Our sustainable roadmap revisited: Better outcomes for a better future

Our core conviction is that quality and sustainability are drivers of long-term returns and that they are closely linked. Ultimately, only companies that run their operations sustainably will have a sustainable competitive advantage and generate sustainable shareholder returns. It is what we like to call triple sustainability or Sustainbility3 and is a concept that has always been integral to our investment approach. 

We first articulated our ESG Roadmap to Sustainable Investing in 2020, highlighting our effort to formalise our approach to sustainability into a dedicated framework. Progress over the past four years has been significant. We have fully integrated ESG into our investment analysis and our ESG Framework now covers 99% of the assets that we manage. We have significantly expanded the resources we allocate to ESG and broadened our collaboration with external investors to tackle systemic issues. We are proud that our work has received external validation, reflecting a depth of approach that goes beyond our size as a company. But the sustainable investing landscape is fast moving. In 2023 alone, there were three pivotal regulatory milestones, the release of the UK Sustainable Disclosure Requirements (UK SDR), the publication of the recommendations of the Taskforce for Nature-related Financial Disclosure (TNFD), and the release of the International Sustainability Standard Board’s (ISSB) inaugural disclosure framework. These developments aim to simplify sustainability regulations and disclosure requirements, whilst increasing transparency for market participants, including investors.

At the same time, collective action continues to gather pace. In the past year, three global climate change conferences brought together representatives to garner action: COP 28 (UN Climate Change Conference), COP 15 (UN Biodiversity Conference) and the inaugural UN Water Conference. These platforms act as catapults for governments, financial market participants and corporations to make pledges to address global challenges and drive sustainable development.

The evolution of our ESG framework

Our ESG Framework seeks to anchor our investment process in industry-leading sustainability standards whilst maintaining our commitment to in-house, independent research. It is important to point out that our process does not attempt to exclude specific industries or make value judgements. Instead, its principal aim is to identify material risks and opportunities that ESG issues may present and assess how well these are managed, or how they may affect a company’s future revenues, costs or value.
We chose early on in our journey to adopt the Sustainability Accounting Standards Board’s (SASB) materiality framework as a key cornerstone to our approach. SASB uses an objective, verifiable and comparable set of criteria to identify material issues for each industry, focusing on issues that have the potential to affect corporate value and are reflective of broader stakeholder consensus. These issues or ‘dimensions’ encompass five themes: environmental, social capital, human capital, business model and innovation, and leadership and governance.

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