Baillie Gifford Responsible Global Equity Income Fund
SRI Style:
ESG Plus
SDR Labelling:
Unlabelled - promotes sustainable characteristics (has CFD)
Product:
OEIC
Fund Region:
Global
Fund Asset Type:
Equity
Launch Date:
06/12/2018
Last Amended:
Jul 2025
Dialshifter (
):
Fund/Portfolio Size:
£1104.40m
(as at: 31/03/2025)
Total Screened Themed SRI Assets:
£18652.00m
(as at: 31/03/2025)
Total Responsible Ownership Assets:
£197033.20m
(as at: 31/03/2025)
Total Assets Under Management:
£197033.20m
(as at: 31/03/2025)
ISIN:
GB00BFM4CT76, GB00BFM4N494, GB00BFM4N502, GB00BFM4N619, GB00BK6KVN38, GB00BK6KVM21, GB00BMTVLF99, GB00BMTVLG07, GB00BP4CQY25, GB00BP4CQZ32
Objectives:
The Responsible Global Equity Income Fund aims to achieve (after deduction of costs) growth in both income and capital over rolling five-year periods, whilst delivering a yield higher than that of the MSCI ACWI Index over the longer term, by investing responsibly. There is no guarantee that this objective will be achieved over any time period and actual investment returns may differ from this objective, particularly over shorter time periods.
Sustainable, Responsible
&/or ESG Overview:
A sustainable income stream
We aim to deliver an income stream that our clients can rely on for the long-term, and that is resilient during periods of stress. We seek companies that have genuinely sustainable business models and which are capable of paying dependable dividends over the course of an economic cycle. We also take account of climate-related risks and opportunities when selecting investments.
The companies we back typically strike a sustainable balance between income today and income for the future: our strategy’s yield has typically been 20–40 per cent higher than the global equity market.
Real growth in income and capital
We aim to deliver growth in both income and capital that is well ahead of inflation over the long run. We invest in companies with substantial earnings growth opportunities and for which paying dividends does not compromise future growth.
Primary fund last amended:
Jul 2025
Information directly from fund manager.
Fund Filters
Sustainability - General
Aim to encourage higher sustainability standards through responsible ownership / stewardship / engagement / voting activity
Use the UN Global Compact to inform or help direct where they can or cannot invest. Will typically not invest in companies with significant breaches (low standards) - strategies vary. (The UNGC covers a wide range of issues - search 'UNGC'). See https://unglobalcompact.org/
Climate Change & Energy
Has 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.
Avoid investment in major coal, oil and/or gas (extraction) companies. Strategies vary.
Avoid investing in companies / assets with coal, oil and gas reserves. See individual entry information for further details.
Encourage the transition to lower carbon activities through asset selection and / or responsible ownership activity.
Excludes companies and other assets with direct involvement in fossil fuel exploration (eg coal, oil and gas companies)
Will only invest in companies that report greenhouse gas emissions in line with this international reporting framework. See https://www.fsb-tcfd.org/ https ://www.ifrs.org/sustainability/tcfd/
Requires all, or most of, the assets they invest in to have a ‘net zero action plan’ - describing how they will reduce their greenhouse gas emissions.
Social / Employment
Has a labour standards policy - likely to mean they will invest in / favour companies that have higher employment related standards and avoid those with low standards. Strategies vary. See eg https://www.ilo.org/international-labour-standards
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.
Excludes companies which make controversial weapons such as landmines, cluster munitions and chemical weapons.
Avoids companies that manufacture weapons intended specifically for military use. Strategies vary - may or may not include non-strategic military products.
Avoids companies with military contracts. This may include medical supplies, food, safety equipment, housing, technology etc
Avoids companies that produce alcohol. Strategies vary; some may allow a small proportion of revenue to come from this area.
Avoids companies with significant involvement in the gambling industry. Some may allow a small proportion of revenues to come from this area.
Avoids companies that derive significant income from pornography and related areas. Strategies vary.
Avoids companies that test their products on animals for purposes other than medical benefit (e.g. for cosmetics). Strategies vary.
Human Rights
Has policies relating to human rights issues. Typically require companies to demonstrate higher standards, although some managers work to encourage improvements. Investee companies are often judged against internationally agreed norms or standards. Strategies vary.
Gilts & Sovereigns
Does not invest in / excludes 'sovereigns' - debt issued by governments. See eg https://www.investopedia.com/terms/s/sovereign-debt.asp
Banking & Financials
Can include banks as part of their holdings / portfolio.
May invest in insurance companies.
Governance & Management
Has policies that relate to corporate governance issues such as board structure, executive remuneration, bribery and/or corporate corruption. These funds will typically avoid companies with poor practices. Strategies vary.
Avoids investing in companies with poor governance practices.(e.g. board structure, management practices etc.) Views may however vary on what counts as 'poor' practices - and funds may not immediately divest as they may prefer to work to encourage higher standards.
Encourage the companies they invest in to have more diverse board structures (e.g. more women on boards)
Aim to encourage higher ESG standards through responsible ownership / stewardship / engagement /voting activity
Product / Service Governance
Find fund / asset managers 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 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 mainly in larger companies / assets. (e.g. over circa £5-£10bn)
Impact Methodologies
Aims to deliver positive environmental and or social impacts (real world benefits) through its engagement with investee assets
How The Fund/Portfolio Works
Has principle 'ethical approach' to avoid companies by using negative screening criteria. Strategies vary.
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.
Investment selection process uses internationally agreed 'norms' (e.g. United Nations Global Compact - UNGC - or the UN Sustainable Development Goals - SDGs) alongside additional SRI criteria such as positive or negative stock selection policies and/or stewardship strategies.
Considers both the 'positive' and 'negative' aspects of company behaviour and makes balanced, considered decisions as part of their investment approach. May apply to a range of different issues and policy areas.
Focuses on the careful management of environmental, social and governance (ESG) related risks - typically by avoiding or being underweight in companies seen as posing major risks in these areas (i.e. not necessarily by using themes, exclusions etc).
Publish explanations of their ethical, social and/or environmental policies online (i.e. investment decision making strategies/ buy/sell &/or asset management strategies).
Does not use stock lending for performance or risk purposes.
Unscreened Assets & Cash
Holds between 70-79% of assets which align to the sustainability objectives; which are not being held purely for risk management purposes, such as derivatives and cash equivalent assets.
Holds between 80-89% of assets which align to the sustainability objectives; which are not being held purely for risk management purposes, such as derivatives and cash equivalent assets.
Holds at least 90% of assets which align to the sustainability objectives; which are not being held purely for risk management purposes, such as derivatives and cash equivalent assets.
Only invests in cash to aid the practical management (buying and selling) of assets and so do not use additional financial instruments.
Intended Clients & Product Options
Designed to meet the needs of individual investors with an interest in sustainability issues.
Designed for clients who care about ethical and values-based issues, often alongside sustainability issues also.
Available via a tax efficient ISA product wrapper.
Fund Management Company Information
About The Business
Finds fund / asset 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 / asset 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 / asset managers that vote all* the shares they own at Annual General Meetings and Extraordinary General Meetings. A commitment to voting shares is a key indicator of 'responsible share ownership' demonstrating their support for or disagreement with management policy. (*situations can legitimately, occasionally occur where voting proves impossible, but in principle all shares should be voted.)
Find fund / asset managers that consider responsible ownership and ESG to be a key differentiator for their business.
Find options run by 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 across all or most funds, products and services.
Find fund / asset 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.
This fund / asset management company invests in companies which have recently listed on a stock exchange (which is important as it can help grow new businesses).
Collaborations & Affiliations
Find fund / asset management companies that have signed up to the UN backed 'Principles of Responsible Investment'.
A member of the Taskforce for Nature Related Financial Disclosures group which aims to aid risk management and shift money towards nature-positive outcomes.
Resources
Find fund / asset 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 / asset 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
Find fund / asset managers that are signatories to the FRC UK Stewardship Code, which sets out a framework for constructive investor / investee relations where managers are encouraged to behave like responsible, typically longer term 'company owners'.
Engagement Approach
Find fund / asset management companies that are working with the companies they invest in to encourage more responsible corporate taxation.
Fund / asset manager has stewardship /responsible ownership strategy that is focused on addressing climate change with investee assets.
The fund / 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
Fund / 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
Fund / 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)
Fund / asset management company has a stewardship strategy in place which involves working to raise diversity, equality and inclusion standards across investee assets
Fund / asset 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
This fund / asset manager may vote differently for different clients or regions. See fund manager stewardship policy for further information.
Escalation policies describe how a manager will proceed if stewardship / engagement activity is not successful in the short term.
Company Wide Exclusions
Find fund / asset management companies (not funds) that avoid investment in 'controversial weapons' across all of their funds and other investment vehicles.
Find funds / asset managers that are reviewing, or have reviewed, their exposure to carbon intensive industries including (but not only) mining, oil and gas companies. (Typically with reference to climate change.)
Climate & Net Zero Transition
Fund / asset management organisations that have pledged to reduce their greenhouse gas emissions to ‘net zero’. Strategies vary - this area is changing rapidly.
Find fund / asset 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.
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.
This fund / 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 / asset management companies that are working to reduce their own (fund management company) carbon/greenhouse gas emissions.
Transparency
Find fund / asset management companies that publish a report detailing their responsible investment ownership - also known as 'Stewardship' - activity.
Find fund / asset management companies that publish information about their sustainable and responsible investment strategies on their company website.
Find fund / asset management companies that will supply information about their sustainable and responsible investment activity on request.
Fund / asset 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:
Our long-term focus requires us to think hard about the sustainability of the business models we choose to invest in. It forces us to be rigorous in making sure that the management teams we back are behaving in a responsible way, that is consistent with our long-term ambitions for the business. This focus on sustainability is embedded in our stock selection framework, and so is embedded at the very heart of our research process.
The purpose of our sustainability assessment is to look forwards and judge
- the Impact, positive or negative, of a company’s products and operations on society
- its Ambition to either further or address that impact, and whether this is best-in-class
- the level of Trust we should have in the management team and the board
Our ESG analyst, Gavin Grant, has 30 years of experience in that field and was previously head of engagement at Norges Bank, a pioneering institution in ESG. He undertakes an independent sustainability assessment of every potential new holding and has the right to veto purchases which are inconsistent with our responsible approach.
Our pre-decision analysis also considers whether a business’s operations are consistent with the principles embedded in the UN Global Compact. The Governance and Sustainability research is discussed with the investment team ahead of a purchase of any new stock for the portfolio.
Whilst we strongly believe that a focus on sustainability is intrinsically linked to consideration of the good that companies can do, it is clear the avoidance of harm is a legitimate concern for those who wish to invest responsibly. In managing our RGEI Fund, we have therefore taken the decision to exclude companies that derive more than 10% of their annual revenues from the production or sale of tobacco, alcohol, weapons and armaments, adult entertainment, fossil fuel extraction and production or the provision of gambling services. These sector exclusions are both widely recognised and used across the investment industry and provide clarity and reassurance to clients who require additional certainty on responsible investment.
Another key feature of our approach is that we use the United Nations (UN) Global Compact’s Ten Principles in selecting investments for the RGEI Fund. However, whilst we use third-party research, including an external screening service (Sustainalytics), we recognise that such third-party research is a blunt instrument for understanding the real features of a business. We also note that the output of different providers’ screens at the stock level can vary enormously. We therefore believe that a thoughtful approach is needed, requiring the exercise of our own judgement and close collaboration between the investment and Governance and Sustainability teams.
Any potential investment that is deemed to breach or not meet the spirit of the ten principles is excluded from the portfolio.
Process:
In managing the Responsible Global Equity Income Fund, our Global Income Growth Team builds on the robust investment process they use to manage Baillie Gifford’s Global Income Growth Fund. The fundamental philosophy is the same – a belief that the best way of delivering a dependable income stream and real growth in income and capital is to invest in companies which can themselves deliver both of these outcomes. Sustainability considerations are fully integrated into the stock-picking process, with the dedicated input of our Governance and Sustainability team. The search for sustainable growth provides a firm foundation for the Responsible Global Equity Income Fund, a foundation upon which we build in a number of ways:
Exclusion - we exclude stocks operating in certain industries which are intrinsically damaging to the planet or society. At this time, we exclude companies that derive more than 10% of their annual revenues from the production or sale of tobacco, alcohol, weapons and armaments, adult entertainment, fossil fuel extraction and production or the provision of gambling services.
Principles – we review all stocks through a detailed ESG lens and only invest in companies which meet the ten principles embodied in the United Nations Global Compact (UNGC). Our dedicated Governance and Sustainability specialist has the right of veto with respect to which companies are excluded. The decision to exclude a company based on assessment against the ten principles does not mean the company’s area of operations is intrinsically harmful, but rather that it is operating in a manner which may not meet the legitimate expectations and aspirations of responsible investors.
Monitor - we continue to review and monitor the stocks in the portfolio to ensure they remain consistent with the objectives of the fund.
Engagement – we engage with companies when we consider there is a need to improve their governance or sustainability practices.
Resources, Affiliations & Corporate Strategies:
ESG resource
Baillie Gifford has a dedicated ESG resource of over 40 people. In conjunction with the investment teams, the ESG analysts are responsible for ESG research and engagement and coordinating the proxy voting process for all our clients’ holdings where we retain the voting rights. They are also responsible for highlighting ESG risks and opportunities to the different investment strategies, monitoring companies we have holdings in, engaging with companies on ESG criteria and challenging them when appropriate.
All ESG analysts have knowledge, and a broad understanding, of global ESG matters including board composition and effectiveness, remuneration, labour practices, health and safety expectations, climate change, and other social and environmental challenges and opportunities.
When conducting our research, we have access to a range of external data providers including: BoardEx, CDP, Conflict Securities, MSCI, Sustainalytics and RepRisk to name a few. The advantage of these third-party providers is the breadth of their coverage and standardised approach. This allows for a quick understanding of areas of potential risk. However, this breadth can be to the detriment of complexity, nuance and context. They often don’t focus on the direction of travel or the ESG opportunities available to a company.
Conducting our own ESG research allows us to focus on the areas important to us. We are also able to leverage our in-house knowledge and relationships with companies and academic partners to supplement available data on ESG issues. In many cases, ESG issues have no clear right or wrong as issues evolve over time and best practice emerges from comparative approaches taken by different companies and sectors. We can use this insight to help other companies we invest in make better long-term decisions on material ESG matters.
ESG membership
We seek to set a positive example as an investor, as an employer and within our own communities. We aim to uphold and promote the highest standards of service and professional behaviours and to enhance the reputation of the investment industry. This also encompasses a responsibility to promote well-functioning financial markets. To support this, we are a member of several groups and industry bodies including:
- International Corporate Governance Network (ICGN)
- Carbon Disclosure Project (CDP)
- Asian Corporate Governance Association (ACGA)
- UN Global Compact (UNGC)
- Principles for Responsible Investment (PRI)
- UK Stewardship Code signatory
- Japan Stewardship Code signatory
- Investor Forum
- Council of Institutional Investors (CII)
- Institutional Investors Group on Climate Change (IIGCC)
- Global Impact Investing Network (GIIN)
- Investor Stewardship Group (US Stewardship Code, ISG US)
- Focusing Capital on the Long Term (FCLT) Global
- European Fund and Asset Management Association Stewardship Code (EFAMA)
- Global Institutional Governance Network (GIGN)
- Task Force on Climate-Related Financial Disclosures (TCFD)
- Farm Animal Investment Risk and Return (FAIRR)
- UK Centre for Greening Finance and Investment (CGFI)
- EM Investor Alliance (EMIA)
- Taskforce on Nature-Related Financial Disclosures (TNFD)
- Sustainability Accounting Standards Board (SASB)
- Net Zero Asset Managers initiative (NZAM)
- Climate Action 100+
ESG governance
The ESG Oversight Group is responsible for setting the firm’s strategic approach to ESG matters in relation to investment strategies and client activities and, along with the head of ESG, for overseeing the ESG function. It provides coordination for the firm’s approach to ESG and the multiple strands of ESG activity that take place. It aims to ensure that the rapidly evolving demands of ESG from an investment, client and regulatory perspective are met. It is chaired by the head of ESG and comprises senior representatives from the Investment Department, Clients Department and ESG function.
The ESG Oversight Group aims to:
- Coordinate and monitor progress towards the firm’s ESG strategy, working with the individual investment, client and operational teams.
- Empower and encourage investors to systematically consider ESG, as relevant for the investment strategy, throughout the investment process.
- Create and oversee ESG-related research groups and ESG professionals to ensure Baillie Gifford has sufficient specialist knowledge.
- Oversee the different components of the ESG function to ensure they continue to meet the requirements of investors, clients and regulators.
- Ensure accurate ESG reporting to clients.
- Oversee the ESG Assurance Group, ensuring that Baillie Gifford is equipped to meet its regulatory requirements and honour ESG commitments made by investment teams.
- Review and recommend any key ESG disclosures for approval or adoption by the Management Committee or any relevant Baillie Gifford entities. This includes the TCFD Climate Report, Our Stewardship Principles and Guidelines and the Investment Stewardship Activities Report.
This group reports into the Management Committee, and the Equity Leadership, Multi Asset and Income Leadership and Clients Management Groups – which include partners from investment, client facing and operational areas. These reporting lines help ensure that our research and stewardship activities are aligned with, and remain of value and relevance to, our clients.
ESG Assurance Group
The ESG Assurance Group is responsible for ensuring that the firm is equipped to meet its ESG-related regulatory requirements and that ESG commitments are being met. This group is comprised of individuals from our ESG function, Clients Department, Business Risk Department, Compliance Department and Legal Department. During 2023, we continued our integration of ESG into these and other operational areas. Evidence of this is the establishment of an ESG group within legal and compliance. This is an ongoing process, but important progress has been made during the year.
We have a dedicated ESG resource of over 40. In conjunction with the investment teams, the ESG resource is responsible for ESG research and engagement, coordinating and processing proxy voting. The ESG Team is responsible for highlighting ESG risks and opportunities to the different investment strategies, monitoring companies we have holdings in, engaging with companies on ESG criteria, and challenging them when appropriate.
SDR Labelling:
Unlabelled - promotes sustainable characteristics (has CFD)
Key Performance Indicators:
Please see our TCFD and Stewardship Reports available on our website: bailliegifford.com/en/uk/institutional-investor/funds/sustainable-growth-fund/#Documents
- Consumer Facing Disclosure
SDR Literature:
| Fund Name | SRI Style | SDR Labelling | Product | Region | Asset Type | Launch Date | Last Amended |
|
|---|---|---|---|---|---|---|---|---|
Baillie Gifford Responsible Global Equity Income Fund |
ESG Plus | Unlabelled - promotes sustainable characteristics (has CFD) | OEIC | Global | Equity | 06/12/2018 | Jul 2025 | |
ObjectivesThe Responsible Global Equity Income Fund aims to achieve (after deduction of costs) growth in both income and capital over rolling five-year periods, whilst delivering a yield higher than that of the MSCI ACWI Index over the longer term, by investing responsibly. There is no guarantee that this objective will be achieved over any time period and actual investment returns may differ from this objective, particularly over shorter time periods. |
Fund/Portfolio Size: £1104.40m (as at: 31/03/2025) Total Screened Themed SRI Assets: £18652.00m (as at: 31/03/2025) Total Responsible Ownership Assets: £197033.20m (as at: 31/03/2025) Total Assets Under Management: £197033.20m (as at: 31/03/2025) ISIN: GB00BFM4CT76, GB00BFM4N494, GB00BFM4N502, GB00BFM4N619, GB00BK6KVN38, GB00BK6KVM21, GB00BMTVLF99, GB00BMTVLG07, GB00BP4CQY25, GB00BP4CQZ32 |
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Sustainable, Responsible &/or ESG OverviewA sustainable income stream We aim to deliver an income stream that our clients can rely on for the long-term, and that is resilient during periods of stress. We seek companies that have genuinely sustainable business models and which are capable of paying dependable dividends over the course of an economic cycle. We also take account of climate-related risks and opportunities when selecting investments. The companies we back typically strike a sustainable balance between income today and income for the future: our strategy’s yield has typically been 20–40 per cent higher than the global equity market.
Real growth in income and capital We aim to deliver growth in both income and capital that is well ahead of inflation over the long run. We invest in companies with substantial earnings growth opportunities and for which paying dividends does not compromise future growth. |
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Primary fund last amended: Jul 2025 |
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Information received directly from Fund Manager |
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Fund FiltersSustainability - General
Encourage more sustainable practices through stewardship
Aim to encourage higher sustainability standards through responsible ownership / stewardship / engagement / voting activity
UN Global Compact linked exclusion policy
Use the UN Global Compact to inform or help direct where they can or cannot invest. Will typically not invest in companies with significant breaches (low standards) - strategies vary. (The UNGC covers a wide range of issues - search 'UNGC'). See https://unglobalcompact.org/ Climate Change & Energy
Climate change / greenhouse gas emissions policy
Has 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.
Coal, oil & / or gas majors excluded
Avoid investment in major coal, oil and/or gas (extraction) companies. Strategies vary.
Fossil fuel reserves exclusion
Avoid investing in companies / assets with coal, oil and gas reserves. See individual entry information for further details.
Encourage transition to low carbon through stewardship activity
Encourage the transition to lower carbon activities through asset selection and / or responsible ownership activity.
Fossil fuel exploration exclusion - direct involvement
Excludes companies and other assets with direct involvement in fossil fuel exploration (eg coal, oil and gas companies)
TCFD / IFRS reporting requirement
Will only invest in companies that report greenhouse gas emissions in line with this international reporting framework. See https://www.fsb-tcfd.org/ https ://www.ifrs.org/sustainability/tcfd/
Require net zero action plan from all / most companies
Requires all, or most of, the assets they invest in to have a ‘net zero action plan’ - describing how they will reduce their greenhouse gas emissions. Social / Employment
Labour standards policy
Has a labour standards policy - likely to mean they will invest in / favour companies that have higher employment related standards and avoid those with low standards. Strategies vary. See eg https://www.ilo.org/international-labour-standards Ethical Values Led Exclusions
Tobacco & 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 & 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.
Controversial weapons exclusion
Excludes companies which make controversial weapons such as landmines, cluster munitions and chemical weapons.
Armaments manufacturers avoided
Avoids companies that manufacture weapons intended specifically for military use. Strategies vary - may or may not include non-strategic military products.
Military involvement exclusion
Avoids companies with military contracts. This may include medical supplies, food, safety equipment, housing, technology etc
Alcohol production excluded
Avoids companies that produce alcohol. Strategies vary; some may allow a small proportion of revenue to come from this area.
Gambling avoidance policy
Avoids companies with significant involvement in the gambling industry. Some may allow a small proportion of revenues to come from this area.
Pornography avoidance policy
Avoids companies that derive significant income from pornography and related areas. Strategies vary.
Animal testing - excluded except if for medical purposes
Avoids companies that test their products on animals for purposes other than medical benefit (e.g. for cosmetics). Strategies vary. Human Rights
Human rights policy
Has policies relating to human rights issues. Typically require companies to demonstrate higher standards, although some managers work to encourage improvements. Investee companies are often judged against internationally agreed norms or standards. Strategies vary. Gilts & Sovereigns
Does not invest in sovereigns
Does not invest in / excludes 'sovereigns' - debt issued by governments. See eg https://www.investopedia.com/terms/s/sovereign-debt.asp Banking & Financials
Invests in banks
Can include banks as part of their holdings / portfolio.
Invests in insurers
May invest in insurance companies. Governance & Management
Governance policy
Has policies that relate to corporate governance issues such as board structure, executive remuneration, bribery and/or corporate corruption. These funds will typically avoid companies with poor practices. Strategies vary.
Avoids companies with poor governance
Avoids investing in companies with poor governance practices.(e.g. board structure, management practices etc.) Views may however vary on what counts as 'poor' practices - and funds may not immediately divest as they may prefer to work to encourage higher standards.
Encourage board diversity e.g. gender
Encourage the companies they invest in to have more diverse board structures (e.g. more women on boards)
Encourage higher ESG standards through stewardship activity
Aim to encourage higher ESG standards through responsible ownership / stewardship / engagement /voting activity Product / Service Governance
ESG integration strategy
Find fund / asset managers 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
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
Invests mainly in larger companies / assets. (e.g. over circa £5-£10bn) Impact Methodologies
Aim to deliver positive impacts through engagement
Aims to deliver positive environmental and or social impacts (real world benefits) through its engagement with investee assets How The Fund/Portfolio Works
Negative selection bias
Has principle 'ethical approach' to avoid companies by using negative screening criteria. Strategies vary.
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
Investment selection process uses internationally agreed 'norms' (e.g. United Nations Global Compact - UNGC - or the UN Sustainable Development Goals - SDGs) alongside additional SRI criteria such as positive or negative stock selection policies and/or stewardship strategies.
Balances company 'pros and cons' / best in sector
Considers both the 'positive' and 'negative' aspects of company behaviour and makes balanced, considered decisions as part of their investment approach. May apply to a range of different issues and policy areas.
ESG risk mitigation focus
Focuses on the careful management of environmental, social and governance (ESG) related risks - typically by avoiding or being underweight in companies seen as posing major risks in these areas (i.e. not necessarily by using themes, exclusions etc).
SRI / ESG / Ethical policies explained on website
Publish explanations of their ethical, social and/or environmental policies online (i.e. investment decision making strategies/ buy/sell &/or asset management strategies).
Do not use stock / securities lending
Does not use stock lending for performance or risk purposes. Unscreened Assets & Cash
Assets typically aligned to sustainability objectives 70 - 79%
Holds between 70-79% of assets which align to the sustainability objectives; which are not being held purely for risk management purposes, such as derivatives and cash equivalent assets.
Assets typically aligned to sustainability objectives 80 – 89%
Holds between 80-89% of assets which align to the sustainability objectives; which are not being held purely for risk management purposes, such as derivatives and cash equivalent assets.
Assets typically aligned to sustainability objectives > 90%
Holds at least 90% of assets which align to the sustainability objectives; which are not being held purely for risk management purposes, such as derivatives and cash equivalent assets.
No ‘diversifiers’ used other than cash
Only invests in cash to aid the practical management (buying and selling) of assets and so do not use additional financial instruments. Intended Clients & Product Options
Intended for clients interested in sustainability
Designed to meet the needs of individual investors with an interest in sustainability issues.
Intended for clients interested in ethical issues
Designed for clients who care about ethical and values-based issues, often alongside sustainability issues also.
Available via an ISA (OEIC only)
Available via a tax efficient ISA product wrapper. Fund Management Company InformationAbout The Business
Responsible ownership / stewardship policy or strategy (AFM companywide)
Finds fund / asset 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 companywide)
Find fund / asset 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 companywide)
Find fund / asset managers that vote all* the shares they own at Annual General Meetings and Extraordinary General Meetings. A commitment to voting shares is a key indicator of 'responsible share ownership' demonstrating their support for or disagreement with management policy. (*situations can legitimately, occasionally occur where voting proves impossible, but in principle all shares should be voted.)
Responsible ownership / ESG a key differentiator (AFM companywide)
Find fund / asset managers that consider responsible ownership and ESG to be a key differentiator for their business.
Responsible ownership policy for non SRI / sustainable options (AFM companywide)
Find options run by 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 across all or most funds, products and services.
Integrates ESG factors into all / most research (AFM companywide)
Find fund / asset 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.
Invests in newly listed companies (AFM companywide)
This fund / asset management company invests in companies which have recently listed on a stock exchange (which is important as it can help grow new businesses). Collaborations & Affiliations
PRI signatory
Find fund / asset management companies that have signed up to the UN backed 'Principles of Responsible Investment'.
TNFD forum member (AFM companywide)
A member of the Taskforce for Nature Related Financial Disclosures group which aims to aid risk management and shift money towards nature-positive outcomes. Resources
In-house responsible ownership / voting expertise
Find fund / asset 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 / asset 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
UK Stewardship Code signatory (AFM companywide)
Find fund / asset managers that are signatories to the FRC UK Stewardship Code, which sets out a framework for constructive investor / investee relations where managers are encouraged to behave like responsible, typically longer term 'company owners'. Engagement Approach
Encourage responsible corporate taxation (AFM companywide)
Find fund / asset management companies that are working with the companies they invest in to encourage more responsible corporate taxation.
Engaging on climate change issues
Fund / asset manager has stewardship /responsible ownership strategy that is focused on addressing climate change with investee assets.
Engaging on biodiversity / nature issues
The fund / 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
Fund / 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
Fund / 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 & / or inclusion issues
Fund / asset management company has a stewardship strategy in place which involves working to raise diversity, equality and inclusion standards across investee assets
Engaging on governance issues
Fund / asset 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
Split voting policy
This fund / asset manager may vote differently for different clients or regions. See fund manager stewardship policy for further information.
Stewardship escalation policy
Escalation policies describe how a manager will proceed if stewardship / engagement activity is not successful in the short term. Company Wide Exclusions
Controversial weapons avoidance policy (AFM companywide)
Find fund / asset management companies (not funds) that avoid investment in 'controversial weapons' across all of their funds and other investment vehicles.
Review(ing) carbon / fossil fuel exposure for all funds (AFM companywide)
Find funds / asset managers that are reviewing, or have reviewed, their exposure to carbon intensive industries including (but not only) mining, oil and gas companies. (Typically with reference to climate change.) Climate & Net Zero Transition
Net Zero commitment (AFM companywide)
Fund / asset management organisations that have pledged to reduce their greenhouse gas emissions to ‘net zero’. Strategies vary - this area is changing rapidly.
Encourage carbon / greenhouse gas reduction (AFM companywide)
Find fund / asset 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 companywide)
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.
‘Forward Looking Climate Metrics’ published / ITR (AFM companywide)
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 - offset carbon as part of net zero plan (AFM companywide)
This fund / 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 companywide)
Find fund / asset management companies that are working to reduce their own (fund management company) carbon/greenhouse gas emissions. Transparency
Publish responsible ownership / stewardship report (AFM companywide)
Find fund / asset management companies that publish a report detailing their responsible investment ownership - also known as 'Stewardship' - activity.
Full stewardship / responsible ownership policy information on company website
Find fund / asset management companies that publish information about their sustainable and responsible investment strategies on their company website.
Full stewardship / responsible ownership policy information available on request
Find fund / asset management companies that will supply information about their sustainable and responsible investment activity on request.
Publish full voting record (AFM companywide)
Fund / asset 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:Our long-term focus requires us to think hard about the sustainability of the business models we choose to invest in. It forces us to be rigorous in making sure that the management teams we back are behaving in a responsible way, that is consistent with our long-term ambitions for the business. This focus on sustainability is embedded in our stock selection framework, and so is embedded at the very heart of our research process. The purpose of our sustainability assessment is to look forwards and judge
Our ESG analyst, Gavin Grant, has 30 years of experience in that field and was previously head of engagement at Norges Bank, a pioneering institution in ESG. He undertakes an independent sustainability assessment of every potential new holding and has the right to veto purchases which are inconsistent with our responsible approach. Our pre-decision analysis also considers whether a business’s operations are consistent with the principles embedded in the UN Global Compact. The Governance and Sustainability research is discussed with the investment team ahead of a purchase of any new stock for the portfolio. Whilst we strongly believe that a focus on sustainability is intrinsically linked to consideration of the good that companies can do, it is clear the avoidance of harm is a legitimate concern for those who wish to invest responsibly. In managing our RGEI Fund, we have therefore taken the decision to exclude companies that derive more than 10% of their annual revenues from the production or sale of tobacco, alcohol, weapons and armaments, adult entertainment, fossil fuel extraction and production or the provision of gambling services. These sector exclusions are both widely recognised and used across the investment industry and provide clarity and reassurance to clients who require additional certainty on responsible investment. Another key feature of our approach is that we use the United Nations (UN) Global Compact’s Ten Principles in selecting investments for the RGEI Fund. However, whilst we use third-party research, including an external screening service (Sustainalytics), we recognise that such third-party research is a blunt instrument for understanding the real features of a business. We also note that the output of different providers’ screens at the stock level can vary enormously. We therefore believe that a thoughtful approach is needed, requiring the exercise of our own judgement and close collaboration between the investment and Governance and Sustainability teams. Any potential investment that is deemed to breach or not meet the spirit of the ten principles is excluded from the portfolio. Process:In managing the Responsible Global Equity Income Fund, our Global Income Growth Team builds on the robust investment process they use to manage Baillie Gifford’s Global Income Growth Fund. The fundamental philosophy is the same – a belief that the best way of delivering a dependable income stream and real growth in income and capital is to invest in companies which can themselves deliver both of these outcomes. Sustainability considerations are fully integrated into the stock-picking process, with the dedicated input of our Governance and Sustainability team. The search for sustainable growth provides a firm foundation for the Responsible Global Equity Income Fund, a foundation upon which we build in a number of ways:
Exclusion - we exclude stocks operating in certain industries which are intrinsically damaging to the planet or society. At this time, we exclude companies that derive more than 10% of their annual revenues from the production or sale of tobacco, alcohol, weapons and armaments, adult entertainment, fossil fuel extraction and production or the provision of gambling services.
Principles – we review all stocks through a detailed ESG lens and only invest in companies which meet the ten principles embodied in the United Nations Global Compact (UNGC). Our dedicated Governance and Sustainability specialist has the right of veto with respect to which companies are excluded. The decision to exclude a company based on assessment against the ten principles does not mean the company’s area of operations is intrinsically harmful, but rather that it is operating in a manner which may not meet the legitimate expectations and aspirations of responsible investors.
Monitor - we continue to review and monitor the stocks in the portfolio to ensure they remain consistent with the objectives of the fund.
Engagement – we engage with companies when we consider there is a need to improve their governance or sustainability practices. Resources, Affiliations & Corporate Strategies:ESG resource Baillie Gifford has a dedicated ESG resource of over 40 people. In conjunction with the investment teams, the ESG analysts are responsible for ESG research and engagement and coordinating the proxy voting process for all our clients’ holdings where we retain the voting rights. They are also responsible for highlighting ESG risks and opportunities to the different investment strategies, monitoring companies we have holdings in, engaging with companies on ESG criteria and challenging them when appropriate. All ESG analysts have knowledge, and a broad understanding, of global ESG matters including board composition and effectiveness, remuneration, labour practices, health and safety expectations, climate change, and other social and environmental challenges and opportunities. When conducting our research, we have access to a range of external data providers including: BoardEx, CDP, Conflict Securities, MSCI, Sustainalytics and RepRisk to name a few. The advantage of these third-party providers is the breadth of their coverage and standardised approach. This allows for a quick understanding of areas of potential risk. However, this breadth can be to the detriment of complexity, nuance and context. They often don’t focus on the direction of travel or the ESG opportunities available to a company. Conducting our own ESG research allows us to focus on the areas important to us. We are also able to leverage our in-house knowledge and relationships with companies and academic partners to supplement available data on ESG issues. In many cases, ESG issues have no clear right or wrong as issues evolve over time and best practice emerges from comparative approaches taken by different companies and sectors. We can use this insight to help other companies we invest in make better long-term decisions on material ESG matters.
ESG membership We seek to set a positive example as an investor, as an employer and within our own communities. We aim to uphold and promote the highest standards of service and professional behaviours and to enhance the reputation of the investment industry. This also encompasses a responsibility to promote well-functioning financial markets. To support this, we are a member of several groups and industry bodies including:
ESG governance The ESG Oversight Group is responsible for setting the firm’s strategic approach to ESG matters in relation to investment strategies and client activities and, along with the head of ESG, for overseeing the ESG function. It provides coordination for the firm’s approach to ESG and the multiple strands of ESG activity that take place. It aims to ensure that the rapidly evolving demands of ESG from an investment, client and regulatory perspective are met. It is chaired by the head of ESG and comprises senior representatives from the Investment Department, Clients Department and ESG function. The ESG Oversight Group aims to:
This group reports into the Management Committee, and the Equity Leadership, Multi Asset and Income Leadership and Clients Management Groups – which include partners from investment, client facing and operational areas. These reporting lines help ensure that our research and stewardship activities are aligned with, and remain of value and relevance to, our clients.
ESG Assurance Group The ESG Assurance Group is responsible for ensuring that the firm is equipped to meet its ESG-related regulatory requirements and that ESG commitments are being met. This group is comprised of individuals from our ESG function, Clients Department, Business Risk Department, Compliance Department and Legal Department. During 2023, we continued our integration of ESG into these and other operational areas. Evidence of this is the establishment of an ESG group within legal and compliance. This is an ongoing process, but important progress has been made during the year. We have a dedicated ESG resource of over 40. In conjunction with the investment teams, the ESG resource is responsible for ESG research and engagement, coordinating and processing proxy voting. The ESG Team is responsible for highlighting ESG risks and opportunities to the different investment strategies, monitoring companies we have holdings in, engaging with companies on ESG criteria, and challenging them when appropriate. SDR Labelling:Unlabelled - promotes sustainable characteristics (has CFD) Key Performance Indicators:
Please see our TCFD and Stewardship Reports available on our website: bailliegifford.com/en/uk/institutional-investor/funds/sustainable-growth-fund/#Documents
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