What it means to invest with purpose
We are an active, global investment management firm, providing a focused range of strategies to public and private-sector DB and DC pension funds, corporations, charities and, via our parent company BNY Mellon Investment Management, individuals.
Our starting point is our clients’ objectives. Through active, thematic and engaged investment, we invest in a way that seeks to deliver attractive outcomes to our clients, and help foster a healthy and vibrant world for all.
As an active manager, we seek to understand the ‘mosaic’ (full picture) of investment candidates we assess in pursuit of the more resilient and enduring returns our clients want. Our proprietary research harnesses our investment themes, and integrates environmental, social and governance considerations for specific investment opportunities, as well as fundamentals and valuation, to better inform our decisions across the strategies we manage.
Our investment themes identify key long-term forces of structural change, such as the disruption from technological change, the increasing power of consumers, the impact of climate change, and the influence of China. They give us a framework for research and debate, and are vital in providing perspective on the investment landscape.
We seek to influence positive change through voting and engagement with companies, and more broadly with the development of best practices, standards and regulations. Our investment professionals work as part of a single investment team, which promotes perspective on the investment landscape, strong idea generation and the swift implementation of investment ideas.
Rated A+ in all areas of the 2020 PRI assessment – We have been awarded the highest rating possible (A+) for overall strategy and governance. We were also rated A+ in the five other areas assessed, including both equities and fixed income. Only 29% of asset managers received an overall A+ rating.
Tier 1 signatory of the Financial Reporting Council’s UK Stewardship Code – We take seriously our responsibilities as trusted stewards of our clients’ assets. Well ahead of becoming a signatory to the world’s first Stewardship Code in 2010, we were exercising proxy voting rights actively and engaging with investee companies.
Integrated responsible investment team – Our dedicated responsible investment team is fully integrated in our investment process, working alongside our conventional financial analysts to inform specific investment decisions and our wider investment themes.
ESG integration – We integrate ESG research in our selection of certain securities ahead of investing, as we believe that taking ESG factors into account can lead to better investment decisions.
ESG analysis – Every security which our sector research analysts wish to recommend must have an in-depth proprietary ESG quality review to identify ESG-related risks and opportunities, as well as engagement opportunities.
Active engagement – By taking an active approach to engagement, we can work with the companies we invest in to better understand the investment characteristics and to increase the sustainability of their businesses over time.
Rigorous approach to voting since the 1970s – We are proud to have been exercising our clients’ voting rights across all securities, globally, for over two decades.Transparency – We recognise that trust and transparency are intrinsically linked. We have published quarterly responsible investment reports since 2005, which provide evidence of how our policies have been implemented.
The starting point for all we do is our clients’ objectives, and we manage a range of strategies to allow us to better meet them.
We aim to optimise performance returns for our clients by investing in well-managed companies. Our dedicated responsible investment team is part of our wider investment team and an integral part of the investment process. Our integrated ESG approach features in all our investment strategies, and allows us to invest in securities with ESG risks if we believe the potential reward outweighs these risks, but the emphasis is very much on improving respective ESG issues through active engagement.
Our suite of sustainable strategies builds on the integrated process by targeting a dual outcome of investment returns and positive societal and environmental outcomes.
Our sustainable strategies aim to invest in sustainable sovereign bonds, and attractive companies with sustainable business practices and no material unresolvable ESG issues.
Exclusions and screening We also manage client portfolios where the investable universe is subject to exclusions and screening.
Strengths in ESG
We were considering ESG matters as part of our investment process long before ESG became a trend in the investment industry. Our approach has always been investment-led, given our belief that it makes us better investors. We believe that we have developed a robust approach to ESG, which extends to research, analysis, stewardship, reporting and public policy.
To highlight some of these strengths; the investment process for our sustainable strategies includes:
- Conducting ESG analysis on each company prior to investing and determining its sustainable credentials.
- Engaging with companies on ESG issues in order to improve our understanding and to influence positive change, and reporting on that activity.
- Giving our responsible investment team veto power in the security-selection process, enabling them to prevent a portfolio from holding a particular company.
- Using sustainable ‘red lines’ to ensure that the poorest-performing companies are not eligible for investment at the outset.
Task Force on Climate-related Financial Disclosures report
Being a responsible and purposeful owner, on behalf of our clients, is not enough on its own. It is vital to encourage the companies in which we invest to provide better disclosure on their management of ESG risks and opportunities, but it is also important to explore what challenges such as climate change will mean for our clients’ investments and our own assets. This is why we became one of the first investment management firms to publicly disclose our environmental impact through our Task Force on Climate-related Financial Disclosures report in November 2018.
In this context, we have taken various steps to reduce our own carbon footprint, such as buying only renewable energy and reducing our consumption of single-use plastics. We also place sustainability, education and diversity at the core of the projects we sponsor within the wider community
Future plans in ESG
While we are confident in our robust governance structure, approach to investor stewardship and wider approach to responsible and sustainable investment, we also recognise the need for these to be continually reviewed to ensure they remain fit for purpose. Our governance structure and systems ensure that this review is conducted regularly, and at least annually. We also recognise that our key stakeholders, such as clients and regulators, have an increasing interest in our approach to stewardship and responsible investing more generally. A recent evolution in our approach has been in relation to reporting. Since the beginning of 2020, we have been publishing responsible investment reports for individual investment strategies, which include complete voting and engagement information. An important area for future improvement is further development of technology-based solutions that will help us more readily and efficiently identify and record ESG-related data, themes, risks, opportunities and activities
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