“We look for fund managers who share similar values to ours.”
ESG investing is now mainstream. Indeed, universal demand for it has grown with such impressive momentum that we can now easily envision a not so distant future where ESG investing is just called investing. Until very recently considered niche, rising awareness has propelled investing that goes beyond merely seeking financial gains to the fore, with capital owners increasingly inspired to direct their assets toward a future planet and society that they subscribe to.
Responsible investing with sustainability at its core has been at the heart of our value system for over 200 years. Because of this, articulating a formal framework for assessing the ESG considerations of the fund managers we work with was a natural extension to our selection and evaluation process. In our approach, we take four key factors into account: responsible investment policy, investment process, active ownership and reporting.
We complete the initial assessment in three steps. The first is the qualitative appraisal, done through a due diligence questionnaire and discussions with fund managers. Through this, we aim to understand and evaluate the fund’s responsible investment policy and approach as well as its integration at every step of the investment process. We also seek to determine the degree of engagement with company management taken on ESG issues. This is followed by a quantitative appraisal, by which we analyse the ensuing portfolio’s ESG scores using third-party ESG data providers and establish conformity with recognised norms, like the exclusion of controversial weapons makers or commitment to the Principles of Responsible Investing (PRI). This is to assess the coherence of execution with the man-ager’s responsible investment policy. The third step involves a peer group ranking, in which we review managers against each other and Pictet Asset Management (which we use as a benchmark) in light of their quantitative and qualitative ESG scores in order to identify the best-in-class players and offerings for our clients. Finally, we actively continue to monitor funds on these ESG criteria and engage with managers on related issues as they arise.
Seeking well-suited partners
We look for fund managers who share similar values with regard to their fiduciary duties and who prioritise the best interest of their clients as we do. The ideal candidate will demonstrate a clear stance on Responsible Investing and be informative and transparent regarding their practice.