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Responsible Investing

Taking the long-term view

Responsible investment

Taking the long-term view is now more important than ever – and that means embracing sustainability in our day-to-day investment decisions, active ownership and reporting practices.

Our approach to sustainability

Sustainable development meets the needs of the present without compromising the ability of future generations to meet their own needs. It is about finding balance between economic development and its impact on civil society and the natural environment. In the financial world, two challenges arise: how we define sustainability, and how to make it integral to what we do. 

Firstly, while sustainability is generally accepted to mean the ability of a system to endure over time, there is no common definition of what constitutes a long-term horizon. For some of our clients this may mean 5 years, for others it could span the length of a human life. Our partnership structure and 200-year history means that, for us, thinking long-term has always spanned several generations. 

 Laurent Ramsey
As asset managers, we allocate capital to finance the real economy. We have a duty to distribute that capital responsibly, and with the needs of future generations in mind. – Laurent Ramsey, Managing Partner and Chief Executive Officer

Second, as an asset manager, our duty to clients is creating value through capital allocation, and preserving assets through strong risk management. To fulfil this mandate, we must use all available public information - financial and extra-financial - to inform our research, stock selection, portfolio construction and management, and interaction with the companies in which we invest. Environmental, social and governance factors are therefore essential considerations to make the right long-term investment decisions for our clients.

 

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ESG considerations are embedded into our investments

Materiality matters

When integrating ESG issues into the investment process, it is key to understand how financially material they are to the long-term performance of a sector or company. What matters are the issues that pose real business risks. This is why we have created “deep dive” sessions with investment teams where we zoom in on the material issues in each sector.


We take an active approach to our investments

There has been a steady decline in the number of shareholders that engage directly with company management over recent decades in the OECD, with warnings that the rise of passive funds could amplify that trend if they don’t make a greater effort to hold executives to account.

As active managers, we believe it is our responsibility to engage with companies on any material ESG issues. These can range from good governance practices, poor social performance which could compromise a company’s licence to operate, to any other area we deem to have an impact on the long-term performance of the company.

This conviction informs our voting practices.

  • We engage directly with corporate boards and sovereign issuers where we feel that helping to improve their ESG practices can make a difference to long-term performance
  • We aim to vote on 100% of equity holdings at general assembly meetings to defend our clients’ best interests
  • In 2017, we voted on 35,964 resolutions at 3,040 meetings

We measure and share the impact of our investments

Transparency differentiates true integration from box-ticking. Producing meaningful metrics requires an understanding of the issues that are most critical to our clients. Doing this well takes time. In addition to financial indicators, our reports include custom ESG metrics such as governance and controversies indicators, proxy voting activity and, and comments on related portfolio activity. From the first quarter of 2019 we will also disclose carbon footprint data.

We are committed advocates of responsible investing

We play an active role in bodies that promote responsible finance and sustainable investments with the objective of helping steer the industry towards more inclusive thinking around people, planet and portfolios, because over the long term, they are inextricably linked. 
Our commitment to responsible investing
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How to invest

All our long only equity and fixed income investment strategies integrate ESG considerations. We also manage a range of thematic strategies focused on environmental and social impact, as well as classic Socially Responsible Investment (SRI) strategies.

Our thematic strategies invest in specific activities that directly contribute to solving environmental and social challenges such as water scarcity, climate change and global public health. By contrast, our SRI strategies invest in the whole economy by focusing on companies with stronger governance, safer and cleaner operations and products.

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