The consideration of and research into ESG factors are formally integrated into Frontier’s broader investment research efforts. Frontier’s clients are asset owners with highly diversified, long-term portfolios and therefore considered “universal owners”. Such asset owners are reliant on a sustainable real economy, as well as predictable and reliable global systems, to achieve their performance objectives. As such, the objective of Frontier’s responsible investment research effort is to positively impact long-term investment outcomes by identifying, assessing and communicating relevant and material investment risks and opportunities arising from ESG factors.
At the delegation of Frontier’s Investment Committee, Frontier’s Responsible Investment Group has primary responsibility to formulate and drive the firm’s responsible investment research agenda. This process is continually informed by Frontier’s interactions on responsible investment issues with a broad range of industry stakeholders including clients, investment managers and responsible investment advocacy groups.
Given the large number and wide variety of ESG factors, the formulation of Frontier’s responsible investment research agenda also considers the materiality of these factors. ESG factors expected to have a material impact on the long-term performance of client portfolios are prioritised for research.
Frontier is further directed by the UN Sustainable Development Goals which in aggregate are viewed as providing tangible and detailed guidance on the likely evolution of development-related policies and capital funding requirements to achieve them. Frontier focusses on those goals where it believes it can materially influence the outcomes on behalf of clients.
Responsible investment research is primarily undertaken by Frontier’s Research Teams, reflecting the domain expertise required to effectively analyse ESG factors within specific asset classes/capital markets. A Research Team may collaborate on responsible investment research with other business units including but not limited to, other Research Teams, the Responsible Investment Group, Client Teams and the Governance Advice, Risk, Decisions and Strategy Team, on an as-needs basis. Where relevant, a Research Team may draw on externally-produced responsible investment intelligence to supplement its proprietary analysis.
Each Research Team formally reports on material responsible investment matters across all major asset classes/capital markets on at least an annual basis. More generally, where deemed material, asset class/capital markets research reports will include consideration and analysis of relevant responsible investment issues.