Newton Ethically Screened Fund for Charities (BNY)
SRI Style:
ESG Plus
SDR Labelling:
Other
Product:
Charities
Fund Region:
Global
Fund Asset Type:
Multi Asset
Launch Date:
17/05/2010
Last Amended:
Oct 2024
Dialshifter (
):
Fund Size:
£109.00m
(as at: 31/03/2024)
Total Assets Under Management:
£86872.77m
ISIN:
GB00B4VV6B25, GB00BKRVRY86, GB00BKRVS015, GB00BKRVRZ93
Contact Us:
Objectives:
The Fund seeks to achieve a balance between capital growth and income for investors which are Charities, over the long term (5 years or more).
Sustainable, Responsible
&/or ESG Overview:
The Fund aims to achieve a balance between capital growth and income for investors which are charities, over the long term (5 years or more). It seeks to achieve this through a multi-asset portfolio screened against socially responsible investment (SRI) criteria aligned with common SRI standards for charity investors. Our focus is very much on delivering attractive total returns for our ethically minded clients - we recognise that ethical investors seek return, like any other investors. The SRI screening criteria avoid key areas relevant to charities including alcohol, tobacco, armaments, pornography and gambling and was established in response to feedback from our investors and other charities.
The Fund does not have any aims with regard to ESG or sustainability. Newton considers financially material ESG risks and opportunities as part of its multi-dimensional research approach. However, this is just one input into the research process.
Primary fund last amended:
Oct 2024
Information directly from fund manager.
Fund Filters
Sustainability - General
Find funds which substantially focus on sustainability issues
Find funds where there is a significant emphasis on (environmental and social) sustainability. Funds with a 'sustainability theme' typically place more emphasis on the area than funds with a 'sustainability policy' - meaning that it is more likely to drive investment selection. Strategies vary. See fund information for further detail.
A core element of these funds aim to encourage higher sustainability standards across business practices through responsible ownership / stewardship / engagement / voting activity
Find funds that use the UN Global Compact to inform or help direct where they can or cannot invest and will typically not invest in companies with significant breaches (low standards) - although strategies vary. (The UNGC covers a wide range of issues - search 'UNGC'). See https://unglobalcompact.org/
The delivery of the shift to a sustainable future is a core feature of this fund and its investment strategy. See eg https://www.transitionpathwayinitiative.org/
Environmental - General
Funds that limit or 'reduce' their exposure to carbon intensive industries (ie sectors which are major contributors to climate change. Funds vary - some funds may be 'underweight' in this area which means they may have some investment in highly carbon intensive areas. Funds of this kind may choose companies they consider to be 'best in sector' and encourage ever higher standards. Strategies vary. See fund information for further details.
Climate Change & Energy
Funds that have policies (documented strategies that explain their position on) climate change related issues such as greenhouse gas/carbon emissions, net zero, transitioning to lower carbon. Strategies vary. Read fund details for further information.
Find funds where investment in clean / renewable energy companies an other assets is central to their investment selection strategy. The proportion of the fund that is directly or indirectly invested in renewable energy varies between funds and over time. See fund information for further details.
A core element of these funds will aim to encourage the transition to lower carbon activities through responsible ownership / stewardship / engagement / voting activity
Fund funds that have an energy efficiency theme - typically meaning that a fund 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.
This fund has a strategy that aims ensure its holdings will gradually reduce their greenhouse gas emissions in line with targets set at COP21 in Paris. The ultimate aim is to achieve ‘net zero emissions by 2050’ and a ‘maximum global temperature increase of +1.5 to +2 degrees above preindustrial levels’. Strategies and opinions vary. Read fund information.
Find funds that require all, or almost all, of the companies it invests in to have a ‘net zero action plan’ - meaning that the companies they invest in have worked out how they will, over time, reduce their total carbon (and other greenhouse gas) emissions to nil.
Social / Employment
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
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.
Fund has a policy aimed at protecting vulnerable workers such as those on zero hour / informal contracts working in the gig economy
Ethical Values Led Exclusions
Companies are excluded if they are involved in any aspect of the production chain for tobacco products, including cigarettes, vaping, e-cigarettes, chewing tobacco and cigars.
Companies are excluded if they make more than 5% of their revenue from the manufacture, sale or distribution of tobacco products including cigarettes, vaping, e-cigarettes, chewing tobacco and cigars.
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.
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.
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.
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.
Find funds that avoid companies that derive significant income from pornography and related areas. Strategies vary. See fund details for further information.
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.
Find funds that avoid companies that are involved in testing their products on animals. Precise application may vary. See fund literature for further information.
Human Rights
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.
Find funds that have policies in place to ensure they do not invest in companies that employ children.
Gilts & Sovereigns
Find funds that invest in loans issued the government, commonly known as gilts or government bonds. These may or may not be ringfenced for specific projects (see additional options). See fund literature for any selection criteria.
Banking & Financials
Find funds that include banks as part of their holdings / portfolio.
Fund excludes financial services companies with widely criticised, aggressive lending practices where interest rates are typically very high, includes ‘doorstep lending’)
Finds funds that include financial instruments (cash, derivatives and / or foreign exchange) issued by banks. See fund literature for further information as strategies vary.
Funds that do or may invest in insurance companies.
Governance & Management
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.
Exclude companies that are subject to United Nations sanctions. See eg https://main.un.org/securitycouncil/en/content/un-sc-consolidated-list
Fund managers encourage the companies they invest in to have more diverse board structures (e.g. more women on boards)
A core element of these funds will 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
Find a fund that invests in a combination of small, medium and larger (potentially multinational)companies.
Find funds that have SRI strategies and focus their investment stock selection on larger companies. (e.g. over circa £5-£10bn)
How The Fund Works
Find funds that focus on finding and investing in companies with positive / beneficial attributes. This strategy can be applied in addition to exclusion criteria and engagement/stewardship activity.
Find funds with few exclusions - typically for example exclude tobacco or companies that breach commonly adopted standards or norms such as the UN Global Compact.
Find funds that invest more heavily in those that have higher ESG ratings/standards or scores and less heavily in companies with lower ESG ratings. Where this is central to a fund's strategy you should expect it to invest in most sectors. Strategies vary.
Find funds that consider both the 'positive' and 'negative' aspects of company behaviour and make balanced, considered decisions as part of their investment approach. May apply to a range of different issues and policy areas.
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 does not use stock lending for performance or risk purposes.
Intended Clients & Product Options
Finds funds designed to meet the needs of individual investors with an interest in sustainability issues.
Find funds designed for clients who care about ethical and values-based issues, often alongside sustainability issues also.
Fund Management Company Information
About The Business
Find fund management companies that are smaller or specialise in particular areas - notably, ideally ESG related. Strategies vary.
Finds fund management companies that have a published company wide stewardship, engagement and / or responsible ownership policy or strategy that covers all investments. Stewardship typically involves encouraging higher ESG standards through voting and dialogue.
Find fund management companies that actively encourage higher 'environmental, social and governance' and/or 'sustainable and responsible investment' practices across investee companies - typically where the aim is to encourage positive change that is aligned with the best interests of investors. Strategies vary. See additional information and options.
Find fund managers that vote all* the shares they own at Annual General Meetings and Extraordinary General Meetings. A commitment to voting shares is a key indicator of 'responsible share ownership' demonstrating their support for or disagreement with management policy. (*situations can legitimately, occasionally occur where voting proves impossible, but in principle all shares should be voted.)
Find funds run by fund managers that apply Responsible ownership or 'Stewardship' policies to all or most of their investment assets. This means active involvement (e.g. voting, dialogue) with the companies they invest in across funds (not normally limited to ethical or SRI options.) Read fund literature for further information.
Find fund management companies that consider environmental, social and governance (ESG) issues when deciding whether or not to invest in a company for all / almost all of their funds and other assets. This is increasingly seen as part of sound risk management.
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.
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).
Asset manager has information on their website that explains how they treat 'vulnerable clients' (as set out in FCA regulation)
Collaborations & Affiliations
Find fund management companies that have signed up to the UN backed 'Principles of Responsible Investment'.
Find fund management companies that have partnered with Fund EcoMarket - meaning that they are helping to improve access to information on sustainable and responsible investment by paying an annual fee to us which enables us to publish information for free. Partner funds are listed ahead of other funds and have their logos displayed.
A member of the Taskforce for Nature Related Financial Disclosures group which aims to aid risk management and shift money towards nature-positive outcomes.
Fund management entity is a member of the Investment Association https://www.theia.org/
Resources
Find fund management companies that employ people to steer and support fund managers in voting shares at company AGM's and EGMs in ways that are consistent with encouraging higher ESG/sustainability standards.
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.
Find fund management companies that makes use of expert external research companies. This can help deliver specialist expertise and means resources are pooled with other investors.
Accreditations
Finds organisations / fund managers that have an A+ PRI rating - meaning they are highly rated according to the 'Principles of Responsible Investment'
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
Find fund management companies that regularly initiate or run industry wide (collaborative) investor projects aimed at raising environmental, social and governance standards amongst investee companies.
Fund manager has stewardship /responsible ownership strategy that is focused on addressing climate change with investee assets.
Asset manager has stewardship /responsible ownership strategy with involves encouraging investee asset to reduce plastic waste and pollution.
Asset manager has a stewardship / responsible ownership policy that means they are working to encourage more responsible mining practices - where environmental and social issues are properly dealt with by the companies they invest in.
The asset manager has a responsible ownership / stewardship strategy that focuses on biodiversity and nature issues relating to the assets they invest the aim of which will be to reduce harm and or deliver improvement. Strategies vary. https://tnfd.global
Asset manager has responsible ownership / stewardship strategy in place which aims to address human rights issues in investee companies (and potentially their suppliers) with the aim of raising standards
Asset manager has responsible ownership / stewardship strategy in place that aims to improve labour standards for the benefit of employees in investee companies (and potentially their suppliers)
Asset management company has a stewardship strategy in place which involves working to raise diversity, equality and inclusion standards across investee assets
working with the assets they hold to help stamp out modern slavery - where direct or indirect company employees are exploited for business benefits.
Fund managers have stewardship strategies in place that focus on improving governance standards across investee assets
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
Find fund management companies (not funds) that avoid investment in 'controversial weapons' across all of their funds and other investment vehicles.
Climate & Net Zero Transition
Fund manager AGM / EGM voting strategy has processes in place that mean they will normally be expected to vote in a way that will encourage the transition to net zero greenhouse gas emissions.
Find fund management companies that have published a Climate Risk policy or statement that is signed / owned by their Chief Executive.
This asset management company has set a date by which they plan to achieve net zero greenhouse gas / CO2e emissions.
Find fund management companies that are working with the companies they invest in to encourage reductions in carbon dioxide and other greenhouse gas emissions.
Finds organisations / fund managers that have a company wide carbon transition plan - meaning that they have plotted a path to how they will move away from activities that produce or use carbon based energy sources (that emit greenhouse gases) towards clean, alternative, renewable energy sources.
This asset management company plans to achieve net zero greenhouse gas (CO2e) emissions with the help of a scheme that will lock away an amount of carbon that is equivalent to the company’s own emissions – so that the end result is ‘net zero’. Calculations and scope vary.
Find fund management companies that are working to reduce their own (fund management company) carbon/greenhouse gas emissions.
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'.
See https://sciencebasedtargets.org/
Transparency
Find fund management companies that publish a report detailing their responsible investment ownership - also known as 'Stewardship' - activity.
Find companies that publish information about their sustainable and responsible investment strategies on their company website.
Find fund management companies that will supply information about their sustainable and responsible investment activity on request.
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.
This asset management company has published a plan that explains how they are going to achieve net zero greenhouse gas / CO2e emissions.
Find fund management companies that have supplied Dialshifter information. See Dialshifter tab within record for more information.
Sustainable, Responsible &/or ESG Policy:
The investment process leverages the expertise and resources of Newton’s broader investment team. The Fund is constructed using a fundamental, security selection process.
We make direct investments in securities providing investors with a direct line of sight as to what is held by the Fund. Investment decisions are predicated on two key factors:
- an investment’s eligibility based on the Fund’s SRI screening criteria; and
- the requirement for attractive valuation and upside potential as identified through our multidimensional research, which includes use of themes and taking into consideration material and relevant ESG factors*. We would never purchase a security simply for its ethical/ ESG credentials, as we believe maximising returns and delivery of the Fund’s investment objectives is key.
The Fund is screened using both sectoral-based exclusions and ethical threshold-based exclusions. A sectoral-based exclusion will effectively exclude any company within a given sector, whereas a threshold-based exclusion will look-through to a company’s revenues to identify earnings from the respective activity. In both cases, compliance with the Fund’s SRI screens is monitored through Newton’s order management system (OMS). Sector exclusions are implemented directly into the OMS using industry classifications from market data providers.
*ESG can be one of many inputs into the fundamental analysis. Newton will make investment decisions that are not based solely on ESG analysis. Other attributes of an investment may outweigh ESG analysis when making investment decisions. The way that material ESG analysis is assessed may vary depending on the asset class and strategy involved. As of September 2022, the equity investment team performs ESG analysis on equity securities prior to their recommendation. ESG analysis is not performed for all fixed income securities. The portfolio managers may purchase equity securities that are not formally recommended and for which ESG analysis has not been performed. Analysis of themes may vary depending on the type of security, investment rationale and investment strategy. Newton will make investment decisions that are not based on themes and may conclude that other attributes of an investment outweigh the thematic structure the security has been assigned to.
Process:
Constructing the Newton SRI Fund for Charities
The Fund aims to strike the balance between providing an investment solution focused on capital growth and income generation and being firmly aligned with SRI standards for charity investors. It aims to achieve a combination of capital growth and income through a multi–asset portfolio screened against SRI criteria. Our focus is very much on delivering attractive total returns for our clients – we recognize that ethical investors seek return, like any other investors. Where this Fund differs from non-screened funds is that we aim to deliver that return within the constraints of a relevant
and dynamic ethical policy which reflects the needs of our investors.
The SRI criteria for the Fund aims to meet the requirements of a broad range of charities and was established in response to feedback from our investors and other charities. The Fund is screened against a range of negative criteria, reflecting these areas of concern and interest for our charity investors. The full criteria are mentioned below:
- Tobacco production, distribution and support
- Over 10% of turnover from production or distribution of tobacco.
- Over 10% of turnover from support to the tobacco industry.
- Alcohol production and distribution
- Over 10% of turnover from production or distribution of alcoholic beverages.
- Gambling
- Over 10% of turnover from gambling operations or products.
- Pornography
- Over 3% of turnover from pornography and adult entertainment services.
- Manufacture of products tested on animals and the production or sale of fur
- Any turnover from production or sale of fur products.
- Over 10% of turnover from the manufacture of cosmetic products tested on animals.
- Over 10% of turnover from the manufacture of non-cosmetic products that are tested on animals.
- Environment
- No investment permitted in a company that has any critical severity controversies; is considered a persistent offender; and is considered non-communicative in respect of Energy-related controversies. This covers the following topics: energy consumption thresholds, greenhouse gas emission thresholds, energy, climate change and air pollution.
- No investment permitted in a company that has any critical severity controversies; is considered a persistent offender; and is considered non-communicative in respect of Biodiversity-related controversies. This covers the following topics: biodiversity and/or animal testing, including exploitation of sensitive eco-systems, and farm animal welfare.
- Developing world
- Broken International Code on Marketing of Breast Milk Substitutes
- Human rights
- No investment permitted in a company that has any critical severity controversies; is considered a persistent offender; and is considered non-communicative in respect of Human Rights-related controversies. This covers the following topics: Fundamental Human Rights, Fundamental Labour Rights, Non Discrimination, Child and Forced Labour.
- Military
- Over 10% of turnover from production of conventional weapons.
- Over 5% of turnover from production of key parts or services for conventional weapons.
- Produces cluster munition systems.
- Not addressed allegations or indications of involvement in anti-personnel landmines.
- Reproductive medicine
- Production of abortifacients.
- Provision of abortion-related services.
- Climate change (fossil fuels)
- Over 10% turnover from thermal coal mining activities.
- Over 10% turnover from the extraction of tar sands or oil shale.
- High interest rate lending
- Over 5% turnover from high interest rate lending. High interest lending will typically have an APR of over 100%, a loan duration of 18 months or less and require no collateral with little or no credit checks performed.
Screening criteria is correct as of 26 August 2021. Newton may make changes to the above screens from time to time. Newton uses a third party vendor, Vigeo EIRIS, in order to apply the negative screening criteria to the Fund, apart from the anti-personnel landmine and cluster munitions screens. The negative screening criteria are based upon Vigeo EIRIS’ own definitions of each controversial activity/area of controversy and are implemented using Vigeo EIRIS’ in-house research. For the anti-personnel landmine and cluster munitions screens, Newton uses output from Sustainalytics to implement the screens.
The Fund is actively managed and draws on an investment process which concentrates on identifying high quality, well-managed companies that benefit from themes and secular growth trends. It is constructed holistically, with no regional, sector or benchmark constraints and with the ability to invest anywhere. Sector and regional allocations may result as much from a series of security selection decisions as from more top-down considerations. The Fund is constructed with reference to the mixed assets and charities team’s model portfolio; however, the portfolio managers do take into account the Fund’s ethical policy and investment objective. The portfolio managers carefully consider risk in the portfolio and make qualitative judgments on the impact new positions, exiting from current positions or existing market conditions would have on the overall portfolio.
The portfolio managers draw upon the output of our proprietary global research team as well as conduct their own research to ensure that the portfolio is composed of securities in which they have strong conviction*. The portfolio managers have a broad and diversified universe of equities, bonds and listed vehicles from which to construct the Fund. The ethical screens exclude approximately 15% of the investible universe, although this varies by region. The global nature of the Fund minimizes the impact of this constricted universe and provides an ample opportunity set from which to deliver attractive returns.
* There is no compulsion for portfolio managers to purchase recommended ideas, and portfolio managers may choose to invest in securities that are not on the research recommended list (RRL).
Buy discipline
The decision to buy the security rests with the lead portfolio manager. This is dictated by the manager’s conviction in the investment idea along with the risk/reward characteristics of the security as well as how it will impact the overall portfolio. The skill of the portfolio manager is in selecting the best combination of securities in the right proportion with the aim of delivering the best risk-weighted return from the portfolio.
The aim is to create a diversified portfolio of active positions. Positions are sized by:
- Conviction
- Downside risk
- Market liquidity conditions
- Active tactical cash allocation
Sell discipline
Securities will be sold if they no longer conform to our SRI ethical criteria or if our view on the fundamentals and valuation changes. If a security falls out of the investable universe, it must be sold within three months to maintain the ethical rigour of the portfolio but at the same time to avoid a ‘forced sale’ at an inopportune time. Changes in the fundamentals of a company, such as a change in management or acquisitions, etc., would prompt the portfolio manager to reassess a company's rating.
We aim to invest for the medium to long term; however, securities may be sold for the following reasons:
- Investment thesis deteriorates
- Change in ‘acceptability’ on ethical screening grounds
- Change in model weight and conviction
- Taking profits
- Switching to more attractive investment opportunities
Ethical investment process
Newton’s investment team employs a straight-forward and transparent approach to ethical investment on behalf of our clients and pooled fund investors. We partner with charities to ensure that we understand their specific needs and desired outcomes. We monitor the evolving ethical landscape for trends in ethical investing and develop the Fund’s strategy to align with these trends. We aim to ensure that the Fund’s policy is relevant and dynamic for all the unit holders in the Fund, that it continues to provide adequate coverage and can be implemented effectively.
Our process leverages the expertise and resources of Newton’s broader investment team. We construct portfolios using a fundamental, security selection process driven by themes and taking account of key ESG factors*. Our detailed analysis provides valuable insight into what a company does (activities/industry) and how it does it (management/governance). It is this detailed understanding of the companies we invest in which also provides a level of risk management within the investment process.
We make direct investments in securities, resulting in greater transparency and knowledge of the portfolio at a deeper level to provide our investors with confidence that the ethical policy is being implemented effectively.
All investment decisions are predicated on two key factors: 1) an investment’s eligibility based on the ethical policy; and 2) the requirement for attractive valuation and upside potential. We would never purchase a security simply for its ethical/ESG credentials, as we believe maximizing returns and delivery of the Fund’s investment objectives is key.
NIM is able to implement a client’s ethical policy using both sectoral-based exclusions and ethical threshold-based exclusions. A sectoral-based exclusion will effectively exclude any company within a given sector, whereas a threshold-based exclusion will look-through to a company’s revenues to identify earnings from the respective activity.
In both cases, compliance with the client’s ethical policy are monitored through NIM’s order management system (OMS).
Sector exclusions are implemented directly into NIM’s OMS using industry classifications from the major market data providers.
We use the expertise of specialist, market leading data providers to facilitate the provision of ethical threshold-based screens. NIM’s main provider of ethical threshold-based screens is Moody’s ESG Solutions (formerly Vigeo EIRIS), but we also retain access to supplementary screens provided by Sustainalytics and MSCI. We ensure that our data providers are reviewed on a regular basis.
For ethical threshold-based exclusions NIM will create an ethical strategy within Moody’s ESG Solutions online platform (DataLab) in line with the respective client/fund’s ethical requirements, choosing from a suite of screens provided by the vendor. The ethical strategy is compared to Moody’s research universe and will then produce a list of companies that are not permitted under the screens selected. The resultant security list is downloaded into NIM’s OMS and can then be used to prevent the purchase of non-compliant companies, as well as flag any holdings that become “restricted”.
Security lists are downloaded into NIM’s OMS from DataLab on a weekly basis.
The integrity of the ethical screens implemented on behalf of our clients/funds and the respective portfolio’s adherence to them is fundamental to our approach as ethical investors and ensures our clients have confidence that we are investing only in those areas deemed investible under the client/fund’s ethical policy. Output from the provider systems in the form of a security list is fed into NIM’s OMS and therefore any attempt to buy a stock that is unacceptable, or where an existing portfolio position becomes un-investible, a warning is triggered, alerting the portfolio manager (PM), the client team and NIM’s investment control (IC) team to this fact.
IC will raise the alert with the PM and NIM’s investment relationship management (IRM) team and will ask the PM to take the appropriate action:
- Selling the security - the PM has three months (in practice this is done immediately) to investigate the issue fully before selling. This time period also helps to ensure that the portfolio does not become a forced seller.
- Retaining the security – if NIM believes it to be in the client’s best interest, it may seek to discuss the company with the client with a view to obtaining permission to continue to hold the security (whereby a detailed file note would be recorded and retained).
The PM will then notify IC which action will be taken. Where the position is to be sold, the three-month time limit will be monitored by IC and the IRM team. Where the client agrees to retaining the security, the IRM team will ensure a file note capturing the client instruction is recorded.
* Where material and relevant information exists. Analysis may vary depending on the type of security, investment rationale and investment strategy. Newton does not currently view certain types of investments as presenting ESG risks, opportunities and/or issues, and believes it is not practicable to evaluate such risks, opportunities and/or issues for certain other investments. In addition, Newton will make investment decisions that are not based solely on ESG considerations. In some cases therefore, Newton may conclude that other attributes of an investment outweigh ESG considerations when making investment decisions.
Resources, Affiliations & Corporate Strategies:
RI Team
Newton has a centralised responsible investment team (RI) headed by Therese Niklasson, global head of sustainable investment. This team is the centre of excellence for all matters related to RI , and with its deep functional knowledge of the RI space and how it is evolving, it provides guidance, support and subject-matter expertise to our wider investment team. The RI teamis global in its footprint and diverse in its employee base. The team is organised into three pillars of expertise – stewardship, research and analytics: these specialisations under the RI umbrella allow us to bring further depth and expertise to each of these activities. The team’s compact size enables it to work cohesively and operate as one team.
Stewardship: Oversees the firm’s engagement framework and advocacy initiatives, focusing its efforts on meaningful outcomes for clients, and also undertakes the firm’s proxy voting activities. Provides subject-matter expertise to the investment team on governance risks and evolving expectations.
Sustainability research: Subject-matter experts consulting the investment and research teams, driving deep insights on sustainability-related subjects. The team manages Newton’s sustainability standards, definitions and frameworks.
RI : Has strong quantitative and RI data expertise and owns the data ecosystem, creating and managing RI data models, frameworks and tools that support ESG integration and sustainable investing. The team has built an innovative suite of building blocks that can be leveraged to develop scalable solutions to meet specific client requirements.
The role of the RI team is to be a support function to the investment teams, to set standards around sustainable investment, and to coordinate and ensure effectiveness around our stewardship efforts. It guides the business around policies and direction of travel for sustainability and stewardship more broadly. The RI team also owns and manages the overall governance systems to ensure we deliver against key codes and commitments including stewardship codes, industry principles such as the UN Principles for Responsible Investment, and industry pledges such as the Net Zero Asset Managers Initiative (NZAMi).
Supporting the team, and the wider business, are various external organisations and vendors including ESG service providers, memberships, and internal systems for monitoring and reporting.
Please see page 16 of the linked report for full RI team details
https://www.newtonim.com/uk-institutional/special-document/responsible-investment-and-stewardship-annual-report/
ESG Governance
Management oversight
The Board has ultimate responsibility for ESG governance. They are supported by the following committees and working groups:
- Newton Executive Management Committee. The purpose of the Newton Executive Management Committee (NEMC) is to ensure the effective operational and strategic management of Newton. Newton’s Global Head of Sustainable Investment, Therese Niklasson, is a member of this committee and submits a formal update each month to the committee. Membership includes the CEO and Chief Risk Officer, and the committee provides formal approval of Newton’s annual sustainability and stewardship report. Reporting to the Board and the NEMC are Newton’s operating committees, some of which play varying roles in relation to Newton’s sustainability efforts, as described below.
- Newton Sustainability Committee. The Sustainability Committee (SC) meets on a quarterly basis and oversees all aspects relating to sustainability at Newton, including Newton’s sustainable framework, sustainable investments, direct impacts and engagement with communities, and engagement with financial markets (advocacy) regarding sustainability and stewardship matters. The SC review’s Newton’s investment universe from an ESG risk perspective, including climate and net-zero efforts. The committee was formed in 2022 and seeks to oversee the wider sustainability strategy, including climate and risk management, and ensure that it is delivered by Newton. It also reviews our strategy and progress around diversity, equity and inclusion (DE&I). The SC is chaired by Newton’s Global Head of Sustainable Investment and includes members of the NEMC as well as representatives from the investment team and risk and compliance.
- Newton Risk and Compliance Committee. This committee is supported by the Newton Conflicts of Interest Committee. These committees deal with various stewardship and responsible investment aspects on an ad-hoc basis, including any relevant internal audit findings and actions as well as climate risk updates from internal groups such as the Emerging Risks Working Group.
We have an oversight group, the Newton Sustainable Investment Forum (SIF), to provide support and challenge in relation to investments held in our sustainable strategies. Please note that the Newton SRI Fund for Charities is not a sustainable strategy.
Memberships and Affiliations
Newton is a signatory to or a supporter of the following industry principles and pledges:
- Net Zero Asset Managers initiative
- Principles for Responsible Investment - NIM has been a PRI signatory since February 2007, ten months after the PRI’s inception.
- Taskforce for Climate-related Financial Disclosures
- UK Stewardship Code
- UK Financial Reporting Council’s principles for stewardship expectations of UK investors.
As investors and an intermediary in the financial system we play an important role in providing investors with access to investment solutions, and that with this comes an inherent responsibility to do what is right on behalf of our clients, as well as wider asset owners and stakeholders in the financial system. Our advocacy focus involves supporting or seeking to influence various issues and areas for the long-term interest of our clients and Newton.
Organisations and initiatives related to ESG matters in which Newton played a formal role in 2023:
- 30% Club – Investor Group
- Member of Race Equity Working Group
- Farm Animal Investment Risk and Return (FAIRR)
- Institutional Investors Group on Climate Change
- Member of Proxy Advisory Working Group (from 2022)
- Investment Association
- Member of Green Gilts Working Group
- World Benchmarking Alliance
- Member of Just Transition Coalition Impact Committee
- Asian Corporate Governance Association
- Education, research and policy influencer across Asian markets on governance matters.
- Global Investor Commission on Mining 2030
- CDP
- Climate Action 100+
- Council of Institutional Investors
- ShareAction Good Work Coalition
- ShareAction coalition focused on quality work, including a specific living wage campaign.
- ShareAction Investor Decarbonisation Initiative
- Investor Alliance for Human Rights
- Investor Coalition on Food Policy
- Taskforce for Nature-related Financial Disclosure Forum
- Investor Stewardship Group
- Transition Pathway Initiative
Dialshifter
Our organisation is helping to support the Paris Climate Agreement and the Race to Net Zero by…
NIM became a signatory to the Net Zero Asset Managers Initiative in March 2021. We have published details of our approach here: https://www.newtonim.com/uk-institutional/insights/net-zero/.
We have aligned ourselves with an independent methodology produced by the Science Based Targets initiative (SBTi). We are committing to having 50% of our financial emissions covered by credible net-zero plans by 2030, with the aim of reaching 100% by 2040.
We seek to meet these headline targets via a range of transparent measures around investments in climate ‘solution providers’, engagement with fossil-fuel to support their energy transition and advocating for supportive government and industry regulation.
SDR Labelling:
Other
Literature
Disclaimer
INFORMATION
Past performance is not a guide to future performance.
The value of investments can fall. Investors may not get back the amount invested. Income from investments
may vary and is not guaranteed.
For Professional Clients only.
Provided solely for use by Fund EcoMarket.
The Newton SRI Fund for Charities is an authorised unit trust. BNY Mellon Fund Managers Limited (BNY MFM) is the Manager. BNY MFM, BNY Mellon Centre, 160 Queen Victoria Street, London EC4V 4LA. Registered in England No. 1998251. Authorised and regulated by the Financial Conduct Authority.
Any views and opinions are those of the Investment Manager unless otherwise noted and is not investment advice.
Portfolio holdings are subject to change, for information only and are not investment recommendations.
BNY, BNY Mellon and Bank of New York Mellon are the corporate brands of The Bank of New York Mellon Corporation and may be used to reference the corporation as a whole and/or its various subsidiaries generally.
Issued in the UK by BNY Mellon Investment Management EMEA Limited, BNY Mellon Centre, 160 Queen Victoria Street, London EC4V 4LA. Registered in England No. 1118580. Authorised and regulated by the Financial Conduct Authority.
Assets under management (AUM) relates to the combined assets managed by the Newton Investment Management group. From 1 September 2021, Newton group of companies includes Newton Investment Management Limited (NIM) and Newton Investment Management North America LLC (NIMNA).
Returns may increase or decrease as a result of currency fluctuations.
Costs incurred when purchasing, holding, converting or selling any investment, will impact returns. Costs may increase or decrease as a result of currency and exchange rate fluctuations.
Benchmark: From 1 October 2021, the Fund’s benchmark changed from a blended index comprising 37.5% FTSE All-Share TR Index, 37.5% FTSE World ex UK TR Index, 20% FTSE Actuaries UK Conventional Gilts All Stocks TR Index and 5% LIBID GBP 7 Day to a blended index comprising 37.5% FTSE All-Share TR Index, 37.5% FTSE World ex UK TR Index, 20% FTSE Actuaries UK Conventional Gilts All Stocks TR Index and 5% 7 day compounded SONIA. The Fund will use the Benchmark as an appropriate comparator because it includes a broad representation of the asset classes, sectors and geographical areas in which the Fund predominantly invests. The Fund is actively managed, which means the Investment Manager has absolute discretion to invest outside the Benchmark subject to the investment objective and policies disclosed in the Prospectus. While the Fund's holdings may include constituents of the Benchmark, the selection of investments and their weightings in the portfolio are not influenced by the Benchmark. The investment strategy does not restrict the extent to which the Investment Manager may deviate from the Benchmark.
RISK WARNINGS
For a full list of risks applicable to this fund, please refer to the Prospectus or other offering documents.
You should read the Prospectus and the Key Investor Information Document (KIID) for each fund in which you want to invest. The Prospectus and KIID can be found at www.newtonim.com.
- Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. Newton is not a tax expert and independent tax and/or legal advice should be sought.
- Where the Fund is invested in sub-investment-grade bonds, which typically have a low credit rating and carry a high degree of default risk, please be aware that this may affect the capital value of your investment.
- The value of overseas securities will be influenced by fluctuations in exchange rates.
- The Fund may hold derivatives. An investment in derivatives may be volatile, but the volatility of the Fund is not expected to be any greater than that of the underlying stock and fixed-income markets.
- Where the Fund has exposure to hedge funds, gold, private equity, and property via publicly quoted transferable securities, there are additional risks associated with these sectors.
- Compared to more established economies, the value of investments in Emerging Markets may be subject to greater volatility due to differences in generally accepted accounting principles or from economic, political instability or less developed market practices.
Fund Name | SRI Style | SDR Labelling | Product | Region | Asset Type | Launch Date | Last Amended |
|
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Newton Ethically Screened Fund for Charities (BNY) |
ESG Plus | Other | Charities | Global | Multi Asset | 17/05/2010 | Oct 2024 | |
ObjectivesThe Fund seeks to achieve a balance between capital growth and income for investors which are Charities, over the long term (5 years or more). |
Fund Size: £109.00m (as at: 31/03/2024) Total Assets Under Management: £86872.77m (as at: 31/03/2024) ISIN: GB00B4VV6B25, GB00BKRVRY86, GB00BKRVS015, GB00BKRVRZ93 Contact Us: salessupport@bny.com |
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Sustainable, Responsible &/or ESG OverviewThe Fund aims to achieve a balance between capital growth and income for investors which are charities, over the long term (5 years or more). It seeks to achieve this through a multi-asset portfolio screened against socially responsible investment (SRI) criteria aligned with common SRI standards for charity investors. Our focus is very much on delivering attractive total returns for our ethically minded clients - we recognise that ethical investors seek return, like any other investors. The SRI screening criteria avoid key areas relevant to charities including alcohol, tobacco, armaments, pornography and gambling and was established in response to feedback from our investors and other charities. The Fund does not have any aims with regard to ESG or sustainability. Newton considers financially material ESG risks and opportunities as part of its multi-dimensional research approach. However, this is just one input into the research process.
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Primary fund last amended: Oct 2024 |
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Information received directly from Fund Manager |
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Fund FiltersSustainability - General
Sustainability focus
Find funds which substantially focus on sustainability issues
Sustainability theme or focus
Find funds where there is a significant emphasis on (environmental and social) sustainability. Funds with a 'sustainability theme' typically place more emphasis on the area than funds with a 'sustainability policy' - meaning that it is more likely to drive investment selection. Strategies vary. See fund information for further detail.
Encourage more sustainable practices through stewardship
A core element of these funds aim to encourage higher sustainability standards across business practices through responsible ownership / stewardship / engagement / voting activity
UN Global Compact linked exclusion policy
Find funds that use the UN Global Compact to inform or help direct where they can or cannot invest and will typically not invest in companies with significant breaches (low standards) - although strategies vary. (The UNGC covers a wide range of issues - search 'UNGC'). See https://unglobalcompact.org/
Transition focus
The delivery of the shift to a sustainable future is a core feature of this fund and its investment strategy. See eg https://www.transitionpathwayinitiative.org/ Environmental - General
Limits exposure to carbon intensive industries
Funds that limit or 'reduce' their exposure to carbon intensive industries (ie sectors which are major contributors to climate change. Funds vary - some funds may be 'underweight' in this area which means they may have some investment in highly carbon intensive areas. Funds of this kind may choose companies they consider to be 'best in sector' and encourage ever higher standards. Strategies vary. See fund information for further details. Climate Change & Energy
Climate change / greenhouse gas emissions policy
Funds that have policies (documented strategies that explain their position on) climate change related issues such as greenhouse gas/carbon emissions, net zero, transitioning to lower carbon. Strategies vary. Read fund details for further information.
Clean / renewable energy theme or focus
Find funds where investment in clean / renewable energy companies an other assets is central to their investment selection strategy. The proportion of the fund that is directly or indirectly invested in renewable energy varies between funds and over time. See fund information for further details.
Encourage transition to low carbon through stewardship activity
A core element of these funds will aim to encourage the transition to lower carbon activities through responsible ownership / stewardship / engagement / voting activity
Energy efficiency theme
Fund funds that have an energy efficiency theme - typically meaning that a fund 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.
Paris aligned fund strategy
This fund has a strategy that aims ensure its holdings will gradually reduce their greenhouse gas emissions in line with targets set at COP21 in Paris. The ultimate aim is to achieve ‘net zero emissions by 2050’ and a ‘maximum global temperature increase of +1.5 to +2 degrees above preindustrial levels’. Strategies and opinions vary. Read fund information.
Require net zero action plan from all/most companies
Find funds that require all, or almost all, of the companies it invests in to have a ‘net zero action plan’ - meaning that the companies they invest in have worked out how they will, over time, reduce their total carbon (and other greenhouse gas) emissions to nil. Social / Employment
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.
Vulnerable / gig workers protection policy
Fund has a policy aimed at protecting vulnerable workers such as those on zero hour / informal contracts working in the gig economy Ethical Values Led Exclusions
Tobacco and related product manufacturers excluded
Companies are excluded if they are involved in any aspect of the production chain for tobacco products, including cigarettes, vaping, e-cigarettes, chewing tobacco and cigars.
Tobacco and related products - avoid where revenue > 5%
Companies are excluded if they make more than 5% of their revenue from the manufacture, sale or distribution of tobacco products including cigarettes, vaping, e-cigarettes, chewing tobacco and cigars.
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.
Animal testing exclusion policy
Find funds that avoid companies that are involved in testing their products on animals. Precise application may vary. See fund literature for further information. 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. Gilts & Sovereigns
Invests in gilts / government bonds
Find funds that invest in loans issued the government, commonly known as gilts or government bonds. These may or may not be ringfenced for specific projects (see additional options). See fund literature for any selection criteria. 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’)
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
Encourage board diversity e.g. gender
Fund managers encourage the companies they invest in to have more diverse board structures (e.g. more women on boards)
Encourage higher ESG standards through stewardship activity
A core element of these funds will 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
Invests in small, mid and large cap companies / assets
Find a fund that invests in a combination of small, medium and larger (potentially multinational)companies.
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) How The Fund Works
Positive selection bias
Find funds that focus on finding and investing in companies with positive / beneficial attributes. This strategy can be applied in addition to exclusion criteria and engagement/stewardship activity.
Limited / few ethical exclusions
Find funds with few exclusions - typically for example exclude tobacco or companies that breach commonly adopted standards or norms such as the UN Global Compact.
ESG weighted / tilt
Find funds that invest more heavily in those that have higher ESG ratings/standards or scores and less heavily in companies with lower ESG ratings. Where this is central to a fund's strategy you should expect it to invest in most sectors. Strategies vary.
Balances company 'pros and cons' / best in sector
Find funds that consider both the 'positive' and 'negative' aspects of company behaviour and make balanced, considered decisions as part of their investment approach. May apply to a range of different issues and policy areas.
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).
Do not use stock / securities lending
This fund does not use stock lending for performance or risk purposes. 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. Fund Management Company InformationAbout The Business
Boutique / specialist fund management company
Find fund management companies that are smaller or specialise in particular areas - notably, ideally ESG related. Strategies vary.
Responsible ownership / stewardship policy or strategy (AFM company wide)
Finds fund management companies that have a published company wide stewardship, engagement and / or responsible ownership policy or strategy that covers all investments. Stewardship typically involves encouraging higher ESG standards through voting and dialogue.
ESG / SRI engagement (AFM company wide)
Find fund management companies that actively encourage higher 'environmental, social and governance' and/or 'sustainable and responsible investment' practices across investee companies - typically where the aim is to encourage positive change that is aligned with the best interests of investors. Strategies vary. See additional information and options.
Vote all* shares at AGMs / EGMs (AFM company wide)
Find fund managers that vote all* the shares they own at Annual General Meetings and Extraordinary General Meetings. A commitment to voting shares is a key indicator of 'responsible share ownership' demonstrating their support for or disagreement with management policy. (*situations can legitimately, occasionally occur where voting proves impossible, but in principle all shares should be voted.)
Responsible ownership policy for non SRI funds (AFM company wide)
Find funds run by fund managers that apply Responsible ownership or 'Stewardship' policies to all or most of their investment assets. This means active involvement (e.g. voting, dialogue) with the companies they invest in across funds (not normally limited to ethical or SRI options.) Read fund literature for further information.
Integrates ESG factors into all / most (AFM) fund research
Find fund management companies that consider environmental, social and governance (ESG) issues when deciding whether or not to invest in a company for all / almost all of their funds and other assets. This is increasingly seen as part of sound risk management.
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) Collaborations & Affiliations
PRI signatory
Find fund management companies that have signed up to the UN backed 'Principles of Responsible Investment'.
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
In-house responsible ownership / voting expertise
Find fund management companies that employ people to steer and support fund managers in voting shares at company AGM's and EGMs in ways that are consistent with encouraging higher ESG/sustainability standards.
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.
Use specialist ESG / SRI / sustainability research companies
Find fund management companies that makes use of expert external research companies. This can help deliver specialist expertise and means resources are pooled with other investors. 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
Regularly lead collaborative ESG initiatives (AFM company wide)
Find fund management companies that regularly initiate or run industry wide (collaborative) investor projects aimed at raising environmental, social and governance standards amongst investee companies.
Engaging on climate change issues
Fund manager has stewardship /responsible ownership strategy that is focused on addressing climate change with investee assets.
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 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
Controversial weapons avoidance policy (AFM company wide)
Find fund management companies (not funds) that avoid investment in 'controversial weapons' across all of their funds and other investment vehicles. Climate & Net Zero Transition
Voting policy includes net zero targets (AFM company wide)
Fund manager AGM / EGM voting strategy has processes in place that mean they will normally be expected to vote in a way that will encourage the transition to net zero greenhouse gas emissions.
Publish 'CEO owned' Climate Risk policy (AFM company wide)
Find fund management companies that have published a Climate Risk policy or statement that is signed / owned by their Chief Executive.
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.
Carbon transition plan published (AFM company wide)
Finds organisations / fund managers that have a company wide carbon transition plan - meaning that they have plotted a path to how they will move away from activities that produce or use carbon based energy sources (that emit greenhouse gases) towards clean, alternative, renewable energy sources.
Carbon offsetting - offset carbon as part of our net zero plan (AFM company wide)
This asset management company plans to achieve net zero greenhouse gas (CO2e) emissions with the help of a scheme that will lock away an amount of carbon that is equivalent to the company’s own emissions – so that the end result is ‘net zero’. Calculations and scope vary.
In-house carbon / GHG reduction policy (AFM company wide)
Find fund management companies that are working to reduce their own (fund management company) carbon/greenhouse gas emissions.
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.
Full SRI / responsible ownership policy information on company website
Find companies that publish information about their sustainable and responsible investment strategies on their company website.
Full SRI / responsible ownership policy information available on request
Find fund management companies that will supply information about their sustainable and responsible investment activity on request.
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.
Net Zero transition plan publicly available (AFM company wide)
This asset management company has published a plan that explains how they are going to achieve net zero greenhouse gas / CO2e emissions.
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 investment process leverages the expertise and resources of Newton’s broader investment team. The Fund is constructed using a fundamental, security selection process. We make direct investments in securities providing investors with a direct line of sight as to what is held by the Fund. Investment decisions are predicated on two key factors:
Process:Constructing the Newton SRI Fund for Charities The Fund aims to strike the balance between providing an investment solution focused on capital growth and income generation and being firmly aligned with SRI standards for charity investors. It aims to achieve a combination of capital growth and income through a multi–asset portfolio screened against SRI criteria. Our focus is very much on delivering attractive total returns for our clients – we recognize that ethical investors seek return, like any other investors. Where this Fund differs from non-screened funds is that we aim to deliver that return within the constraints of a relevant The SRI criteria for the Fund aims to meet the requirements of a broad range of charities and was established in response to feedback from our investors and other charities. The Fund is screened against a range of negative criteria, reflecting these areas of concern and interest for our charity investors. The full criteria are mentioned below:
Screening criteria is correct as of 26 August 2021. Newton may make changes to the above screens from time to time. Newton uses a third party vendor, Vigeo EIRIS, in order to apply the negative screening criteria to the Fund, apart from the anti-personnel landmine and cluster munitions screens. The negative screening criteria are based upon Vigeo EIRIS’ own definitions of each controversial activity/area of controversy and are implemented using Vigeo EIRIS’ in-house research. For the anti-personnel landmine and cluster munitions screens, Newton uses output from Sustainalytics to implement the screens.
The portfolio managers draw upon the output of our proprietary global research team as well as conduct their own research to ensure that the portfolio is composed of securities in which they have strong conviction*. The portfolio managers have a broad and diversified universe of equities, bonds and listed vehicles from which to construct the Fund. The ethical screens exclude approximately 15% of the investible universe, although this varies by region. The global nature of the Fund minimizes the impact of this constricted universe and provides an ample opportunity set from which to deliver attractive returns.
* There is no compulsion for portfolio managers to purchase recommended ideas, and portfolio managers may choose to invest in securities that are not on the research recommended list (RRL).
Buy discipline The decision to buy the security rests with the lead portfolio manager. This is dictated by the manager’s conviction in the investment idea along with the risk/reward characteristics of the security as well as how it will impact the overall portfolio. The skill of the portfolio manager is in selecting the best combination of securities in the right proportion with the aim of delivering the best risk-weighted return from the portfolio. The aim is to create a diversified portfolio of active positions. Positions are sized by:
Securities will be sold if they no longer conform to our SRI ethical criteria or if our view on the fundamentals and valuation changes. If a security falls out of the investable universe, it must be sold within three months to maintain the ethical rigour of the portfolio but at the same time to avoid a ‘forced sale’ at an inopportune time. Changes in the fundamentals of a company, such as a change in management or acquisitions, etc., would prompt the portfolio manager to reassess a company's rating. We aim to invest for the medium to long term; however, securities may be sold for the following reasons:
Newton’s investment team employs a straight-forward and transparent approach to ethical investment on behalf of our clients and pooled fund investors. We partner with charities to ensure that we understand their specific needs and desired outcomes. We monitor the evolving ethical landscape for trends in ethical investing and develop the Fund’s strategy to align with these trends. We aim to ensure that the Fund’s policy is relevant and dynamic for all the unit holders in the Fund, that it continues to provide adequate coverage and can be implemented effectively. Our process leverages the expertise and resources of Newton’s broader investment team. We construct portfolios using a fundamental, security selection process driven by themes and taking account of key ESG factors*. Our detailed analysis provides valuable insight into what a company does (activities/industry) and how it does it (management/governance). It is this detailed understanding of the companies we invest in which also provides a level of risk management within the investment process. We make direct investments in securities, resulting in greater transparency and knowledge of the portfolio at a deeper level to provide our investors with confidence that the ethical policy is being implemented effectively. All investment decisions are predicated on two key factors: 1) an investment’s eligibility based on the ethical policy; and 2) the requirement for attractive valuation and upside potential. We would never purchase a security simply for its ethical/ESG credentials, as we believe maximizing returns and delivery of the Fund’s investment objectives is key. NIM is able to implement a client’s ethical policy using both sectoral-based exclusions and ethical threshold-based exclusions. A sectoral-based exclusion will effectively exclude any company within a given sector, whereas a threshold-based exclusion will look-through to a company’s revenues to identify earnings from the respective activity. In both cases, compliance with the client’s ethical policy are monitored through NIM’s order management system (OMS). Sector exclusions are implemented directly into NIM’s OMS using industry classifications from the major market data providers. We use the expertise of specialist, market leading data providers to facilitate the provision of ethical threshold-based screens. NIM’s main provider of ethical threshold-based screens is Moody’s ESG Solutions (formerly Vigeo EIRIS), but we also retain access to supplementary screens provided by Sustainalytics and MSCI. We ensure that our data providers are reviewed on a regular basis. For ethical threshold-based exclusions NIM will create an ethical strategy within Moody’s ESG Solutions online platform (DataLab) in line with the respective client/fund’s ethical requirements, choosing from a suite of screens provided by the vendor. The ethical strategy is compared to Moody’s research universe and will then produce a list of companies that are not permitted under the screens selected. The resultant security list is downloaded into NIM’s OMS and can then be used to prevent the purchase of non-compliant companies, as well as flag any holdings that become “restricted”. Security lists are downloaded into NIM’s OMS from DataLab on a weekly basis. The integrity of the ethical screens implemented on behalf of our clients/funds and the respective portfolio’s adherence to them is fundamental to our approach as ethical investors and ensures our clients have confidence that we are investing only in those areas deemed investible under the client/fund’s ethical policy. Output from the provider systems in the form of a security list is fed into NIM’s OMS and therefore any attempt to buy a stock that is unacceptable, or where an existing portfolio position becomes un-investible, a warning is triggered, alerting the portfolio manager (PM), the client team and NIM’s investment control (IC) team to this fact. IC will raise the alert with the PM and NIM’s investment relationship management (IRM) team and will ask the PM to take the appropriate action:
Resources, Affiliations & Corporate Strategies:RI Team Newton has a centralised responsible investment team (RI) headed by Therese Niklasson, global head of sustainable investment. This team is the centre of excellence for all matters related to RI , and with its deep functional knowledge of the RI space and how it is evolving, it provides guidance, support and subject-matter expertise to our wider investment team. The RI teamis global in its footprint and diverse in its employee base. The team is organised into three pillars of expertise – stewardship, research and analytics: these specialisations under the RI umbrella allow us to bring further depth and expertise to each of these activities. The team’s compact size enables it to work cohesively and operate as one team.
Please see page 16 of the linked report for full RI team details
ESG Governance Management oversight The Board has ultimate responsibility for ESG governance. They are supported by the following committees and working groups:
We have an oversight group, the Newton Sustainable Investment Forum (SIF), to provide support and challenge in relation to investments held in our sustainable strategies. Please note that the Newton SRI Fund for Charities is not a sustainable strategy.
Memberships and Affiliations Newton is a signatory to or a supporter of the following industry principles and pledges:
As investors and an intermediary in the financial system we play an important role in providing investors with access to investment solutions, and that with this comes an inherent responsibility to do what is right on behalf of our clients, as well as wider asset owners and stakeholders in the financial system. Our advocacy focus involves supporting or seeking to influence various issues and areas for the long-term interest of our clients and Newton.
Organisations and initiatives related to ESG matters in which Newton played a formal role in 2023:
DialshifterOur organisation is helping to support the Paris Climate Agreement and the Race to Net Zero by… NIM became a signatory to the Net Zero Asset Managers Initiative in March 2021. We have published details of our approach here: https://www.newtonim.com/uk-institutional/insights/net-zero/. We seek to meet these headline targets via a range of transparent measures around investments in climate ‘solution providers’, engagement with fossil-fuel to support their energy transition and advocating for supportive government and industry regulation.
SDR Labelling:Other LiteratureDisclaimerINFORMATION Past performance is not a guide to future performance. The Newton SRI Fund for Charities is an authorised unit trust. BNY Mellon Fund Managers Limited (BNY MFM) is the Manager. BNY MFM, BNY Mellon Centre, 160 Queen Victoria Street, London EC4V 4LA. Registered in England No. 1998251. Authorised and regulated by the Financial Conduct Authority. Portfolio holdings are subject to change, for information only and are not investment recommendations. BNY, BNY Mellon and Bank of New York Mellon are the corporate brands of The Bank of New York Mellon Corporation and may be used to reference the corporation as a whole and/or its various subsidiaries generally. Issued in the UK by BNY Mellon Investment Management EMEA Limited, BNY Mellon Centre, 160 Queen Victoria Street, London EC4V 4LA. Registered in England No. 1118580. Authorised and regulated by the Financial Conduct Authority. Assets under management (AUM) relates to the combined assets managed by the Newton Investment Management group. From 1 September 2021, Newton group of companies includes Newton Investment Management Limited (NIM) and Newton Investment Management North America LLC (NIMNA). Returns may increase or decrease as a result of currency fluctuations. Costs incurred when purchasing, holding, converting or selling any investment, will impact returns. Costs may increase or decrease as a result of currency and exchange rate fluctuations. Benchmark: From 1 October 2021, the Fund’s benchmark changed from a blended index comprising 37.5% FTSE All-Share TR Index, 37.5% FTSE World ex UK TR Index, 20% FTSE Actuaries UK Conventional Gilts All Stocks TR Index and 5% LIBID GBP 7 Day to a blended index comprising 37.5% FTSE All-Share TR Index, 37.5% FTSE World ex UK TR Index, 20% FTSE Actuaries UK Conventional Gilts All Stocks TR Index and 5% 7 day compounded SONIA. The Fund will use the Benchmark as an appropriate comparator because it includes a broad representation of the asset classes, sectors and geographical areas in which the Fund predominantly invests. The Fund is actively managed, which means the Investment Manager has absolute discretion to invest outside the Benchmark subject to the investment objective and policies disclosed in the Prospectus. While the Fund's holdings may include constituents of the Benchmark, the selection of investments and their weightings in the portfolio are not influenced by the Benchmark. The investment strategy does not restrict the extent to which the Investment Manager may deviate from the Benchmark.
For a full list of risks applicable to this fund, please refer to the Prospectus or other offering documents. You should read the Prospectus and the Key Investor Information Document (KIID) for each fund in which you want to invest. The Prospectus and KIID can be found at www.newtonim.com.
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