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The international business of Federated Hermes (formerly Hermes Investment Management)

PRI reporting framework 2020

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SG 18. Innovative features of approach to RI

18.1. 責任投資へのアプローチの特徴が特に革新的であるかどうかについて説明してください。

18.2. 特に革新的だと思う責任投資へのアプローチの特徴について説明してください。

We have a Responsibility Office, which acts as a hub of expertise and support to assist every employee in our business to work toward our mission of delivering holistic returns.

All of our investment strategies consider environmental, social, and governance (ESG) factors in their investment strategies. We consider ourselves as having been at the forefront of responsible investing for decades and have been integrating ESG factors into everything we do. Over the last (few) years we have intensified our best practice efforts through increased interaction between our engagers and fund managers and have developed and enhanced our integration of fundamental ESG research into each team’s investment strategies and process.  This is reflected in our improved PRI score. We have also spent a significant effort in developing new tools that help the investment teams integrate ESG factors; Corporate governance tool was developed in 2019, and subsequently launched in addition to the existing carbon and portfolio snapshot tools.

In recent years, we progressed beyond ESG integration by launching two public-equity impact strategies focused on investments connected to the SDGs. The first, Impact Opportunities (launched in late 2017), is a high-conviction strategy aiming to invest globally in companies that are generating sustainable wealth through products and services that directly meet the underserved needs addressed by the SDGs. By focusing on companies exposed to these sources of enduring demand, the Strategy seeks the growth leaders of tomorrow. The second, SDG Engagement Equity (launched in early 2018), targets smaller companies across the globe with potential – through engagement – to become financially stronger businesses which generate positive impacts that support the SDGs.

In September 2019, we launched SDG Engagement High Yield Credit, which aims to outperform the global high-yield market through high-conviction investment in companies with strong fundamentals that also demonstrate the potential, through engagement, to create positive change.

By respectively seeking present-day impact, and working with companies to deliver positive change tomorrow, these distinct capabilities show that sustainable investing remains core to our identity, purpose and growth strategy. Our company engagement goes hand-in-hands with our advocacy work, as we seek to positively influence both at the individual company level but also seek to positively influence the markets in which they operate.

Believing the SDGs can be a powerful way of identifying impactful companies, in 2019 we created the SDG Taxonomy – a living research project that clearly demonstrates clear connections between the underlying targets of the SDGs and investment opportunities. For example, the SDG Taxonomy identifies SDG target 7.3 (by 2030, double the global rate of improvement in energy efficiency) as directly investable through public equities. Our Impact Opportunities portfolio has exposure to Hannon Armstrong Sustainable Infrastructure – a company that provides financing for climate-change solutions – and so, it is strongly linked to target 7.3. To explore the SDG Taxonomy, use the following link:

Three aspects of real-estate investment support the SDGs, and which guide our Responsible Property investment (RPI) approach. One such aspect is meaningful place-making.

Intrinsic to our ability to generate positive impacts through RPI is the concept of meaningful cities: urban places where people want to work and live, in which they take great civic pride, and which they want to support through social, economic, leisure and community-based activities. One such example is Wellington Place in Leeds, where we have worked with developer MEPC to implement a meaningful place-making approach for the past decade. Our RPI report sets out some of the positive impacts achieved to date - and we have also commissioned Hatch Regeneris to provide assessments of the economic and social impact of the development of some of these areas, such as NOMA in Manchester