Why ESG factors matter
Financially material environmental, social and governance (ESG) factors can affect the performance of investments. We believe that when companies and other security issuers manage these factors well, they are more likely to be more efficient, less exposed to regulatory and reputational risk, and offer opportunities for our client portfolios.
As a result, we believe assessing financially material ESG considerations in the investment decision-making progress strengthens risk management and may contribute to long-term financial returns.
Issues related to the quality and functioning of the natural environment and natural systems
- Greenhouse gas emissions
- Climate change resilience
- Pollution (air, water, noise, light)
- Biodiversity/habitat protection
- Waste management
Issues related to the rights, wellbeing and interests of people and communities
- Workplace safety
- Cybersecurity and data privacy
- Human rights
- Local stakeholder relationships
- Discrimination prevention
Issues related to the way companies are managed and overseen
- Independence of chair/board
- Fiduciary duty
- Board diversity
- Executive compensation
- Bribery and corruption
ESG integration across asset classes
In assets we categorise as ESG integrated under our governance process, we systematically assess financially material ESG factors in our investment decisions, across asset classes and regions, with the goal of mitigating risk and improving the long-term returns of the investments we make on behalf of our clients. ESG integration does not change a strategy’s investment objective, exclude specific types of companies or constrain a strategy’s investable universe.
ESG factors are integrated in our active investment processes in a manner consistent with each investment style. We use a common framework to evaluate and approve the ESG integration approach for each investment group, and conduct ongoing monitoring.
Firmwide ESG integration resources
Across investment groups, ESG integration approaches benefit from shared global knowledge and resources. In addition to the ESG insights of individual investment desks, we have developed and are implementing globally consistent, data-driven proprietary ESG scoring.
One common technology platform, Spectrum TM, enabling ESG research sharing across investment teams
Global research expertise
300+ analysts integrating ESG factors into their research (as at November 2022)
30+ specialists in central sustainable investing team
Principles for Responsible Investment
We have been a signatory of the UNPRI since 2007. As of September 2022, we are rated 5/5 stars for our Investment and Stewardship Policy.