ESG (Environmental, Social and Governance) factors and analysis have become extremely important to many of our clients. Responsible investment considers ESG factors when making investment decisions and looks to influence companies or assets for good outcomes for all stakeholders (known as active ownership and stewardship). It looks to complement, rather than contradict, traditional investment research and portfolio construction techniques.
We believe that through the integration of ESG factors into our investment process and engaging with the asset managers with whom we invest, we can help advance the discussion and implementation of responsible investing practices.
Responsible investing, or investing with a focus on ESG criteria, can be approached in many ways by investment managers. They can do this through an exclusion-based approach, where they are looking to avoid companies that do harm, through to impact investing which is investing for a dual purpose. Th investment managers in our portfolios use a combination of approaches with the active equity and fixed income managers all incorporating exclusion, integration and engagement into their approach.
An approach based on screening out certain sectors like tobacco. Excluding companies that violate the 10 principles of the UN Global Compact* around Human Rights, Labour, Environment and Anti-Corruption.
Companies with strong ESG and sustainability profiles are more likely to be included in the portfolio than those with average or poor profiles.
Investment managers look to engage with companies to improve their ESG profile or ensure they maintain high standards.
Aim to and report on how the investments make a difference to the UN Sustainable Development Goals
Find out more about Davy Institutional Consulting and our approach to responsible investing.
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*The UN Global Compact is a non-binding United Nations pact to encourage businesses and firms worldwide to adopt sustainable and socially responsible policies, and to report on their implementation.
