Rathbone Ethical Bond

SRI Style:

Ethical Style

SDR Labelling:

Unlabelled with sustainable characteristics

Product:

OEIC

Fund Region:

UK

Fund Asset Type:

Fixed Interest

Launch Date:

14/05/2002

Last Amended:

Jul 2024

Dialshifter ():

Fund Size:

£1985.15m

(as at: 31/03/2024)

Total Screened Themed SRI Assets:

£2738.66m

Total Assets Under Management:

£15000.00m

ISIN:

GB00B77DQT14, GB00B7FQJT36, GB0030957137, GB0030957020, GB00BDD0RN99, GB00BDD0RM82

Objectives:

The objective of the fund is to deliver a greater total return than the Investment Association (IA) Sterling Corporate Bond sector, after fees, over any rolling five-year period.

There is no guarantee that this investment objective will be achieved over five years, or any other time period.

We use the IA Sterling Corporate Bond sector as a target for our fund's return because we aim to consistently outperform the average return of our competitors. 

Sustainable, Responsible
&/or ESG Overview:

The fund’s ethical approach is an ‘ethically balanced’ one, utilising both positive and negative screening criteria. The fund excludes from its universe any issuers of corporate bonds in breach of any of its exclusion criteria, whilst to qualify for inclusion issuers satisfy at least one of the fund's positive activity requirements. ESG risk is also included within the financial analysis of the attractiveness of a corporate bond.

Screening of investments against the fund’s ethical criteria is conducted by Greenbank’s Ethical, Sustainable and Impact (ESI) research team which, while part of Rathbones Group, operates separately to the fund’s investment management team. This enables independent oversight of the screening of investments.

Every investment that goes into the fund needs be fundamentally sound, from a financial perspective. Therefore, no investments are in the fund only because of their social and environmental outcomes.

 

Primary fund last amended:

Jul 2024

Information directly from fund manager.

Fund Filters

Sustainability - 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.

Environmental damage and pollution policy

Funds that have written policies explaining the approach they take when companies damage the environment or are significant polluters. Funds of this kind may work with companies to encourage higher standards, or exclude companies - sometimes dependent on the situation. Strategies vary. See fund information for further detail.

Nature & Biodiversity
Biodiversity / nature policy

Find funds that have a written biodiversity policy or theme aimed at encouraging and improving environmental protection and safeguarding the natural world (sometimes referred to as the preservation or enhancement of 'natural capital'). See eg https://www.un.org/en/climatechange/science/climate-issues/biodiversity

Deforestation / palm oil policy

Find funds that have policies in place designed to ensure they do not invest in companies that are significantly involved in deforestation. This typically relates to palm oil plantations where biodiversity loss is a major concern (as well as other issues). Strategies vary. See fund information for further detail.

Illegal deforestation exclusion policy

Find funds that have policies in place explaining that they avoid companies involved in illegal and/or unsustainable deforestation. This may relate to palm oil, cattle farming or other concerns. Strategies vary. See fund information for further detail.

Responsible palm oil policy

Fund has a responsible palm oil policy which is likely to focus on the producers of palm oil and deforestation issues with a view to informing investment decisions (and / or engagement) to support and encourage high standards.

Genetic engineering exclusion

Fund avoids assets / companies directly involved in genetic engineering

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.

Coal, oil & / or gas majors excluded

Funds that avoid investing in major coal, oil and/or gas (extraction) companies. Funds vary: some may exclude all companies that extract oil. Others may have exposure to oil extraction via more diversified energy companies. See fund literature to confirm details.

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.

Arctic drilling exclusion

Funds that avoid companies that are involved in extracting oil from the Arctic regions. See fund literature for further details.

Fossil fuel reserves exclusion

Funds that avoid investing in companies with coal, oil and gas reserves. See fund information for further details.

Invests in clean energy / renewables

Funds that hold companies in the clean energy and renewable energy sectors (at the time research was supplied). Fund strategies vary, in particular the proportion of investment in these areas may vary significantly. Check fund literature for details.

Nuclear exclusion policy

Find funds that have policies which say they avoid or limit their investment in the nuclear industry. Strategies vary. See fund information for further detail.

Fossil fuel exploration exclusion - direct involvement

The fund manager excludes companies with direct involvement in fossil fuel exploration (eg coal, oil and gas companies)

TCFD reporting requirement (Becoming IFRS)

Will only invest in companies that report greenhouse gas emissions reduction strategies in line with the framework set out the by the Taskforce for Climate Related Financial Disclosure, which is increasingly becoming mandatory. See https://www.fsb-tcfd.org/ https ://www.ifrs.org/sustainability/tcfd/

Social / Employment
Social policy

Find funds that have policies which set out their approach to social issues (e.g. human rights, labour standards, equal opportunities, child labour and adherence to internationally recognised codes such as the UN Global Compact). Funds with social policies typically avoid companies with low standards or work to encourage higher standards. See fund information for detail.

Labour standards policy

Find funds that have a labour standards policy - which can be expected to mean that the fund will invest in / favour companies that have higher standards in this area - although fund strategies can vary significantly (as with all policy areas). See eg https://www.ilo.org/international-labour-standards

Favours companies with strong social policies

Find funds that invest in line with positive strategies that relate to 'people' issues - such as having strong human rights, labour standards and equal opportunities practices. Such funds are likely to invest in companies that have market leading standards with regard to employee and supplier practices. Read fund literature for further information.

Diversity, equality & inclusion Policy (fund level)

Find individual funds that have a written diversity policy – where the fund manager will aim to select companies with a carefully considered, sound approach to diversity. This should ideally cover a range of issues including gender, ethnicity, disability, beliefs, sexual orientation, etc.

Mining exclusion

All mining companies excluded

Ethical Values Led Exclusions
Ethical policies

Find funds that have policies that set out their position on ethical or 'personal values' based issues. Strategies vary. See fund information for further detail.

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.

Armaments manufacturers avoided

Find funds that avoid companies that manufacture products intended specifically for military use. Fund strategies vary - particularly with regard to non-strategic military products. See fund literature for fund specific details.

Civilian firearms production exclusion

Find funds with 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.

Alcohol production excluded

Find funds that avoid investment in companies involved in the production of alcohol. Strategies vary; some funds allow a small proportion of profits to come from this area. See fund literature for further information.

Gambling avoidance policy

Find funds that avoid companies with significant involvement in the gambling industry. Some funds may allow a small proportion of profits to come from this area. See fund policy for further details.

Pornography avoidance policy

Find funds that avoid companies that derive significant income from pornography and related areas. Strategies vary. See fund details for further information.

Animal welfare policy

Find funds with 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. See fund information for further detail.

Human Rights
Human rights policy

Find funds that have policies relating to human rights issues. Funds of this kind typically require companies to demonstrate higher standards, although some fund managers work to encourage improvements. Investee companies are often judged against internationally agreed norms or standards. Strategies vary. See fund information for further detail.

Child labour exclusion

Find funds that have policies in place to ensure they do not invest in companies that employ children.

Oppressive regimes (not free or democratic) exclusion policy

Find funds with policies that exclude companies or other assets where regimes are not democratic, or where people may be oppressed. May use eg. Freedom House research. Strategies vary. See fund literature for further information.

Modern slavery exclusion policy

The fund has a policy which excludes assets with involvement in Modern Slavery

Gilts & Sovereigns
Gilts / government bonds - exclude some

Find funds that avoid investing in 'some' gilts or government bonds. Strategies vary, but this may relate to avoiding specific countries or particular reasons for bond issuance. 'Green gilts' for example would be likely to be acceptable. See fund literature for further information.

Invests in sovereigns subject to screening criteria

Find funds that invest in financial instruments issued by governments, but will only hold those that meet certain environmental and or social criteria. This may, for example mean certain assets are excluded in line with eg Freedom House research. Strategies vary, see fund literature for more information.

Banking & Financials
Invests in banks

Find funds that include banks as part of their holdings / portfolio.

Predatory lending exclusion

Fund excludes financial services companies with widely criticised, aggressive lending practices where interest rates are typically very high, includes ‘doorstep lending’)

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 financial instruments issued by banks

Finds funds that include financial instruments (cash, derivatives and / or foreign exchange) issued by banks. See fund literature for further information as strategies vary.

Invests in insurers

Funds that do or may invest in insurance companies.

Governance & Management
Avoids companies with poor governance

Find funds that aim to avoid 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. See fund literature for further information.

UN sanctions exclusion

Exclude companies that are subject to United Nations sanctions. See eg https://main.un.org/securitycouncil/en/content/un-sc-consolidated-list

Fund Governance
External (fund) committee has veto powers

Find funds that employ an external committee (i.e. not company employees) that has power to veto (i.e. overrule) fund managers stock selection decisions. (This would typically mean the committee can tell the manager of this particular fund not to buy / sell a specific investment when they consider it appropriate to do so.)

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.

Invests mostly in large cap companies / assets

Find funds that have SRI strategies and focus their investment stock selection on larger companies. (e.g. over circa £5-£10bn)

Invest in supranationals

International entities or bodies with agreed remits that are broadly similar to those that may otherwise be undertaken by individual governments eg the UN

Targeted Positive Investments
Invests > 5% in green bonds

Find funds that invest in green bonds (also known as climate bonds) which encourage sustainability and support climate related or special environmental projects. Please check fund literature for specific % of assets invested in this area.

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.

Strictly screened ethical fund

Find funds where their main approach is to apply positive or negative ethical, social and / or environmental screens. Strictly screened funds are likely to exclude more companies than other related fund options. See fund literature for further information.

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.

Combines norms based exclusions with other SRI criteria

Find funds that make significant use of internationally agreed 'norms' (e.g. United Nations Global Compact - UNGC - or the UN Sustainable Development Goals - SDGs) as part of their investment selection process alongside additional SRI criteria such as positive or negative stock selection policies and/or stewardship strategies.

Combines ESG strategy with other SRI criteria

Find funds that have an ESG strategy (which is typically focused on avoiding companies that pose environmental, social or governance related risks) with additional criteria such as positive and/or negative screens, themes and stewardship strategies.

Norms focus

Find funds that use internationally agreed standards, conventions and 'norms' to help direct where the fund can and cannot invest (e.g. the UN Global Compact, UN Sustainable Development Goals). Read fund literature for further information.

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).

Participated in sustainability solutions IPOs or new issuances

This fund does (and has recently) invested in newly listed companies other assets (eg bonds) which are significantly focused on the provision of products and/or services which are designed to solve environmental and/or social problems.

Do not use stock / securities lending

This fund does not use stock lending for performance or risk purposes.

Unscreened Assets & Cash
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 interested in ethical issues

Find funds designed for clients who care about ethical and values-based issues, often alongside sustainability issues also.

Faith friendly

Find funds that have attributes that commonly suit the aims of investors of faith - although they may not be specifically marketed as being only for religious investors. Strategies vary (as do investor aims). Read 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
RSMR rated

Find funds that are rated by research agency 'Rayner Spencer Mills Research' (awarded 'RSMR Rated' status). Read fund literature or contact RSMR for further information.

SFDR Article 8 fund / product (EU)

Finds funds classified under Article 8 of the EU’s SFDR (Sustainable Finance Disclosure Requirements). Article 8 of the SFDR is a set of requirements that apply to financial products that 'promote' environmental or social characteristics with high governance also. These rules do not currently apply to UK funds so many managers may leave this field blank.

Fund Management Company Information

About 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.

In-house diversity improvement programme (AFM company wide)

Finds organisations / fund managers that have an in-house (company wide) diversity improvement programme - meaning that they are working to ensure that within their own businesses they employ people from diverse backgrounds - often typically focused on ethnicity and/or sex.

Diversity, equality & inclusion engagement policy (AFM company wide)

Find fund management companies that encourage the companies they invest in to have strong diversity, race, gender and other equality policies across all assets held, not simply screened or themed SRI/ESG funds. (ie Asset Management company wide).

Vulnerable client policy on website (AFM company wide)

Asset manager has information on their website that explains how they treat 'vulnerable clients' (as set out in FCA regulation)

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 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/

Resources
Employ specialist ESG / SRI / sustainability researchers

Find a fund management company that directly employs specialist ESG/SRI/sustainability researchers or analysts. This allows asset managers to discuss environmental, social and governance risks and opportunities directly with companies.

Accreditations
PRI A+ rated (AFM company wide)

Finds organisations / fund managers that have an A+ PRI rating - meaning they are highly rated according to the 'Principles of Responsible Investment'

UK Stewardship Code signatory (AFM company wide)

Find fund managers that are signatories to the FRC UK Stewardship Code, which sets out a framework for constructive investor / investee relations where fund managers are encouraged to behave like responsible, typically longer term 'company owners'.

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.

Engaging on governance issues

Fund managers have stewardship strategies in place that focus on improving governance standards across investee assets

Engaging on responsible supply chain issues

Has a stewardship / responsible ownership strategy that encourages responsible supply chain - ie the managers will discuss environmental, social and governance issues with investee companies with the aim of raising standards

Company Wide Exclusions
Coal divestment policy (AFM company wide)

This asset manager has a strategy in place that will lead them to exit direct investments in the coal mining industry. Managers ability to do this may depend on the geographic regions in which they invest.

Climate & Net Zero Transition
Net Zero commitment (AFM company wide)

Fund management organisations that have pledged to reduce their greenhouse gas emissions to ‘net zero’. Strategies vary - this area is changing rapidly.

Net Zero - have set a Net Zero target date (AFM company wide)

This asset management company has set a date by which they plan to achieve net zero greenhouse gas / CO2e emissions.

Encourage carbon / greenhouse gas reduction (AFM company wide)

Find fund management companies that are working with the companies they invest in to encourage reductions in carbon dioxide and other greenhouse gas emissions.

‘Forward Looking Climate Metrics’ published / ITR (AFM company wide)

Finds organisations / fund managers that have published ‘forward looking climate metrics’ e.g. 'implied temperature rise' data that are a total of the asset management company's share (% owned) of all the investee company emissions of the assets they manage, as well as their own direct and other indirect emissions.

Carbon offsetting – do NOT offset carbon as part of net zero plan (AFM company wide)

This asset management company plans to achieve net zero greenhouse gas (CO2e) emissions by reducing their emissions. Calculations and scope vary.

Working towards a ‘Net Zero’ commitment (AFM company wide)

Finds organisations / fund management companies that are in the process of working out how to make a ‘net zero commitment’ - meaning that when that is finalised they will have started the process of reducing their total greenhouse gas emissions to'zero'.

Committed to SBTi / Science Based Targets Initiative

See https://sciencebasedtargets.org/

Transparency
Publish responsible ownership / stewardship report (AFM company wide)

Find fund management companies that publish a report detailing their responsible investment ownership - also known as 'Stewardship' - activity.

Publish full voting record (AFM company wide)

Fund management companies that publish a full record of how they vote their shares at AGMs (annual general meetings) and EGMs (extraordinary general meetings). Voting strategies have an important role to play encouraging higher environmental, social and governance standards.

Sustainable, Responsible &/or ESG Policy:

The Rathbone Ethical Bond Fund offers the opportunity to invest in a fixed income fund with high-quality investment grade bonds while applying a broad range of both positive and negative screening criteria that will appeal to consumers with ethical concerns.

The fund applies key negative exclusion criteria to issuers of corporate bonds before ensuring that any issuers not in breach of these satisfy at least one of the fund’s positive activity requirements. The fund manager uses the services of Greenbank Investment’s (Greenbank) in-house Ethical, Sustainable and Impact (ESI) research team.

The fund’s ethical criteria were developed prior to the launch of the fund in May 2002 with significant guidance from Greenbank Investments. The criteria continue to be defined reviewed and, where necessary, evolved as part of a formal annual review process. with reference to the ethical committee which meets once a year as part of the fund’s annual review process. The last substantive changes to the fund’s criteria were made in 2017.

A short summary is provided below of some of the criteria applied to key asset classes. Further details are provided in the fund’s Ethical Screening Process brochure which is available at: https://www.rathbonesam.com/uk/financial-adviser/fixed-income/rathbone-ethical-bond-fund


Corporate bonds

Companies are assessed against a number of positive and negative top-level social and environmental criteria. The team analyse in detail the specific merits of each company’s individual activities and responsible business practices.

 

The exclusions and negative screens

The funds apply screening criteria to avoid investing in companies creating significant negative impacts.

The funds shall exclude companies in breach of specific criteria related to one or more of the following:

  • Alcohol
  • Animal welfare
  • Armaments
  • Climate change
  • Environment
  • Gambling
  • Human rights
  • Nuclear power
  • Pornography
  • Predatory lending
  • Tobacco


The positive ethical criteria

We believe that companies displaying strong policies and practices with regard to environmental, social and governance issues are likely to be well-positioned to deliver long-term value creation for investors.

In order to qualify for inclusion in the funds, companies that pass the negative screen must also display leading or well-developed business practices and policies and/or provide socially or environmentally beneficial products and services.


Green, social or sustainability bonds

Green bonds, social bonds, sustainability bonds, or similar bonds where the proceeds are used to support specified environmental or social objectives, may be eligible for inclusion in the fund. Each is subject to the usual sustainability criteria applied to the issuer. If the corporate issuer itself does not pass our positive and negative screens, a bond may still be approved for inclusion in the fund on the merits of how the bond’s proceeds will be used, rather than the issuer’s principal activity. When analysing a ring-fenced bond against our criteria, we will look at:

  • The issuer’s green/social financing framework and whether an independent second party opinion on this has been sought (what the proceeds of the bond can be used for).
  • The processes in place to govern ongoing management of proceeds from the bond (how certain can we be that the money will be used as intended).
  • Full transparency on the use of proceeds through regular reporting, ideally with third party verification and reporting on impact in addition to allocation of funds (what was the money used for and what benefit did it create).
  • Whether the funding is transformational for the issuer or part of ‘business as usual’ with a green/social label (would the activity have occurred anyway?).

 

 

Process:

The fund manager has the ultimate control of investment decisions on the fund but inclusion in the fund is dependent on the adherence of the relevant investment to the funds ethical criteria.

ESG risk factors are integrated at all stages of the investment process. At the security selection phase, the analyst will consider financially material ESG risks to the company, the risks these pose to the credit metrics and whether these risks are sufficiently reflected in the valuation of a bond. Equally, it could be that we feel the ESG strength of an issuer is being underappreciated in terms of the valuation of their bonds- this is likely to be something that we see become a driver of technical moves we see in bond markets in coming years as we see central banks 'greening' their corporate bond QE programmes.

At a portfolio construction level, we consider ESG data to be a significant driver of our investment themes and to identify material risks/opportunities. Two recent examples of this are the investments along the 'anthropocene' theme that we have discussed in recent years, as well as the decision so use bank fossil fuel lending data in order to reduce/remove our exposure to banks that we believed to be most exposed to climate change risk.

In terms of risk management, we would consider ESG to be integrated to the risk management process by inclusion in the previous two. On top of this, the risk team conduct regular ESG analysis on our fund, producing a regular risk report including relevant ESG risk data that is available to the CEO on a monthly basis, as well as the six-monthly Portfolio and Risk Challenge meeting.

 


Ethical screening

Once an investment has been researched and deemed suitable for the funds from a financial perspective, it then needs to be scrutinised in line with pre-determined ethical criteria. These criteria have been agreed between the fund managers and the team at Greenbank Investments (Greenbank), who will be the final arbiters. The fund managers may propose an investment, but Greenbank has the power of veto if the investment fails to meet the ethical criteria.

New investments that are considered suitable for the funds are investigated as requested by the fund managers and subjected to the team’s screening process. The team looks to update all of its in-depth company profiles on a 12-18 month cycle. A full review of the fund’s eligible investment universe will be carried out an annual basis ahead of a formal annual review meeting.

The fund’s holdings are monitored regularly, and reviewed in the light of any relevant news, merger and acquisition activity or findings from ongoing analysis. As companies change their activities, merge with others or develop new policies and practices, their ethical credentials may alter. The Greenbank ESI research team works closely with the fund managers to highlight changes in ethical performance and ensure that the funds only hold approved investments.

Divestment on ethical grounds is likely to be uncommon, as investments we hold are unlikely to change their ‘spots’ overnight. If the activities of a company change, such that it is no longer suitable for the funds, the fund managers would normally seek to sell the holding within three to six months.

Finally, stewardship forms an essential part of our approach to responsible investment. Stewardship is a crucial fourth leg to the process and involves the participation of both the fund managers and a dedicated corporate governance team when scrutinising policies and management teams.

 


ESG data

The team utilises several resources including:

  • MSCI ESG ratings and research: measures a company’s resilience to long-term, financially relevant ESG risks and opportunities
  • Sustainalytics ESG risk ratings and research: measures the magnitude of a company’s unmanaged ESG risks
  • Industry ESG conferences and company meetings: provide information on both sector-wide and company specific ESG or sustainability issues
  • ESG research/comments from internal and third-party analysts: provide additional insight into any relevant ESG issues affecting potential investment opportunities
  • Weekly sustainability news flow: provides weekly news on material sustainability issues and topics across holdings


To apply the sustainability criteria, the ESI research team use MSCI ESG Manager as a tool to help identify which companies we need to screen out of our portfolios for not meeting our exclusionary criteria. The screening tool looks at companies’ revenue exposure or ESG score to different areas we screen out and flags if there is a breach.

In addition to the reporting outputs from companies themselves, the Greenbank team uses a variety of sources, including reports and publications from industry groups, non-governmental organisations, sell-side analysts, external research bodies and specialist responsible investment publications, to arrive at a balanced view of companies’ overall performance. Some examples of sources of information include the Workforce Disclosure Initiative, Access to Medicine Index, Access to Nutrition Initiative and CDP (Carbon Disclosure Project). Since June 2015, the team has also subscribed to MSCI ESG Manager to reinforce this process, utilising tools such as their SDG alignment tool, as an initial starting point for their analysis in some cases. Greenbank also conducts research into wider topics such as climate change, clean energy, human rights, community investment and employee welfare and utilises this research when conducting the sustainability screening for the funds.

For sustainability bonds, Greenbank will also take into consideration whether the financing framework is aligned to an external standard, which can include, but is not limited to, the International Capital Market Association’s Green Bond Principles and the Climate Bonds Initiative’s Climate Bonds Standard and Certification Scheme.

 

Resources, Affiliations & Corporate Strategies:

Bryn Jones is the lead fund manager of the fund. He is supported by Stuart Chilvers (Fund Manager), Christie Goncalves (Assistant Fund Manager), and the broader investment team. For biographies of the fund managers please visit: https://www.rathbonesam.com/uk/financial-adviser/fixed-income/rathbone-ethical-bond-fund

The investment team also utilises the resources of the wider group, leveraging from areas such as our investment committee structure and dedicated research function.

At the time of investment, the fund manager is required to have clear approval from the ethical committee. This is complemented by a full review of all holdings and the fund’s eligible investment universe ahead of and at the annual review meeting. The fund’s holdings are monitored by Greenbank Investment’s (Greenbank) ethical, sustainable and impact (ESI) research team regularly and reviewed in the light of any relevant news, merger and acquisition activity or findings from ongoing company analysis.

Divestments are very uncommon. If the activities of an issuer change, so that a bond is no longer suitable for the fund, the fund manager would normally seek to sell the holding within three months. If the bond is particularly illiquid and selling is difficult, the manager can take up to six months. If the bond is within two years of redemption, it can be held to maturity if the fund manager believes selling it earlier would be prejudicial to the overall performance of the fund. Any divestments, or proposed divestments, made on SRI grounds, would be mentioned in the ethical report section of the Annual Report.

The fund does not have an external committee or verification process; it believes this control is provided by accountability to investors and public scrutiny. The complete portfolio is published in the Interim and Annual Reports and is also made publicly available monthly. Unitholders and others are encouraged to comment on the fund’s holdings and how they view the application of its ethical criteria.

The investment team have access to a variety of external ESG resources including MSCI, Sustainalytics and Fitch.


Greenbank Investments’ ESI research team

Greenbank investments’ specialist ethical, sustainable and impact (ESI) team conduct ethical research and apply the fund’s ethical screening criteria. The team at Greenbank have been at the forefront of developments in the ethical investment industry since 1992, launching one of the first bespoke ethical portfolio services in 1997. The fund’s ethical and sustainability framework and methodology have been developed with Greenbank, utilising their many years’ experience of managing private client portfolios as well as providing screening services for the other Rathbones’ sustainable funds (including Rathbone Greenbank Multi-Asset Portfolio funds, the Rathbone Greenbank Global Sustainability Fund and the Rathbone Greenbank Global Sustainable Bond Fund).

Greenbank Investments work with over 1,200 clients across the UK and manage over £2.3bn in assets (as at 31 March 2024).

Kate Elliot is Head of Greenbank’s ESI research team, which comprises:

  • Perry Rudd - Ethical, Sustainable and Impact Research Adviser
  • Sophie Lawrence - Stewardship and Engagement Lead
  • Emma Williams - Senior Ethical, Sustainable and Impact Researcher
  • Kai Johns - Senior Ethical, Sustainable and Impact Researcher
  • Charlie Young - Ethical, Sustainable and Impact Researcher
  • Lauren O’Leary - Ethical, Sustainable and Impact Researcher
  • Caitlin Westlake - Assistant Ethical, Sustainable and Impact Researcher

For biographies for the team please visit the Our People page on the Rathbones website.

 

Rathbones Stewardship team

The Rathbones Group Stewardship team is led by Matt Crossman and comprises:

  • Archie Pearson: ESG & Stewardship Analyst, Voting Lead
  • Kazuki Shaw: ESG & Stewardship Analyst
  • Philippa Bliss – ESG & Stewardship Analyst
  • Tilia Astell: Junior ESG & Stewardship Analyst


In addition to this, Jenny Foster is an Engagement Analyst for Rathbones Asset Management, working with all of the fund managers to deliver Rathbone Asset Management's engagement strategy and lead direct engagements with companies.
 


ESG affiliations and memberships

Rathbones Group is a member of PIMFA and UK Finance. They are also members of or signatories to:

  • UK Stewardship Code
  • PRI
  • CDP
  • IIGCC
  • Climate Action 100+
  • Living Wage employer
  • The Workplace Wellbeing Charter
  • The FTSE Women Leaders Review
  • Signatories to UN Global Compact
  • Signatories to Women in Finance Charter
  • Listed on FTSE4Good
  • Net Zero Asset Managers Initiative
  • Business Ambition 1.5ºC
  • Inclusive Companies
  • UKSIF

Please see the Rathbones website for further details at: About Us | Partnership and memberships


Greenbank (Rathbones’ specialist sustainable investment division) partners with many different members of the responsible investment community. These are shown below:

  •  Ecumenical Council for Corporate Responsibility (ECCR)
  • Workforce Disclosure Initiative (WDi)
  • The Food Foundation
  • Access to Medicine Index
  • Access to Nutrition Initiative
  • Finance for Biodiversity
  • Business Benchmark on Farm Animal Welfare (BBFAW)
  • Long-term Investors in People’s Health – ShareAction
  • FAIRR
  • Financing a Just Transition Alliance
  • New Plastics Economy Global Commitment
  • Paris Aligned Investment Initiative
  • Investor Alliance on Human Rights
  • Business Coalition for a Global Plastics Treaty


Please see the Greenbank Investments website for further details at: Partnerships | Greenbank

 

 

SDR Labelling:

Unlabelled with sustainable characteristics

Disclaimer

Note re Filters

PRI A+ rated

In 2022, PRI updated their scoring mechanism. This in turn has altered how Rathbones Group Plc reports its scores.

Rathbone Group Scores:

  • Investment and stewardship policy: our score was 72% in 2020. For this category, now expanded to cover stewardship activities too, and renamed policy, governance and strategy, we earned a score of 77%.
  • Direct – listed equity active fundamental: up from 37% in 2020 to 42% now.
  • Fixed income – SSA and corporate: up from 28% and 29% in 2020 to 67% in both cases. 'SSA' stands for sovereign, supranational and agency debt (mainly government bonds).
  • Confidence-building measures: 80%. This is a new category, which assesses how we review and verify the data reported to the PRI. Issues considered include our overall approach to review and verification, whether a third party has checked the data, whether our internal audit team has done the same, and the seniority of the Rathbones executive who reviewed the report before submission.


The Rathbones Group scores published in 2023 can be found on page 41 of our responsible investment report for our 2023 activity.

.

Disclaimer

Important Information

The information contained in this document is for use by investment advisers and is not intended for circulation to private clients or the general public.

Past performance should not be seen as an indication of future performance. The value of investments and the income from them may go down as well as up and you may not get back your original investment.

Rathbones Asset Management is authorised and regulated by the Financial Conduct Authority and Rathbones Asset Management is a member of the Investment Association.

Rathbones Asset Management Limited: Registered address 8 Finsbury Circus, London, EC2M 7AZ.

Registered No. 02376568 - A Member of the Rathbone Group.

 

 

Fund Name SRI Style SDR Labelling Product Region Asset Type Launch Date Last Amended

Rathbone Ethical Bond

Ethical Style Unlabelled with sustainable characteristics OEIC UK Fixed Interest 14/05/2002 Jul 2024

Objectives

The objective of the fund is to deliver a greater total return than the Investment Association (IA) Sterling Corporate Bond sector, after fees, over any rolling five-year period.

There is no guarantee that this investment objective will be achieved over five years, or any other time period.

We use the IA Sterling Corporate Bond sector as a target for our fund's return because we aim to consistently outperform the average return of our competitors. 

Fund Size: £1985.15m

(as at: 31/03/2024)

Total Screened Themed SRI Assets: £2738.66m

(as at: 31/03/2024)

Total Assets Under Management: £15000.00m

(as at: 31/03/2024)

ISIN: GB00B77DQT14, GB00B7FQJT36, GB0030957137, GB0030957020, GB00BDD0RN99, GB00BDD0RM82

Contact Us: ram@rathbones.com

Sustainable, Responsible &/or ESG Overview

The fund’s ethical approach is an ‘ethically balanced’ one, utilising both positive and negative screening criteria. The fund excludes from its universe any issuers of corporate bonds in breach of any of its exclusion criteria, whilst to qualify for inclusion issuers satisfy at least one of the fund's positive activity requirements. ESG risk is also included within the financial analysis of the attractiveness of a corporate bond.

Screening of investments against the fund’s ethical criteria is conducted by Greenbank’s Ethical, Sustainable and Impact (ESI) research team which, while part of Rathbones Group, operates separately to the fund’s investment management team. This enables independent oversight of the screening of investments.

Every investment that goes into the fund needs be fundamentally sound, from a financial perspective. Therefore, no investments are in the fund only because of their social and environmental outcomes.

 

Primary fund last amended: Jul 2024

Information received directly from Fund Manager

Please select what you would like to read:

Fund Filters

Sustainability - 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.

Environmental damage and pollution policy

Funds that have written policies explaining the approach they take when companies damage the environment or are significant polluters. Funds of this kind may work with companies to encourage higher standards, or exclude companies - sometimes dependent on the situation. Strategies vary. See fund information for further detail.

Nature & Biodiversity
Biodiversity / nature policy

Find funds that have a written biodiversity policy or theme aimed at encouraging and improving environmental protection and safeguarding the natural world (sometimes referred to as the preservation or enhancement of 'natural capital'). See eg https://www.un.org/en/climatechange/science/climate-issues/biodiversity

Deforestation / palm oil policy

Find funds that have policies in place designed to ensure they do not invest in companies that are significantly involved in deforestation. This typically relates to palm oil plantations where biodiversity loss is a major concern (as well as other issues). Strategies vary. See fund information for further detail.

Illegal deforestation exclusion policy

Find funds that have policies in place explaining that they avoid companies involved in illegal and/or unsustainable deforestation. This may relate to palm oil, cattle farming or other concerns. Strategies vary. See fund information for further detail.

Responsible palm oil policy

Fund has a responsible palm oil policy which is likely to focus on the producers of palm oil and deforestation issues with a view to informing investment decisions (and / or engagement) to support and encourage high standards.

Genetic engineering exclusion

Fund avoids assets / companies directly involved in genetic engineering

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.

Coal, oil & / or gas majors excluded

Funds that avoid investing in major coal, oil and/or gas (extraction) companies. Funds vary: some may exclude all companies that extract oil. Others may have exposure to oil extraction via more diversified energy companies. See fund literature to confirm details.

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.

Arctic drilling exclusion

Funds that avoid companies that are involved in extracting oil from the Arctic regions. See fund literature for further details.

Fossil fuel reserves exclusion

Funds that avoid investing in companies with coal, oil and gas reserves. See fund information for further details.

Invests in clean energy / renewables

Funds that hold companies in the clean energy and renewable energy sectors (at the time research was supplied). Fund strategies vary, in particular the proportion of investment in these areas may vary significantly. Check fund literature for details.

Nuclear exclusion policy

Find funds that have policies which say they avoid or limit their investment in the nuclear industry. Strategies vary. See fund information for further detail.

Fossil fuel exploration exclusion - direct involvement

The fund manager excludes companies with direct involvement in fossil fuel exploration (eg coal, oil and gas companies)

TCFD reporting requirement (Becoming IFRS)

Will only invest in companies that report greenhouse gas emissions reduction strategies in line with the framework set out the by the Taskforce for Climate Related Financial Disclosure, which is increasingly becoming mandatory. See https://www.fsb-tcfd.org/ https ://www.ifrs.org/sustainability/tcfd/

Social / Employment
Social policy

Find funds that have policies which set out their approach to social issues (e.g. human rights, labour standards, equal opportunities, child labour and adherence to internationally recognised codes such as the UN Global Compact). Funds with social policies typically avoid companies with low standards or work to encourage higher standards. See fund information for detail.

Labour standards policy

Find funds that have a labour standards policy - which can be expected to mean that the fund will invest in / favour companies that have higher standards in this area - although fund strategies can vary significantly (as with all policy areas). See eg https://www.ilo.org/international-labour-standards

Favours companies with strong social policies

Find funds that invest in line with positive strategies that relate to 'people' issues - such as having strong human rights, labour standards and equal opportunities practices. Such funds are likely to invest in companies that have market leading standards with regard to employee and supplier practices. Read fund literature for further information.

Diversity, equality & inclusion Policy (fund level)

Find individual funds that have a written diversity policy – where the fund manager will aim to select companies with a carefully considered, sound approach to diversity. This should ideally cover a range of issues including gender, ethnicity, disability, beliefs, sexual orientation, etc.

Mining exclusion

All mining companies excluded

Ethical Values Led Exclusions
Ethical policies

Find funds that have policies that set out their position on ethical or 'personal values' based issues. Strategies vary. See fund information for further detail.

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.

Armaments manufacturers avoided

Find funds that avoid companies that manufacture products intended specifically for military use. Fund strategies vary - particularly with regard to non-strategic military products. See fund literature for fund specific details.

Civilian firearms production exclusion

Find funds with 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.

Alcohol production excluded

Find funds that avoid investment in companies involved in the production of alcohol. Strategies vary; some funds allow a small proportion of profits to come from this area. See fund literature for further information.

Gambling avoidance policy

Find funds that avoid companies with significant involvement in the gambling industry. Some funds may allow a small proportion of profits to come from this area. See fund policy for further details.

Pornography avoidance policy

Find funds that avoid companies that derive significant income from pornography and related areas. Strategies vary. See fund details for further information.

Animal welfare policy

Find funds with 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. See fund information for further detail.

Human Rights
Human rights policy

Find funds that have policies relating to human rights issues. Funds of this kind typically require companies to demonstrate higher standards, although some fund managers work to encourage improvements. Investee companies are often judged against internationally agreed norms or standards. Strategies vary. See fund information for further detail.

Child labour exclusion

Find funds that have policies in place to ensure they do not invest in companies that employ children.

Oppressive regimes (not free or democratic) exclusion policy

Find funds with policies that exclude companies or other assets where regimes are not democratic, or where people may be oppressed. May use eg. Freedom House research. Strategies vary. See fund literature for further information.

Modern slavery exclusion policy

The fund has a policy which excludes assets with involvement in Modern Slavery

Gilts & Sovereigns
Gilts / government bonds - exclude some

Find funds that avoid investing in 'some' gilts or government bonds. Strategies vary, but this may relate to avoiding specific countries or particular reasons for bond issuance. 'Green gilts' for example would be likely to be acceptable. See fund literature for further information.

Invests in sovereigns subject to screening criteria

Find funds that invest in financial instruments issued by governments, but will only hold those that meet certain environmental and or social criteria. This may, for example mean certain assets are excluded in line with eg Freedom House research. Strategies vary, see fund literature for more information.

Banking & Financials
Invests in banks

Find funds that include banks as part of their holdings / portfolio.

Predatory lending exclusion

Fund excludes financial services companies with widely criticised, aggressive lending practices where interest rates are typically very high, includes ‘doorstep lending’)

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 financial instruments issued by banks

Finds funds that include financial instruments (cash, derivatives and / or foreign exchange) issued by banks. See fund literature for further information as strategies vary.

Invests in insurers

Funds that do or may invest in insurance companies.

Governance & Management
Avoids companies with poor governance

Find funds that aim to avoid 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. See fund literature for further information.

UN sanctions exclusion

Exclude companies that are subject to United Nations sanctions. See eg https://main.un.org/securitycouncil/en/content/un-sc-consolidated-list

Fund Governance
External (fund) committee has veto powers

Find funds that employ an external committee (i.e. not company employees) that has power to veto (i.e. overrule) fund managers stock selection decisions. (This would typically mean the committee can tell the manager of this particular fund not to buy / sell a specific investment when they consider it appropriate to do so.)

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.

Invests mostly in large cap companies / assets

Find funds that have SRI strategies and focus their investment stock selection on larger companies. (e.g. over circa £5-£10bn)

Invest in supranationals

International entities or bodies with agreed remits that are broadly similar to those that may otherwise be undertaken by individual governments eg the UN

Targeted Positive Investments
Invests > 5% in green bonds

Find funds that invest in green bonds (also known as climate bonds) which encourage sustainability and support climate related or special environmental projects. Please check fund literature for specific % of assets invested in this area.

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.

Strictly screened ethical fund

Find funds where their main approach is to apply positive or negative ethical, social and / or environmental screens. Strictly screened funds are likely to exclude more companies than other related fund options. See fund literature for further information.

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.

Combines norms based exclusions with other SRI criteria

Find funds that make significant use of internationally agreed 'norms' (e.g. United Nations Global Compact - UNGC - or the UN Sustainable Development Goals - SDGs) as part of their investment selection process alongside additional SRI criteria such as positive or negative stock selection policies and/or stewardship strategies.

Combines ESG strategy with other SRI criteria

Find funds that have an ESG strategy (which is typically focused on avoiding companies that pose environmental, social or governance related risks) with additional criteria such as positive and/or negative screens, themes and stewardship strategies.

Norms focus

Find funds that use internationally agreed standards, conventions and 'norms' to help direct where the fund can and cannot invest (e.g. the UN Global Compact, UN Sustainable Development Goals). Read fund literature for further information.

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).

Participated in sustainability solutions IPOs or new issuances

This fund does (and has recently) invested in newly listed companies other assets (eg bonds) which are significantly focused on the provision of products and/or services which are designed to solve environmental and/or social problems.

Do not use stock / securities lending

This fund does not use stock lending for performance or risk purposes.

Unscreened Assets & Cash
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 interested in ethical issues

Find funds designed for clients who care about ethical and values-based issues, often alongside sustainability issues also.

Faith friendly

Find funds that have attributes that commonly suit the aims of investors of faith - although they may not be specifically marketed as being only for religious investors. Strategies vary (as do investor aims). Read 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
RSMR rated

Find funds that are rated by research agency 'Rayner Spencer Mills Research' (awarded 'RSMR Rated' status). Read fund literature or contact RSMR for further information.

SFDR Article 8 fund / product (EU)

Finds funds classified under Article 8 of the EU’s SFDR (Sustainable Finance Disclosure Requirements). Article 8 of the SFDR is a set of requirements that apply to financial products that 'promote' environmental or social characteristics with high governance also. These rules do not currently apply to UK funds so many managers may leave this field blank.

Fund Management Company Information

About 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.

In-house diversity improvement programme (AFM company wide)

Finds organisations / fund managers that have an in-house (company wide) diversity improvement programme - meaning that they are working to ensure that within their own businesses they employ people from diverse backgrounds - often typically focused on ethnicity and/or sex.

Diversity, equality & inclusion engagement policy (AFM company wide)

Find fund management companies that encourage the companies they invest in to have strong diversity, race, gender and other equality policies across all assets held, not simply screened or themed SRI/ESG funds. (ie Asset Management company wide).

Vulnerable client policy on website (AFM company wide)

Asset manager has information on their website that explains how they treat 'vulnerable clients' (as set out in FCA regulation)

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 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/

Resources
Employ specialist ESG / SRI / sustainability researchers

Find a fund management company that directly employs specialist ESG/SRI/sustainability researchers or analysts. This allows asset managers to discuss environmental, social and governance risks and opportunities directly with companies.

Accreditations
PRI A+ rated (AFM company wide)

Finds organisations / fund managers that have an A+ PRI rating - meaning they are highly rated according to the 'Principles of Responsible Investment'

UK Stewardship Code signatory (AFM company wide)

Find fund managers that are signatories to the FRC UK Stewardship Code, which sets out a framework for constructive investor / investee relations where fund managers are encouraged to behave like responsible, typically longer term 'company owners'.

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.

Engaging on governance issues

Fund managers have stewardship strategies in place that focus on improving governance standards across investee assets

Engaging on responsible supply chain issues

Has a stewardship / responsible ownership strategy that encourages responsible supply chain - ie the managers will discuss environmental, social and governance issues with investee companies with the aim of raising standards

Company Wide Exclusions
Coal divestment policy (AFM company wide)

This asset manager has a strategy in place that will lead them to exit direct investments in the coal mining industry. Managers ability to do this may depend on the geographic regions in which they invest.

Climate & Net Zero Transition
Net Zero commitment (AFM company wide)

Fund management organisations that have pledged to reduce their greenhouse gas emissions to ‘net zero’. Strategies vary - this area is changing rapidly.

Net Zero - have set a Net Zero target date (AFM company wide)

This asset management company has set a date by which they plan to achieve net zero greenhouse gas / CO2e emissions.

Encourage carbon / greenhouse gas reduction (AFM company wide)

Find fund management companies that are working with the companies they invest in to encourage reductions in carbon dioxide and other greenhouse gas emissions.

‘Forward Looking Climate Metrics’ published / ITR (AFM company wide)

Finds organisations / fund managers that have published ‘forward looking climate metrics’ e.g. 'implied temperature rise' data that are a total of the asset management company's share (% owned) of all the investee company emissions of the assets they manage, as well as their own direct and other indirect emissions.

Carbon offsetting – do NOT offset carbon as part of net zero plan (AFM company wide)

This asset management company plans to achieve net zero greenhouse gas (CO2e) emissions by reducing their emissions. Calculations and scope vary.

Working towards a ‘Net Zero’ commitment (AFM company wide)

Finds organisations / fund management companies that are in the process of working out how to make a ‘net zero commitment’ - meaning that when that is finalised they will have started the process of reducing their total greenhouse gas emissions to'zero'.

Committed to SBTi / Science Based Targets Initiative

See https://sciencebasedtargets.org/

Transparency
Publish responsible ownership / stewardship report (AFM company wide)

Find fund management companies that publish a report detailing their responsible investment ownership - also known as 'Stewardship' - activity.

Publish full voting record (AFM company wide)

Fund management companies that publish a full record of how they vote their shares at AGMs (annual general meetings) and EGMs (extraordinary general meetings). Voting strategies have an important role to play encouraging higher environmental, social and governance standards.

Sustainable, Responsible &/or ESG Policy:

The Rathbone Ethical Bond Fund offers the opportunity to invest in a fixed income fund with high-quality investment grade bonds while applying a broad range of both positive and negative screening criteria that will appeal to consumers with ethical concerns.

The fund applies key negative exclusion criteria to issuers of corporate bonds before ensuring that any issuers not in breach of these satisfy at least one of the fund’s positive activity requirements. The fund manager uses the services of Greenbank Investment’s (Greenbank) in-house Ethical, Sustainable and Impact (ESI) research team.

The fund’s ethical criteria were developed prior to the launch of the fund in May 2002 with significant guidance from Greenbank Investments. The criteria continue to be defined reviewed and, where necessary, evolved as part of a formal annual review process. with reference to the ethical committee which meets once a year as part of the fund’s annual review process. The last substantive changes to the fund’s criteria were made in 2017.

A short summary is provided below of some of the criteria applied to key asset classes. Further details are provided in the fund’s Ethical Screening Process brochure which is available at: https://www.rathbonesam.com/uk/financial-adviser/fixed-income/rathbone-ethical-bond-fund


Corporate bonds

Companies are assessed against a number of positive and negative top-level social and environmental criteria. The team analyse in detail the specific merits of each company’s individual activities and responsible business practices.

 

The exclusions and negative screens

The funds apply screening criteria to avoid investing in companies creating significant negative impacts.

The funds shall exclude companies in breach of specific criteria related to one or more of the following:

  • Alcohol
  • Animal welfare
  • Armaments
  • Climate change
  • Environment
  • Gambling
  • Human rights
  • Nuclear power
  • Pornography
  • Predatory lending
  • Tobacco


The positive ethical criteria

We believe that companies displaying strong policies and practices with regard to environmental, social and governance issues are likely to be well-positioned to deliver long-term value creation for investors.

In order to qualify for inclusion in the funds, companies that pass the negative screen must also display leading or well-developed business practices and policies and/or provide socially or environmentally beneficial products and services.


Green, social or sustainability bonds

Green bonds, social bonds, sustainability bonds, or similar bonds where the proceeds are used to support specified environmental or social objectives, may be eligible for inclusion in the fund. Each is subject to the usual sustainability criteria applied to the issuer. If the corporate issuer itself does not pass our positive and negative screens, a bond may still be approved for inclusion in the fund on the merits of how the bond’s proceeds will be used, rather than the issuer’s principal activity. When analysing a ring-fenced bond against our criteria, we will look at:

  • The issuer’s green/social financing framework and whether an independent second party opinion on this has been sought (what the proceeds of the bond can be used for).
  • The processes in place to govern ongoing management of proceeds from the bond (how certain can we be that the money will be used as intended).
  • Full transparency on the use of proceeds through regular reporting, ideally with third party verification and reporting on impact in addition to allocation of funds (what was the money used for and what benefit did it create).
  • Whether the funding is transformational for the issuer or part of ‘business as usual’ with a green/social label (would the activity have occurred anyway?).

 

 

Process:

The fund manager has the ultimate control of investment decisions on the fund but inclusion in the fund is dependent on the adherence of the relevant investment to the funds ethical criteria.

ESG risk factors are integrated at all stages of the investment process. At the security selection phase, the analyst will consider financially material ESG risks to the company, the risks these pose to the credit metrics and whether these risks are sufficiently reflected in the valuation of a bond. Equally, it could be that we feel the ESG strength of an issuer is being underappreciated in terms of the valuation of their bonds- this is likely to be something that we see become a driver of technical moves we see in bond markets in coming years as we see central banks 'greening' their corporate bond QE programmes.

At a portfolio construction level, we consider ESG data to be a significant driver of our investment themes and to identify material risks/opportunities. Two recent examples of this are the investments along the 'anthropocene' theme that we have discussed in recent years, as well as the decision so use bank fossil fuel lending data in order to reduce/remove our exposure to banks that we believed to be most exposed to climate change risk.

In terms of risk management, we would consider ESG to be integrated to the risk management process by inclusion in the previous two. On top of this, the risk team conduct regular ESG analysis on our fund, producing a regular risk report including relevant ESG risk data that is available to the CEO on a monthly basis, as well as the six-monthly Portfolio and Risk Challenge meeting.

 


Ethical screening

Once an investment has been researched and deemed suitable for the funds from a financial perspective, it then needs to be scrutinised in line with pre-determined ethical criteria. These criteria have been agreed between the fund managers and the team at Greenbank Investments (Greenbank), who will be the final arbiters. The fund managers may propose an investment, but Greenbank has the power of veto if the investment fails to meet the ethical criteria.

New investments that are considered suitable for the funds are investigated as requested by the fund managers and subjected to the team’s screening process. The team looks to update all of its in-depth company profiles on a 12-18 month cycle. A full review of the fund’s eligible investment universe will be carried out an annual basis ahead of a formal annual review meeting.

The fund’s holdings are monitored regularly, and reviewed in the light of any relevant news, merger and acquisition activity or findings from ongoing analysis. As companies change their activities, merge with others or develop new policies and practices, their ethical credentials may alter. The Greenbank ESI research team works closely with the fund managers to highlight changes in ethical performance and ensure that the funds only hold approved investments.

Divestment on ethical grounds is likely to be uncommon, as investments we hold are unlikely to change their ‘spots’ overnight. If the activities of a company change, such that it is no longer suitable for the funds, the fund managers would normally seek to sell the holding within three to six months.

Finally, stewardship forms an essential part of our approach to responsible investment. Stewardship is a crucial fourth leg to the process and involves the participation of both the fund managers and a dedicated corporate governance team when scrutinising policies and management teams.

 


ESG data

The team utilises several resources including:

  • MSCI ESG ratings and research: measures a company’s resilience to long-term, financially relevant ESG risks and opportunities
  • Sustainalytics ESG risk ratings and research: measures the magnitude of a company’s unmanaged ESG risks
  • Industry ESG conferences and company meetings: provide information on both sector-wide and company specific ESG or sustainability issues
  • ESG research/comments from internal and third-party analysts: provide additional insight into any relevant ESG issues affecting potential investment opportunities
  • Weekly sustainability news flow: provides weekly news on material sustainability issues and topics across holdings


To apply the sustainability criteria, the ESI research team use MSCI ESG Manager as a tool to help identify which companies we need to screen out of our portfolios for not meeting our exclusionary criteria. The screening tool looks at companies’ revenue exposure or ESG score to different areas we screen out and flags if there is a breach.

In addition to the reporting outputs from companies themselves, the Greenbank team uses a variety of sources, including reports and publications from industry groups, non-governmental organisations, sell-side analysts, external research bodies and specialist responsible investment publications, to arrive at a balanced view of companies’ overall performance. Some examples of sources of information include the Workforce Disclosure Initiative, Access to Medicine Index, Access to Nutrition Initiative and CDP (Carbon Disclosure Project). Since June 2015, the team has also subscribed to MSCI ESG Manager to reinforce this process, utilising tools such as their SDG alignment tool, as an initial starting point for their analysis in some cases. Greenbank also conducts research into wider topics such as climate change, clean energy, human rights, community investment and employee welfare and utilises this research when conducting the sustainability screening for the funds.

For sustainability bonds, Greenbank will also take into consideration whether the financing framework is aligned to an external standard, which can include, but is not limited to, the International Capital Market Association’s Green Bond Principles and the Climate Bonds Initiative’s Climate Bonds Standard and Certification Scheme.

 

Resources, Affiliations & Corporate Strategies:

Bryn Jones is the lead fund manager of the fund. He is supported by Stuart Chilvers (Fund Manager), Christie Goncalves (Assistant Fund Manager), and the broader investment team. For biographies of the fund managers please visit: https://www.rathbonesam.com/uk/financial-adviser/fixed-income/rathbone-ethical-bond-fund

The investment team also utilises the resources of the wider group, leveraging from areas such as our investment committee structure and dedicated research function.

At the time of investment, the fund manager is required to have clear approval from the ethical committee. This is complemented by a full review of all holdings and the fund’s eligible investment universe ahead of and at the annual review meeting. The fund’s holdings are monitored by Greenbank Investment’s (Greenbank) ethical, sustainable and impact (ESI) research team regularly and reviewed in the light of any relevant news, merger and acquisition activity or findings from ongoing company analysis.

Divestments are very uncommon. If the activities of an issuer change, so that a bond is no longer suitable for the fund, the fund manager would normally seek to sell the holding within three months. If the bond is particularly illiquid and selling is difficult, the manager can take up to six months. If the bond is within two years of redemption, it can be held to maturity if the fund manager believes selling it earlier would be prejudicial to the overall performance of the fund. Any divestments, or proposed divestments, made on SRI grounds, would be mentioned in the ethical report section of the Annual Report.

The fund does not have an external committee or verification process; it believes this control is provided by accountability to investors and public scrutiny. The complete portfolio is published in the Interim and Annual Reports and is also made publicly available monthly. Unitholders and others are encouraged to comment on the fund’s holdings and how they view the application of its ethical criteria.

The investment team have access to a variety of external ESG resources including MSCI, Sustainalytics and Fitch.


Greenbank Investments’ ESI research team

Greenbank investments’ specialist ethical, sustainable and impact (ESI) team conduct ethical research and apply the fund’s ethical screening criteria. The team at Greenbank have been at the forefront of developments in the ethical investment industry since 1992, launching one of the first bespoke ethical portfolio services in 1997. The fund’s ethical and sustainability framework and methodology have been developed with Greenbank, utilising their many years’ experience of managing private client portfolios as well as providing screening services for the other Rathbones’ sustainable funds (including Rathbone Greenbank Multi-Asset Portfolio funds, the Rathbone Greenbank Global Sustainability Fund and the Rathbone Greenbank Global Sustainable Bond Fund).

Greenbank Investments work with over 1,200 clients across the UK and manage over £2.3bn in assets (as at 31 March 2024).

Kate Elliot is Head of Greenbank’s ESI research team, which comprises:

  • Perry Rudd - Ethical, Sustainable and Impact Research Adviser
  • Sophie Lawrence - Stewardship and Engagement Lead
  • Emma Williams - Senior Ethical, Sustainable and Impact Researcher
  • Kai Johns - Senior Ethical, Sustainable and Impact Researcher
  • Charlie Young - Ethical, Sustainable and Impact Researcher
  • Lauren O’Leary - Ethical, Sustainable and Impact Researcher
  • Caitlin Westlake - Assistant Ethical, Sustainable and Impact Researcher

For biographies for the team please visit the Our People page on the Rathbones website.

 

Rathbones Stewardship team

The Rathbones Group Stewardship team is led by Matt Crossman and comprises:

  • Archie Pearson: ESG & Stewardship Analyst, Voting Lead
  • Kazuki Shaw: ESG & Stewardship Analyst
  • Philippa Bliss – ESG & Stewardship Analyst
  • Tilia Astell: Junior ESG & Stewardship Analyst


In addition to this, Jenny Foster is an Engagement Analyst for Rathbones Asset Management, working with all of the fund managers to deliver Rathbone Asset Management's engagement strategy and lead direct engagements with companies.
 


ESG affiliations and memberships

Rathbones Group is a member of PIMFA and UK Finance. They are also members of or signatories to:

  • UK Stewardship Code
  • PRI
  • CDP
  • IIGCC
  • Climate Action 100+
  • Living Wage employer
  • The Workplace Wellbeing Charter
  • The FTSE Women Leaders Review
  • Signatories to UN Global Compact
  • Signatories to Women in Finance Charter
  • Listed on FTSE4Good
  • Net Zero Asset Managers Initiative
  • Business Ambition 1.5ºC
  • Inclusive Companies
  • UKSIF

Please see the Rathbones website for further details at: About Us | Partnership and memberships


Greenbank (Rathbones’ specialist sustainable investment division) partners with many different members of the responsible investment community. These are shown below:

  •  Ecumenical Council for Corporate Responsibility (ECCR)
  • Workforce Disclosure Initiative (WDi)
  • The Food Foundation
  • Access to Medicine Index
  • Access to Nutrition Initiative
  • Finance for Biodiversity
  • Business Benchmark on Farm Animal Welfare (BBFAW)
  • Long-term Investors in People’s Health – ShareAction
  • FAIRR
  • Financing a Just Transition Alliance
  • New Plastics Economy Global Commitment
  • Paris Aligned Investment Initiative
  • Investor Alliance on Human Rights
  • Business Coalition for a Global Plastics Treaty


Please see the Greenbank Investments website for further details at: Partnerships | Greenbank

 

 

SDR Labelling:

Unlabelled with sustainable characteristics

Disclaimer

Note re Filters

PRI A+ rated

In 2022, PRI updated their scoring mechanism. This in turn has altered how Rathbones Group Plc reports its scores.

Rathbone Group Scores:

  • Investment and stewardship policy: our score was 72% in 2020. For this category, now expanded to cover stewardship activities too, and renamed policy, governance and strategy, we earned a score of 77%.
  • Direct – listed equity active fundamental: up from 37% in 2020 to 42% now.
  • Fixed income – SSA and corporate: up from 28% and 29% in 2020 to 67% in both cases. 'SSA' stands for sovereign, supranational and agency debt (mainly government bonds).
  • Confidence-building measures: 80%. This is a new category, which assesses how we review and verify the data reported to the PRI. Issues considered include our overall approach to review and verification, whether a third party has checked the data, whether our internal audit team has done the same, and the seniority of the Rathbones executive who reviewed the report before submission.


The Rathbones Group scores published in 2023 can be found on page 41 of our responsible investment report for our 2023 activity.

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Disclaimer

Important Information

The information contained in this document is for use by investment advisers and is not intended for circulation to private clients or the general public.

Past performance should not be seen as an indication of future performance. The value of investments and the income from them may go down as well as up and you may not get back your original investment.

Rathbones Asset Management is authorised and regulated by the Financial Conduct Authority and Rathbones Asset Management is a member of the Investment Association.

Rathbones Asset Management Limited: Registered address 8 Finsbury Circus, London, EC2M 7AZ.

Registered No. 02376568 - A Member of the Rathbone Group.