Aegon Sustainable Equity Fund
SRI Style:
Sustainable Style
SDR Labelling:
Sustainability Focus label
Product:
OEIC
Fund Region:
UK
Fund Asset Type:
Equity
Launch Date:
30/10/1987
Last Amended:
Nov 2024
Dialshifter (
):
Fund/Portfolio Size:
£163.12m
(as at: 30/09/2025)
Total Screened Themed SRI Assets:
£28761.00m
(as at: 31/03/2024)
Total Responsible Ownership Assets:
£116188.00m
Total Assets Under Management:
£268599.00m
ISIN:
GB0007274516, GB00BF2VD060
Contact Us:
Objectives:
The investment objective is to maximize total return (income plus capital) by investing in a diversified portfolio of global equity securities which meets the strategy's predefined sustainability criteria.
Sustainable, Responsible
&/or ESG Overview:
Awaiting update from fund manager (requested April 2025)
Our mission is to generate excess returns by investing in sustainable growth companies that have a positive impact.
Having sustainability research at the heart of our process helps us identify companies that can establish and maintain competitive advantages through positive impact products and practices. We see multiple sustainability trends that are creating opportunities to capture meaningful economic value.
We believe that the companies best placed to capture this economic value are those with the most innovative solutions. Typically, these are newer and smaller businesses rather than the more established incumbents. We believe this fresh mind-set makes these companies the best innovators and the ones most likely to achieve large and lasting growth as a result. We aim to be open minded and will consider larger and more established companies that meet our philosophy.
Primary fund last amended:
Nov 2024
Information directly from fund manager.
Fund Filters
Sustainability - General
Has 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 individual entry information.
Has a significant focus on sustainability issues
Aim to encourage higher sustainability standards through responsible ownership / stewardship / engagement / voting activity
Publicly report performance against named sustainability objectives
Has a theme or investment strand focused on the shift to a circular economy - where products are reused and recycled not incinerated or dumped. See eg https://www.ellenmacarthurfoundation.org/topics/circular-economy-introduction/overview
Environmental - General
Options that limit or 'reduce' their exposure to carbon intensive industries (ie sectors which are major contributors to climate change). Strategies vary.
Has documented policies explaining the approach to environmental damage and pollution. Strategies vary.
Has a policy or theme that relates to managing natural resources more efficiently. Strategies vary. See individual entry information.
Aims to invest in companies with strong or market leading environmental policies and practices. Strategies vary. See individual entry information for more detail.
Nature & Biodiversity
Avoids assets that are involved in illegal deforestation. This may relate to palm oil, cattle farming or other areas. Strategies vary.
Aims to avoid investing in companies that produce genetically modified seeds or crops. (This does not typically include avoiding companies such as supermarkets).
Avoids assets / companies directly involved in genetic engineering
Climate Change & Energy
Avoid investment in major coal, oil and/or gas (extraction) companies. Strategies vary.
Avoid companies involved in fracking and tar sands - which are widely regarded as controversial methods of oil and gas extraction. Strategies vary.
Avoid companies that are involved in extracting oil from the Arctic regions.
Avoid investing in companies / assets with coal, oil and gas reserves. See individual entry information for further details.
Invest (or may invest) in clean / renewable energy companies and other assets. The proportion directly or indirectly invested in renewable energy may vary over time.
Has an energy efficiency theme - typically meaning that the manager is focused on investing in organisations that manage - or help others to manage - energy use more carefully and less wastefully - and so reduce greenhouse gas emissions.
Invest in renewable energy companies and / or companies where renewable energy is a significant part of their business. Strategies vary.
Has a policy which describes the avoidance or limited investment in the nuclear industry. Strategies vary.
Excludes companies and other assets with direct involvement in fossil fuel exploration (eg coal, oil and gas companies)
Excludes companies / assets with indirect involvement in fossil fuel exploration. This may relate to providers of finance and / or insurance and providers of other services.
Requires all, or most of, the assets they invest in to have a ‘net zero action plan’ - describing how they will reduce their greenhouse gas emissions.
Will only invest in companies that report greenhouse gas emissions in line with this international reporting framework. See https://www.fsb-tcfd.org/ https ://www.ifrs.org/sustainability/tcfd/
Social / Employment
Aims to invest in assets with high social values - this may include strong human rights, labour standards and equal opportunities or safety related practices.
Has policies or themes that set out their approach to health and wellbeing issues, typically aims to invest in companies with high standards - or encourage high standards.
Ethical Values Led Exclusions
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.
Avoids companies that manufacture weapons intended specifically for military use. Strategies vary - may or may not included non-strategic military products.
Has a written civilian firearms exclusion policy - meaning that they will not invest in companies that make (or perhaps also sell) handguns made for non-military users.
Avoids companies with significant involvement in the gambling industry. Some may allow a small proportion of revenues to come from this area.
Find funds that avoid companies that derive significant income from pornography and related areas. Strategies vary.
Has policies that require specific animal welfare standards to be met. These may reference well-known welfare standards (3Rs - Replace, Reduce, Refine) or certification schemes. Strategies vary.
Avoids companies that test their products on animals for purposes other than medical benefit (e.g. for cosmetics). Strategies vary.
Human Rights
Has policies relating to human rights issues. Typically require companies to demonstrate higher standards, although some managers work to encourage improvements. Investee companies are often judged against internationally agreed norms or standards. Strategies vary.
Has policies to avoid companies that employ children.
Has policies that exclude companies or other assets which operate in, or are owned by regimes which are not democratic, or where people may be oppressed. May use eg. Freedom House research. Strategies vary.
Has a policy which excludes assets with involvement in Modern Slavery
Meeting Peoples' Basic Needs
Healthcare and or medical theme or area of investment - may have a single or many themes
Gilts & Sovereigns
Does not invest in / excludes 'sovereigns' - debt issued by governments. See eg https://www.investopedia.com/terms/s/sovereign-debt.asp
Banking & Financials
Can include banks as part of their holdings / portfolio.
Avoids banks which finance fossil fuels extraction (coal, oil, gas)
Will avoid banks that have a large part of their loan book (or other assets) invested in fossil fuels companies - particular coal, oil and gas.
May invest in insurance companies.
Governance & Management
Has policies that relate to corporate governance issues such as board structure, executive remuneration, bribery and/or corporate corruption. These funds will typically avoid companies with poor practices. Strategies vary.
Avoids investing in companies with poor governance practices.(e.g. board structure, management practices etc.) Views may however vary on what counts as 'poor' practices - and funds may not immediately divest as they may prefer to work to encourage higher standards.
Encourage the companies they invest in to have more diverse board structures (e.g. more women on boards)
Encourage the banks and insurance companies they invest in to publish climate change related financial information - as set out by the Task Force on Climate Related Financial Disclosures (with the aim of helping investors measure and respond to climate risk).
Aim to encourage higher ESG standards through responsible ownership / stewardship / engagement /voting activity
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
More than half of the funds' assets are invested in smaller or medium sized companies (i.e. below around £5 -10 billion).
Invests in a combination of small, medium and larger (potentially multinational) companies.
Targeted Positive Investments
Find funds that invest >25% of their capital towards companies where a major part of their business is focused on helping to address environmental or social challenges.
Find funds that invest >50% of their capital in companies where a major part of their business is focused on helping to address environmental or social challenges.
Impact Methodologies
Find funds that direct investment towards companies where a major part of their business is about solving environmental challenges. e.g. companies helping to address climate change.
Find funds that invest in companies where a major part of their business is specifically aimed at helping to address social challenges. e.g. companies helping to address poverty.
Find funds that specifically set out to invest in companies that are regarded as 'disrupting' existing business practices - typically through the development of innovative (sustainability aware) products and/or practices.
Fund aims to deliver positive environmental and or social impacts (real world benefits) through its engagement with investee assets
50% of fund assets are regarded by the fund manager as being significantly focused on providing solutions to environmental or social challenges. Strategies vary.
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 where their main 'ethical approach' is to avoid companies by using negative screening criteria. Read fund literature for further information.
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.
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.
A major focus of these funds is the careful management of environmental, social and governance (ESG) related risks - typically by avoiding or being underweight in companies seen as posing major risks in these areas (i.e. not necessarily by using themes, exclusions etc).
Find funds that have published explanations of their ethical, social and/or environmental policies online (i.e. fund decision making strategies/ buy/sell &/or asset management strategies).
This fund has changed its mandate. It was previously not an ESG/sustainable fund. The information published here shows the upgraded fund strategy.
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.
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.
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.
All assets held in the fund - except cash - meet the sustainability criteria published in fund documentation.
Intended Clients & Product Options
Finds funds designed to meet the needs of individual investors with an interest in sustainability issues.
Finds funds designed to meet the needs of individual investors with an interest in ‘Impact investment funds’ which 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.
Find funds that are available via a tax efficient ISA product wrapper.
Labels & Accreditations
Find funds that have chosen to adopt one of the Financial Conduct Authority (FCA) SDR labels. Please note: there are a range of reasons why potentially relevant funds may not use an SDR label eg. adopting a label may be work in progress, the manager may not yet be allowed to do so because of the product type, a manager may feel their fund is insufficiently aligned to SDR requirements. Read fund literature and / or our blogs for further information.
Collaborations & Affiliations
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.
Transparency
Find fund management companies that have supplied Dialshifter information. See Dialshifter tab within record for more information.
Sustainable, Responsible &/or ESG Policy:
The fund’s investment approach seeks to identify the best bottom-up investment ideas available globally while focusing our exposure to companies that have strong sustainability characteristics, as defined by our detailed in-house sustainability analysis. In addition, there are a limited number of product-based exclusions, designed to prevent the fund from investing in companies that we believe have a materially harmful impact on environmental and/or social factors.
Step 1 – Product Exclusions
The fund applies a limited number of absolute exclusions as follows:
Adult entertainment
- Own an adult entertainment company or produce adult entertainment.
Animal welfare
- Engage in the production and sale of animal tested cosmetics.
Fossil fuels
- Engage in the extraction of oil, gas or coal.
Gambling
- Derive more than 10% of revenue from gambling.
Genetic modification
- Conduct genetic modification for agricultural purposes.
Human rights
- Fail to address serious allegations of violations of international standards on human rights including the use of child, forced or bonded labor.
Nuclear power
- Own a nuclear power facility.
Tobacco
- Derive more than 10% of revenue from tobacco.
Weapons
- Produce or sell civilian firearms and firms which manufacture or sell armaments, nuclear weapons or associated strategic products.
This typically results in around 15% of the MSCI ACWI universe being excluded. Due to the structural sustainability challenges facing the above industries, we expect the market capitalizations of these areas to decline over the long-term relative to sustainable products and services.
Step 2 – Sustainability analysis
The sustainability analysis carried out by the RI team assesses three dimensions:
- Sustainable product: The nature of the products and services that a company provides (what a company does)
- Sustainable practices: Its operational practices and standards (how it does it)
- Sustainable monitoring: Improvement over time (we track positive and negative sustainability changes).
We analyze every company on a stock-specific basis, looking at the absolute and relative nuances that apply to it in terms of product, practices, and improvement in the context of its region, sector, size and maturity and versus our own absolute standards. This analysis seeks to determine the key sustainability risks and opportunities for a company.
Our RI team refers to the Sustainable Accounting Standards Board’s (SASB) ‘Materiality Map’ as a starting point. Materiality is central to our process, as we strongly believe that sustainability analysis should be tailored to the specific context of an individual company, rather than using the same criteria for all. We believe the materiality map provides an effective way of highlighting the ESG factors that matter most to a company given the industry and the sector in which it operates, helping to focus our bottom-up sustainability research. Our experience is that this often leads to us focusing on different factors when compared to third-party ESG ratings and reaching contrasting conclusions.
The RI team’s sustainability analysis will gather and analyze qualitative and quantitative information on these material factors in the context of the ‘Three Dimensions’ framework discussed above to form a conclusion and a sustainability rating for a company. As a result of this analysis, companies are classified into three categories:
- Leaders: Companies that meet a large amount of our absolute sustainability criteria and are demonstrably leaders in their sub-sector.
- Improvers: Companies where sustainability issues have been identified but where the company is showing clear evidence of taking steps to improve its sustainability performance,
- Laggards: Companies that are either excluded due to a combination of poor product exposure (e.g. tobacco or defense manufacturers), poor sustainability disclosure and performance and/or with little evidence of a desire to improve.
Only companies designated as sustainability Leaders or Improvers are suitable for inclusion in the portfolio. The rationale for investing in both sustainability Leaders and Improvers is that empirical evidence shows that identifying and investing in sustainability improvers is one of the most effective ways of generating alpha by incorporating sustainability data into the investment process.
This process is dynamic. It does not stop once we decide to invest in a company. The sustainability analysis for every holding in the portfolio is updated at least annually, or more regularly if events occur that we think could impact the conclusions of the most recent research. During each update, the RI team can change the categorization of a company and should their analysis result in a downgrade to a Laggard, then the stock becomes uninvestible and must be sold from the portfolio as soon as is reasonably practicable. This independent oversight of the portfolio is important for the integrity of the process.
It is important to note that after applying the product exclusions and conducting sustainability analysis the resulting investment universe is still very large and provides ample investment opportunities to build a diversified portfolio of 35-45 stocks.
We recognize that within sustainability considerations, there are always debates, grey areas and nuances and this is a key reason why we analyze stocks from the bottom up.
In addition to the categorization of leader, improver or laggard outlined above, each stock is assigned to one of our seven sustainability pillars based on our view of the main sustainability issue they are trying to address. There is no set range for weightings to specific pillars – it is simply an outcome of bottom-up stock selection.
Process:
Our investment process provides an effective and disciplined approach to screening, analysis and portfolio construction. The process focuses on identifying profitable investment ideas and provides a forum for constructive engagement across the equity team.
At a very broad level, our investment process can be thought of as consisting of three key stages: idea generation, bottom-up analysis and portfolio construction. We have a very clear philosophical idea of the types of companies we are looking for which means the size of the universe we are realistically going to find ideas in is manageable.
Investment universe
As detailed in our ESG perspective, we apply some broad filters to derive an initial investment universe and then apply our sustainability exclusions. It is from this opportunity set that we search for the best sustainable growth ideas. We are guided by our philosophy in this search and use diverse sources of idea generation to ensure a consistent flow of stocks for consideration by the team.
Bottom-up analysis – Fundamental investment analysis combined with sustainability analysis
We emphasize stock selection and idea generation rather than blanket research coverage. We evaluate stocks using both our FVT analysis framework and in-depth sustainability analysis from our specialist RI team to reduce the universe to the specific types of opportunities which meet our investment criteria.
Investment Analysis
We use a common language and framework across our Equities team to analyse the most promising companies: Aegon AM’s Fundamentals, Valuations and Technicals (FVT).
The key thing we look for across the FVT process are indications of underestimated change or persistency. FVT encompasses the three aspects of our detailed bottom-up analysis: fundamentals, valuation and technicals. While we dedicate the majority of our time to fundamental research, the exact proportion of each aspect of the analysis is fluid and varies on a case-by-case basis.
Sustainability analysis
This two-way interaction between the fund management team and RI team enables us to build a more holistic view of each company and discover attractive long-term growth opportunities by looking through an ESG lens. This is a radically different approach to our competitors. The final decision on a stock’s sustainability category rests solely with the RI team, who have the power to veto any investment idea.
Focus list
Ideas that we have carried out research on then comprise our focus list. Some of the stocks on this list will have been fully analyzed, having been through the full FVT and RI analysis process. They may be on the list but not in the portfolio at present because we like the fundamental story but think the valuation is too rich, or because we already have several stocks in a similar industry in the portfolio. In contrast, other stocks on the focus list may have only had high level initial research carried out on them. This may be because we think the company has potential but need to see further proof points of commercial success before we consider the idea fully, for example.
Portfolio construction
Our final stage is using the output of this analysis to construct an optimal portfolio of around 40 high-conviction stocks from the focus list. We seek to keep stock-specific risk high, meaning our ability as stock pickers is what drives our portfolio. Final decision-making responsibility for portfolio construction lies with the portfolio managers.
Research and ESG data
While our own research drives our investment process, we draw upon external research to help form our views. All portfolio managers have access to our primary information systems, Bloomberg, Reuters and FactSet, which provide us with real-time information on stocks, markets, indices, news, derivatives, economics, bonds, and currencies. We also have extensive access to the research departments of numerous major investment banks, stockbrokers, and independent sell-side houses.
To supplement our own research, we make use of a range of external sources of ESG data, including third-party ESG ratings, company and sector reports and regional reports. Although, as mentioned earlier, these are only used as inputs into the process and our conclusions are always based on detailed internally generated analysis.
The information stream generated from these sources is shared across the team on a timely basis. We attach more importance to meeting companies, as this provides valuable insights to company strategy and allows us to identify change factors that will drive the share price.
We will not take an investment decision or purchase a stock without completing our own investment and sustainability research.
Dialshifter
This fund is helping to ‘shift the dial from brown to green’ by…
Aegon AM apply strict screening criteria to our ethical and sustainable range, avoiding companies and sectors which have a detrimental effect on the environment, such as:
- environmentally unsound activities – specifically PVC, Ozone Depleting Chemicals and hazardous pesticides.
- those convicted of serious pollution offences or breach internationally recognised conventions on biodiversity.
- energy intensive industries not tackling climate change and hazardous chemicals issues.
- coal mining/processing.
- oil and gas exploration/production.
Excluding harmful companies with large carbon footprints delivers investments with lower carbon intensity and green energy transition themes.
Our approach results in a low carbon portfolio giving exposure to positive climate change solutions.
SDR Labelling:
Sustainability Focus label
Key Performance Indicators:
- the percentage of investments allocated at the level of the Fund classified as ‘Sustainable’ and ‘Sustainable Leaders’ based on the ACD’s proprietary framework and scoring matrix as explained above to demonstrate the Fund continues to meet its sustainability objective; and
- the percentage of the Fund allocated to the six sustainability themes*; and a point-in-time (end of reporting period) and year-on-year breakdown of the Products/Services scores and Practices scores of the Fund’s holdings expressed as a percentage
- Consumer Facing Disclosure
SDR Literature:
| Fund Name | SRI Style | SDR Labelling | Product | Region | Asset Type | Launch Date | Last Amended |
|
|---|---|---|---|---|---|---|---|---|
Aegon Sustainable Equity Fund |
Sustainable Style | Sustainability Focus label | OEIC | UK | Equity | 30/10/1987 | Nov 2024 | |
ObjectivesThe investment objective is to maximize total return (income plus capital) by investing in a diversified portfolio of global equity securities which meets the strategy's predefined sustainability criteria.
|
Fund/Portfolio Size: £163.12m (as at: 30/09/2025) Total Screened Themed SRI Assets: £28761.00m (as at: 31/03/2024) Total Responsible Ownership Assets: £116188.00m (as at: 30/09/2025) Total Assets Under Management: £268599.00m (as at: 30/09/2025) ISIN: GB0007274516, GB00BF2VD060 Contact Us: mark.ferguson@aegonam.com |
|||||||
Sustainable, Responsible &/or ESG OverviewAwaiting update from fund manager (requested April 2025) Our mission is to generate excess returns by investing in sustainable growth companies that have a positive impact. Having sustainability research at the heart of our process helps us identify companies that can establish and maintain competitive advantages through positive impact products and practices. We see multiple sustainability trends that are creating opportunities to capture meaningful economic value. We believe that the companies best placed to capture this economic value are those with the most innovative solutions. Typically, these are newer and smaller businesses rather than the more established incumbents. We believe this fresh mind-set makes these companies the best innovators and the ones most likely to achieve large and lasting growth as a result. We aim to be open minded and will consider larger and more established companies that meet our philosophy. |
||||||||
|
Primary fund last amended: Nov 2024 |
||||||||
|
Information received directly from Fund Manager |
||||||||
|
Please select what you would like to read:
Fund FiltersSustainability - General
Sustainability policy
Has 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 individual entry information.
Sustainability focus
Has a significant focus on sustainability issues
Encourage more sustainable practices through stewardship
Aim to encourage higher sustainability standards through responsible ownership / stewardship / engagement / voting activity
Report against sustainability objectives
Publicly report performance against named sustainability objectives
Circular economy theme
Has a theme or investment strand focused on the shift to a circular economy - where products are reused and recycled not incinerated or dumped. See eg https://www.ellenmacarthurfoundation.org/topics/circular-economy-introduction/overview Environmental - General
Limits exposure to carbon intensive industries
Options that limit or 'reduce' their exposure to carbon intensive industries (ie sectors which are major contributors to climate change). Strategies vary.
Environmental damage and pollution policy
Has documented policies explaining the approach to environmental damage and pollution. Strategies vary.
Resource efficiency policy or theme
Has a policy or theme that relates to managing natural resources more efficiently. Strategies vary. See individual entry information.
Favours cleaner, greener companies
Aims to invest in companies with strong or market leading environmental policies and practices. Strategies vary. See individual entry information for more detail. Nature & Biodiversity
Illegal deforestation exclusion policy
Avoids assets that are involved in illegal deforestation. This may relate to palm oil, cattle farming or other areas. Strategies vary.
Avoids genetically modified seeds/crop production
Aims to avoid investing in companies that produce genetically modified seeds or crops. (This does not typically include avoiding companies such as supermarkets).
Genetic engineering exclusion
Avoids assets / companies directly involved in genetic engineering Climate Change & Energy
Coal, oil & / or gas majors excluded
Avoid investment in major coal, oil and/or gas (extraction) companies. Strategies vary.
Fracking and tar sands excluded
Avoid companies involved in fracking and tar sands - which are widely regarded as controversial methods of oil and gas extraction. Strategies vary.
Arctic drilling exclusion
Avoid companies that are involved in extracting oil from the Arctic regions.
Fossil fuel reserves exclusion
Avoid investing in companies / assets with coal, oil and gas reserves. See individual entry information for further details.
Clean / renewable energy theme or focus
Invest (or may invest) in clean / renewable energy companies and other assets. The proportion directly or indirectly invested in renewable energy may vary over time.
Energy efficiency theme
Has an energy efficiency theme - typically meaning that the manager is focused on investing in organisations that manage - or help others to manage - energy use more carefully and less wastefully - and so reduce greenhouse gas emissions.
Invests in clean energy / renewables
Invest in renewable energy companies and / or companies where renewable energy is a significant part of their business. Strategies vary.
Nuclear exclusion policy
Has a policy which describes the avoidance or limited investment in the nuclear industry. Strategies vary.
Fossil fuel exploration exclusion - direct involvement
Excludes companies and other assets with direct involvement in fossil fuel exploration (eg coal, oil and gas companies)
Fossil fuel exploration exclusion – indirect involvement
Excludes companies / assets with indirect involvement in fossil fuel exploration. This may relate to providers of finance and / or insurance and providers of other services.
Require net zero action plan from all/most companies
Requires all, or most of, the assets they invest in to have a ‘net zero action plan’ - describing how they will reduce their greenhouse gas emissions.
TCFD / IFRS reporting requirement
Will only invest in companies that report greenhouse gas emissions in line with this international reporting framework. See https://www.fsb-tcfd.org/ https ://www.ifrs.org/sustainability/tcfd/ Social / Employment
Favours companies with strong social policies
Aims to invest in assets with high social values - this may include strong human rights, labour standards and equal opportunities or safety related practices.
Health & wellbeing policies or theme
Has policies or themes that set out their approach to health and wellbeing issues, typically aims to invest in companies with high standards - or encourage high standards. Ethical Values Led Exclusions
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.
Armaments manufacturers avoided
Avoids companies that manufacture weapons intended specifically for military use. Strategies vary - may or may not included non-strategic military products.
Civilian firearms production exclusion
Has a written civilian firearms exclusion policy - meaning that they will not invest in companies that make (or perhaps also sell) handguns made for non-military users.
Gambling avoidance policy
Avoids companies with significant involvement in the gambling industry. Some may allow a small proportion of revenues to come from this area.
Pornography avoidance policy
Find funds that avoid companies that derive significant income from pornography and related areas. Strategies vary.
Animal welfare policy
Has policies that require specific animal welfare standards to be met. These may reference well-known welfare standards (3Rs - Replace, Reduce, Refine) or certification schemes. Strategies vary.
Animal testing - excluded except if for medical purposes
Avoids companies that test their products on animals for purposes other than medical benefit (e.g. for cosmetics). Strategies vary. Human Rights
Human rights policy
Has policies relating to human rights issues. Typically require companies to demonstrate higher standards, although some managers work to encourage improvements. Investee companies are often judged against internationally agreed norms or standards. Strategies vary.
Child labour exclusion
Has policies to avoid companies that employ children.
Oppressive regimes (not free or democratic) exclusion policy
Has policies that exclude companies or other assets which operate in, or are owned by regimes which are not democratic, or where people may be oppressed. May use eg. Freedom House research. Strategies vary.
Modern slavery exclusion policy
Has a policy which excludes assets with involvement in Modern Slavery Meeting Peoples' Basic Needs
Healthcare / medical theme
Healthcare and or medical theme or area of investment - may have a single or many themes Gilts & Sovereigns
Does not invest in sovereigns
Does not invest in / excludes 'sovereigns' - debt issued by governments. See eg https://www.investopedia.com/terms/s/sovereign-debt.asp Banking & Financials
Invests in banks
Can include banks as part of their holdings / portfolio.
Exclude banks that finance fossil fuels extraction
Avoids banks which finance fossil fuels extraction (coal, oil, gas)
Exclude banks with significant fossil fuel investments
Will avoid banks that have a large part of their loan book (or other assets) invested in fossil fuels companies - particular coal, oil and gas.
Invests in insurers
May invest in insurance companies. Governance & Management
Governance policy
Has policies that relate to corporate governance issues such as board structure, executive remuneration, bribery and/or corporate corruption. These funds will typically avoid companies with poor practices. Strategies vary.
Avoids companies with poor governance
Avoids investing in companies with poor governance practices.(e.g. board structure, management practices etc.) Views may however vary on what counts as 'poor' practices - and funds may not immediately divest as they may prefer to work to encourage higher standards.
Encourage board diversity e.g. gender
Encourage the companies they invest in to have more diverse board structures (e.g. more women on boards)
Encourage TCFD alignment for banks & insurance companies
Encourage the banks and insurance companies they invest in to publish climate change related financial information - as set out by the Task Force on Climate Related Financial Disclosures (with the aim of helping investors measure and respond to climate risk).
Encourage higher ESG standards through stewardship activity
Aim to encourage higher ESG standards through responsible ownership / stewardship / engagement /voting activity 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% small / mid cap companies
More than half of the funds' assets are invested in smaller or medium sized companies (i.e. below around £5 -10 billion).
Invests in small, mid and large cap companies / assets
Invests in a combination of small, medium and larger (potentially multinational) companies. Targeted Positive Investments
Invests >25% of fund in environmental/social solutions companies
Find funds that invest >25% of their capital towards companies where a major part of their business is focused on helping to address environmental or social challenges.
Invests >50% of fund in environmental/social solutions companies
Find funds that invest >50% of their capital in companies where a major part of their business is focused on helping to address environmental or social challenges. Impact Methodologies
Invests in environmental solutions companies
Find funds that direct investment towards companies where a major part of their business is about solving environmental challenges. e.g. companies helping to address climate change.
Invests in social solutions companies
Find funds that invest in companies where a major part of their business is specifically aimed at helping to address social challenges. e.g. companies helping to address poverty.
Invests in sustainability / ESG disruptors
Find funds that specifically set out to invest in companies that are regarded as 'disrupting' existing business practices - typically through the development of innovative (sustainability aware) products and/or practices.
Aim to deliver positive impacts through engagement
Fund aims to deliver positive environmental and or social impacts (real world benefits) through its engagement with investee assets
Over 50% in assets providing environmental or social ‘solutions’
50% of fund assets are regarded by the fund manager as being significantly focused on providing solutions to environmental or social challenges. Strategies vary. 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.
Negative selection bias
Find funds where their main 'ethical approach' is to avoid companies by using negative screening criteria. Read fund literature for further information.
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.
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.
Focus on ESG risk mitigation
A major focus of these funds is the careful management of environmental, social and governance (ESG) related risks - typically by avoiding or being underweight in companies seen as posing major risks in these areas (i.e. not necessarily by using themes, exclusions etc).
SRI / ESG / Ethical policies explained on website
Find funds that have published explanations of their ethical, social and/or environmental policies online (i.e. fund decision making strategies/ buy/sell &/or asset management strategies).
Converted from ‘non ESG’ strategy
This fund has changed its mandate. It was previously not an ESG/sustainable fund. The information published here shows the upgraded fund strategy.
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.
Assets typically aligned to sustainability objectives 80 – 89%
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.
Assets typically aligned to sustainability objectives > 90%
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.
All assets (except cash) meet published sustainability criteria
All assets held in the fund - except cash - meet the sustainability criteria published in fund documentation. 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.
Intended for clients who want to have a positive impact
Finds funds designed to meet the needs of individual investors with an interest in ‘Impact investment funds’ which 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.
Available via an ISA (OEIC only)
Find funds that are available via a tax efficient ISA product wrapper. Labels & Accreditations
SDR Labelled
Find funds that have chosen to adopt one of the Financial Conduct Authority (FCA) SDR labels. Please note: there are a range of reasons why potentially relevant funds may not use an SDR label eg. adopting a label may be work in progress, the manager may not yet be allowed to do so because of the product type, a manager may feel their fund is insufficiently aligned to SDR requirements. Read fund literature and / or our blogs for further information. Collaborations & Affiliations
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. Transparency
Dialshifter statement
Find fund management companies that have supplied Dialshifter information. See Dialshifter tab within record for more information. Sustainable, Responsible &/or ESG Policy:The fund’s investment approach seeks to identify the best bottom-up investment ideas available globally while focusing our exposure to companies that have strong sustainability characteristics, as defined by our detailed in-house sustainability analysis. In addition, there are a limited number of product-based exclusions, designed to prevent the fund from investing in companies that we believe have a materially harmful impact on environmental and/or social factors. Step 1 – Product Exclusions The fund applies a limited number of absolute exclusions as follows: Adult entertainment
Animal welfare
Fossil fuels
Gambling
Genetic modification
Human rights
Nuclear power
Tobacco
Weapons
Step 2 – Sustainability analysis The sustainability analysis carried out by the RI team assesses three dimensions:
Our RI team refers to the Sustainable Accounting Standards Board’s (SASB) ‘Materiality Map’ as a starting point. Materiality is central to our process, as we strongly believe that sustainability analysis should be tailored to the specific context of an individual company, rather than using the same criteria for all. We believe the materiality map provides an effective way of highlighting the ESG factors that matter most to a company given the industry and the sector in which it operates, helping to focus our bottom-up sustainability research. Our experience is that this often leads to us focusing on different factors when compared to third-party ESG ratings and reaching contrasting conclusions. The RI team’s sustainability analysis will gather and analyze qualitative and quantitative information on these material factors in the context of the ‘Three Dimensions’ framework discussed above to form a conclusion and a sustainability rating for a company. As a result of this analysis, companies are classified into three categories:
This process is dynamic. It does not stop once we decide to invest in a company. The sustainability analysis for every holding in the portfolio is updated at least annually, or more regularly if events occur that we think could impact the conclusions of the most recent research. During each update, the RI team can change the categorization of a company and should their analysis result in a downgrade to a Laggard, then the stock becomes uninvestible and must be sold from the portfolio as soon as is reasonably practicable. This independent oversight of the portfolio is important for the integrity of the process. It is important to note that after applying the product exclusions and conducting sustainability analysis the resulting investment universe is still very large and provides ample investment opportunities to build a diversified portfolio of 35-45 stocks. We recognize that within sustainability considerations, there are always debates, grey areas and nuances and this is a key reason why we analyze stocks from the bottom up. In addition to the categorization of leader, improver or laggard outlined above, each stock is assigned to one of our seven sustainability pillars based on our view of the main sustainability issue they are trying to address. There is no set range for weightings to specific pillars – it is simply an outcome of bottom-up stock selection. Process:Our investment process provides an effective and disciplined approach to screening, analysis and portfolio construction. The process focuses on identifying profitable investment ideas and provides a forum for constructive engagement across the equity team. At a very broad level, our investment process can be thought of as consisting of three key stages: idea generation, bottom-up analysis and portfolio construction. We have a very clear philosophical idea of the types of companies we are looking for which means the size of the universe we are realistically going to find ideas in is manageable.
As detailed in our ESG perspective, we apply some broad filters to derive an initial investment universe and then apply our sustainability exclusions. It is from this opportunity set that we search for the best sustainable growth ideas. We are guided by our philosophy in this search and use diverse sources of idea generation to ensure a consistent flow of stocks for consideration by the team.
We emphasize stock selection and idea generation rather than blanket research coverage. We evaluate stocks using both our FVT analysis framework and in-depth sustainability analysis from our specialist RI team to reduce the universe to the specific types of opportunities which meet our investment criteria.
We use a common language and framework across our Equities team to analyse the most promising companies: Aegon AM’s Fundamentals, Valuations and Technicals (FVT). The key thing we look for across the FVT process are indications of underestimated change or persistency. FVT encompasses the three aspects of our detailed bottom-up analysis: fundamentals, valuation and technicals. While we dedicate the majority of our time to fundamental research, the exact proportion of each aspect of the analysis is fluid and varies on a case-by-case basis.
This two-way interaction between the fund management team and RI team enables us to build a more holistic view of each company and discover attractive long-term growth opportunities by looking through an ESG lens. This is a radically different approach to our competitors. The final decision on a stock’s sustainability category rests solely with the RI team, who have the power to veto any investment idea. Ideas that we have carried out research on then comprise our focus list. Some of the stocks on this list will have been fully analyzed, having been through the full FVT and RI analysis process. They may be on the list but not in the portfolio at present because we like the fundamental story but think the valuation is too rich, or because we already have several stocks in a similar industry in the portfolio. In contrast, other stocks on the focus list may have only had high level initial research carried out on them. This may be because we think the company has potential but need to see further proof points of commercial success before we consider the idea fully, for example.
Our final stage is using the output of this analysis to construct an optimal portfolio of around 40 high-conviction stocks from the focus list. We seek to keep stock-specific risk high, meaning our ability as stock pickers is what drives our portfolio. Final decision-making responsibility for portfolio construction lies with the portfolio managers.
While our own research drives our investment process, we draw upon external research to help form our views. All portfolio managers have access to our primary information systems, Bloomberg, Reuters and FactSet, which provide us with real-time information on stocks, markets, indices, news, derivatives, economics, bonds, and currencies. We also have extensive access to the research departments of numerous major investment banks, stockbrokers, and independent sell-side houses. To supplement our own research, we make use of a range of external sources of ESG data, including third-party ESG ratings, company and sector reports and regional reports. Although, as mentioned earlier, these are only used as inputs into the process and our conclusions are always based on detailed internally generated analysis. The information stream generated from these sources is shared across the team on a timely basis. We attach more importance to meeting companies, as this provides valuable insights to company strategy and allows us to identify change factors that will drive the share price. We will not take an investment decision or purchase a stock without completing our own investment and sustainability research. Dialshifter (Fund)This fund is helping to ‘shift the dial from brown to green’ by… Aegon AM apply strict screening criteria to our ethical and sustainable range, avoiding companies and sectors which have a detrimental effect on the environment, such as:
Excluding harmful companies with large carbon footprints delivers investments with lower carbon intensity and green energy transition themes. Our approach results in a low carbon portfolio giving exposure to positive climate change solutions. Dialshifter (Corporate)Our organisation is helping to support the Paris Climate Agreement and the Race to Net Zero by… Aegon AM carries out a significant number of individual and collaborative engagements related to climate change to improve outcomes for our clients’ portfolios. As part of our engagement strategy, we challenge portfolio companies to set science-based greenhouse gas (GHG) reduction targets and expect them to work towards those with ambitious decarbonisation plans. We engage with companies on a regular basis, prioritizing top GHG emitters, and discuss progress towards their targets and the realisation of the 2015 Paris Agreement as the key international commitment to the climate transition.
SDR Labelling:Sustainability Focus label Key Performance Indicators:
SDR Literature: |
||||||||