesser effectiveness. A key feature of our use of the scientific method is our participation in the scientific conversation: in general, we will place greater reliance on factors or signals supported by a greater body of academic research than those with more restricted evidence.
The Fund’s range of systematically integrated ESG features described above delivers a range of Sustainability outcomes.
Process:The Fund is designed to provide investors with ongoing access to the best thinking in two increasingly important fields of investment: factor investing and sustainability. Our approach to factor investing enables us to seamlessly integrate a number of sustainability criteria, including SustainEx (Schroders’ proprietary measure of ESG impact), sophisticated and material quantitative measures of corporate governance, and a 50% reduction in carbon intensity, compared to MSCI ACWI.
Resources, Affiliations & Corporate Strategies:Sustainable Investment Team Sustainability is fundamental to our investment principles at Schroders, and we have an experienced and well-resourced (40+ members) Sustainable Investment team, who are embedded within our Investment function. We are a global team, spread across four regional hubs in London, Paris, Singapore and New York, aiming to ensure that sustainability is embedded through our global investment teams and client functions. The team is led by Andrew Howard, Global Head of Sustainable Investment who is also a member of our Group Management Committee. As team head, he oversees our approach to ESG integration, active ownership, our sustainability research and tools, and our reporting and product strategy. Our central Sustainable Investment team sits alongside investment teams rather than operating in a silo, which facilitates regular dialogue with our analysts and portfolio managers. It is organised into four pillars:
Our Advisory and Integration team acts as a central contact point and consultant for a range of stakeholders across the business. This includes advising investment teams on ESG integration best practice; compliance, risk and legal teams on ESG regulation; and working with our regional experts; across Asia Pacific, Europe and North America, as outlined under pillar four. Our Models and Data team is responsible for the maintenance and evolution of our suite of proprietary tools. They are also responsible for ESG data, ensuring we harness sustainability data effectively from both conventional and unconventional sources. Our Strategy and Research team is responsible for undertaking sustainability research to: inform firmwide strategy and commitments; provide insights for investment teams to analyse sustainability-related risks and opportunities; and provide research-related and technical support for other stakeholders across the firm.
B. Active ownership Our Engagement team partners with investors to have dialogue with the companies in which we invest, seeking to understand how prepared they are for a changing world and pushing them towards more sustainable practices. The team track the progress of these engagements and hold companies to account. Our Corporate Governance team is responsible for voting in line with our Voting Policy and Principles.
Our Impact team is responsible for scaling our impact product offering in line with best-practice impact principles. The team works closely with investment desks and is responsible for developing and implementing our impact management and measurement framework, including impact assessment and monitoring at transaction and portfolio level, product development, impact strategy and impact reporting.
Our Regional Experts based in Asia Pacific, Europe and North America have a deep understanding of local market characteristics and nuances, and are responsible for staying abreast of sustainability-related developments. Our experts work with clients and internal teams to navigate and support clients’ ESG aspirations and challenges, utilising Schroders’ proprietary tools and research to develop investment solutions that meet their needs. They also engage with regulators and industry bodies to shape and support the global sustainable finance agenda. Our regional experts are a critical extension of the central team in London as the firm continues to evolve its global ESG strategy.
We have a number of governance structures in place for decision-making and oversight of our approach to sustainable investment. The Board of Schroders plc (the Board) has collective responsibility for the management, direction and performance of the Group, and is accountable for our overall business strategy. The Group Chief Executive is responsible for proposing the strategy for the Group and for its implementation, supported by the Group’s senior management team and a number of Committees, some of which are noted below. The Group Sustainability and Impact (GSI) Committee provides advice to the Group Chief Executive on sustainability and impact matters. The Committee considers, reviews and recommends the overall global sustainability and impact strategy, including key initiatives, new commitments and policies for approval. The Global Head of Sustainable Investment and Global Head of Corporate Sustainability are members of the Committee and report to the Group Management Committee (GMC) and the Board. The Sustainability Executive Committee (ExCo) develops and oversees the delivery of our Group-level sustainable investment management strategy. The ExCo also advises on the development of our sustainability and impact investment and product frameworks. The ExCo has senior representation from across the business including Investment, Client Group, Wealth Management, Schroders Capital and Corporate Sustainability. The Sustainability Regulations Steering Committee (Sustainability Reg SteerCo) oversees the progress of in-flight sustainability regulatory change programmes, as well as monitoring emergent sustainability regulations and determining their high-level impact on our Group sustainability strategy and supporting operations. The Sustainability Reg SteerCo receives input on planned or potential sustainability-related regulation from our Public Policy team, which actively engages with relevant regulators, industry trade associations and other bodies in the United Kingdom (UK) and European Union (EU). The Sustainability Reg Steerco has senior representation from across the business including Investment, Wealth Management, Schroders Capital, Legal, Risk & Compliance, Product and Operations Management. Certain Schroders entities, businesses and Investment teams also have their own committees which consider their sustainable investment activities. For example, the Private Assets Sustainability and Impact Steering Committee (PA S&I SteerCo) develops and oversees the implementation of the Private Assets Sustainability and Impact strategy. In addition, the Wealth Management Sustainable Investment Committee (WMSIC), a sub-committee of the Wealth Management Investment Committee (WMIC), has delegated responsibility for recommending Wealth Management's Sustainability models, as well as providing investment strategy and direction for client portfolios that are linked to the sustainable models. Alongside our central Sustainable Investment team, sustainable investing is also overseen and delivered by dedicated teams and expert individuals embedded throughout the firm (including across Investment teams and Client Group functions).
We believe we have a particular role to play in sharing our expertise on different areas, supporting best practice but also learning from others. We have a long-standing commitment to support and collaborate with several industry groups, organisations and initiatives to promote well-functioning financial markets. Our key stakeholders include exchanges, regulators and international and regional trade associations. For example, Schroders is a member of trade bodies such as the Investment Association in the UK, the European Fund and Asset Management Association (EFAMA), the Asia Securities Industry and Financial Markets Association (ASIFMA) in Hong Kong and the Securities Industry and Financial Markets Association (SIFMA) in the US. Through this participation we share our insights to support the development of policy recommendations, share best practice and build coalitions of like-minded market participants to advocate for better functioning markets. We consider this to be key in improving responsible investment standards across sectors, establishing a consistent dialogue with companies, and in promoting the ongoing development and recognition of sustainability and ESG within the investment industry. A list of organisations and initiatives of which Schroders is a member or signatory is available on our website (Industry involvement| Schroders global).
Voting Record |
||||||||