We recognise that implementing our responsible investment processes and our clients’ ethical rules into the investment decisions made by other funds is challenging. For this reason, we have adopted the following strategy:
Prior to allocating our clients’ capital to a third-party investment vehicle we seek to establish a legal agreement. This ensures that ESG criteria are considered by the manager and restricts investment in the activities that our clients wish to avoid in their portfolio.
If this is not possible, and there is no alternative route to the investment, we consider the Fund Manager’s house approach to responsible investment and the underlying exposure to the activities restricted by our clients. Should more than 10% of the Fund’s net asset value be exposed, or likely to be exposed in the future, to such activities or we have concerns about their approach to ESG we would not proceed to investment. We also ensure that considerably less than one percent of the capital in our own funds is exposed to restricted activity in this way.
Finally, once an investment has been made we continue to monitor exposure to restricted activity and would divest from any fund if this breached the 10% threshold.