The Fund invests in high quality companies that the investment manager believe are well positioned to benefit from and contribute to sustainable development. The Fund does not invest in companies with material exposure to harmful products and services (defined as 5% of company revenue, except for tobacco production and controversial weapons where the threshold is 0%) or who fail to discharge their environmental stewardship and human rights responsibilities.

Sustainability is core to our investment philosophy and integrated into our investment process. We do not have a separate team that looks at sustainability – every investment analyst in the Sustainable Funds Group analyses the sustainability positioning of a business, and is also responsible for engagement and proxy voting. The insights from engagement and voting help us to build our conviction in the quality and sustainability of each investee company.

We only invest in high-quality companies that contribute to and benefit from sustainable development. We define development as sustainable if it furthers human development and has an ecological footprint that respects planetary boundaries. All members of the investment team sign our Hippocratic Oath, pledging to uphold the principles of stewardship.

We approach sustainability as a means to mitigate risks and as a driver of investment returns. Integrating sustainability into our analysis aligns with our long-term investment horizon. Sustainability headwinds and tailwinds significantly impact each company’s long term success.

Our consideration of sustainability is holistic; it is more than ESG integration. We consider financial sustainability – conservatism around the balance sheet, for example – and stewardship by management – the fair treatment of all stakeholders through a crisis, for example – to be as essential to the sustainability positioning of a company as the product or service the company sells. 

When assessing a company’s sustainability we ask ourselves the following questions:

>         Commercial proposition

Do the products and services make a valuable contribution to sustainable development?

>         Operational impact

Is the company trying to reduce negative impacts in its operation?

>         Company ethos

Do the culture and values embody sustainability and continuous improvement?

>         Context

Can the company benefit from sustainability tailwinds and headwinds?

We avoid companies that have unsustainable business models and we engage with companies to improve sustainability outcomes. This leads us to seek out companies with exceptional cultures, run by responsible stewards, where the products, services and operations help reduce ecological footprints or solve environmental problems, or advance human development, or both, wherever possible.

We have established a materiality threshold for harmful or controversial activities at 5% of revenues – 0% for tobacco production and controversial weapons. Within the Sustainable Funds Group, we explicitly seek to invest in companies that are making a positive contribution to society. You can read our position statement in full on the website. 

We supplement our internal research around sustainability using Sustainalytics. At the end of each quarter, portfolios are checked to ensure companies meet global norms for best practices and raise no exceptions against our thresholds for harmful activities. We also receive controversy reporting from RepRisk.