We encourage all managers to consider ESG factors in respect of their businesses. However, we acknowledge that there are strategies where financial risk and / or return is impacted more by these factors than others and our approach and expectations for these strategies reflects that difference in impact.
We would terminate or take a decision to redeem investments from strategies where there is clear disregard for ESG integration, causing increased risk to returns. Our starting position is one of engagement versus screening / limit based. As such, where we can work with managers to improve their approach we will actively do so. Typically managers with consistently poor ESG scores, who have no willingness to change (Low Momentum Scores) and where there is material risk to financial returns will be placed on a watch list and, with no improvement - we would expect to make a redemption decision.