ESG statement

American Century Investments

American Century Investments focuses on delivering superior, long-term risk-adjusted performance to clients worldwide. The decision to invest with us also enables our clients to make a meaningful impact by funding research that could lead to lifesaving cures for diseases such as Alzheimer’s, diabetes and cancer. American Century pays dividends to our owner, the Stowers Institute for Medical Research, a world-class biomedical research organization. Since 2000, American Century’s dividend payments funding the institute’s work have totaled more than $1.5 billion.

With responsible investing firmly rooted in our culture, American Century Investments’ views on ESG factors are integral to our corporate citizenship and business model. We focus on material ESG issues which can affect the performance of individual securities to varying degrees over time. We seek to integrate the analysis of potential risks and opportunities associated with ESG issues within our fundamental research process, and we strive to mitigate related downside risks or capture upside potential as necessary, without compromising our fiduciary duty to act in the best interest of our clients.

As a matter of principle, risk management is at the core of our investment process. We continually take into account the materiality of all potential risks to our investments, including those stemming from ESG-related issues, with the objective of achieving superior, long-term, risk-adjusted returns for our clients.

In addition to conducting our business with the highest ethical standards and complying with all applicable laws and regulations, our ESG approach is regularly reviewed against industry investment stewardship and governance standards and ESG methodologies to ensure alignment with our processes.

Each strategy within American Century’s Global and Non-U.S. Growth Equity discipline is managed according to an integrated approach to ESG investing. Strategies include: Global Growth, Non-U.S. Growth, Emerging Markets All Cap and Small Cap, Global Small Cap and Non-U.S. Small Cap. We also offer a UCITS fund for the firm’s Emerging Markets Equity strategy, which in addition to formally integrating ESG factors using American Century’s proprietary scoring system, is managed according to the United Nations Global Compact framework.

In assessing the sustainability of earnings growth, we integrate the analysis of material risks and opportunities arising from ESG issues within our fundamental research process. We employ bottom-up analysis, and a combination of third-party ESG data and proprietary ESG assessment tools to evaluate whether ESG issues could move the needle on a company’s market valuation or warrant decrements to its fundamental profile.

Analysts are required to ensure that any ESG risks identified by our process are not financially material to our investment thesis. The investment team can also address with company management any ESG issues and controversies deemed material to an issuer’s long-term financial condition.

 


Funds to watch

Name ISIN Domicile Description
U.S. Sustainable Large Cap Core

The U.S. Sustainable Large Cap Core strategy combines ESG factors with fundamental business improvement metrics and systematically evaluates the factors throughout the research process and in portfolio construction. The strategy intends to have a weighted average portfolio ESG score that places the portfolio in the top decile of U.S. Large Blend peers, based on MSCI ESG fund quality rankings and Morningstar’s fund sustainability ratings. This is achieved by investing in companies that are considered ESG leaders in their respective sectors while excluding worst-in-class or issue-oriented companies and tobacco companies. The strategy’s lead portfolio managers work closely with the ESG Desk to ensure that any ESG risks identified by our ESG integration process are not financially material to our investment thesis.


U.S. Sustainable Large Cap Core Quarterly Review | U.S. Sustainable Large Cap Core RFI
U.S. Health Care Impact Equity

Currently, this strategy is only available to Japanese retail investors. The portfolio primarily focuses on stocks of U.S. health care companies exhibiting sustainable and accelerating earnings growth and profitability. Furthermore, the portfolio is constructed to align with the United Nations’ Sustainable Development Goal 3 (SDG-3) to “ensure healthy lives and promote well-being for all at all ages.” The investment team uses a proprietary multi-factor model to rank health care stocks based on fundamental acceleration, earnings quality, relative strength and valuation. Next the team conducts deep fundamental analysis, as well as assesses the sustainability and profitability of the company. In addition, the strategy’s lead portfolio managers work closely with the ESG Desk to ensure any ESG risks identified by our ESG integration process are not financially material to our investment thesis.

ESG DDQ

Does the investment manager have a policy addressing its approach to the incorporation of ESG factors within the investment process? If there is no policy, please explain why.

American Century’s ESG policy outlines the firm’s approach to integrating ESG risks and opportunities into investment processes and highlights our focus on delivering ESG solutions that meet our clients’ evolving needs

Please explain what steps have been taken to ensure ESG specialists have authority in the portfolio management process?

For portfolios that employ American Century’s ESG integration framework, investment analysts work closely with our ESG Desk and are required to ensure that any ESG risks identified by our ESG integration process are not financially material to our investment thesis.

Oversight and accountability for American Century’s ESG-investing activities primarily fall under the responsibility of the Office of the Chief Investment Officer (CIO). The execution of our ESG policy and management of our ESG-investing platform falls under the purview of our Head of ESG and Investment Stewardship.

Please explain how the Sustainable Development Goals (SDGs) are integrated in the investment policy and decisions, if applicable.

American Century’s alignment with SDGs is at the firm level, as the ownership structure of American Century Investments is unique in the asset management industry. With over 40% of our company dividends distributed to the Stowers Institute for Medical Research, we enable our clients to directly support important research and contribute to the global fight against cancer and other gene-based diseases. With responsible investing firmly rooted in our DNA, American Century Investments’ focus on ESG factors is integral to our corporate citizenship and business model. This aligns us with goal number three (good health and well-being) of the U.N. Sustainable Development Goals.

The U.S. Health Care Impact Equity Strategy is also constructed to align with the United Nations’ Sustainable Development Goal number three.

How do you collaborate with other investors to achieve successful engagement outcomes?

American Century Investments is a signatory of the United Nations-supported Principles for Responsible Investment (UNPRI), publicly demonstrating our commitment to ESG and responsible investment. We participate in UNPRI-level collaborative initiatives but maintain independence with respect to ESG-focused meetings with the companies we own or seek to own in our strategies.

Please describe what ESG data, research, third-party consultants and other resources the fund manager uses, and how these are incorporated in the investment and risk management processes.

Our proprietary ESG assessment tools leverage third-party ESG data from the following sources:

  • MSCI Governance and Carbon Metrics: Data feeds into American Century’s proprietary governance heat map and portfolio carbon foot printing assessments.
  • Bloomberg ESG Business Intelligence: Data feeds into American Century’s proprietary E&S scoring model.
  • Sustainability Accounting Standards Board: Standards used for research purposes and industry alignment around materiality of non-financial metrics.
  • ISS Socially Responsible Investing (SRI): Provides proxy research and recommendations specific to individual companies.