ESG statement

Columbia Threadneedle Investments

Is ESG integrated into your investment process? How? Which funds or does this apply to the entire firm? 

Environmental, Social and Governance (ESG) considerations are integrated into our central investment research to help us manage risks and identify new opportunities. We believe it’s part of our financial responsibility to clients to fully understand any factors that may affect the investment decisions we make for our clients. That’s why ESG considerations play an important role in our global research and due diligence philosophy and approach.

We gather, process and analyse ESG data from many suppliers to create practical tools that enable integration of ESG considerations into investment research, portfolio construction and risk monitoring, across asset classes. We also use our active ownership expertise to engage with companies and issuers to better understand how they are managing ESG risks and to drive change and help companies improve their ESG practices. Our investment teams use this research and these tools to gain a clear understanding of the ESG considerations financially relevant to different investment opportunities.

Where a fund or client has specific responsible or sustainable objectives, further guidelines will be in place to ensure that the ESG objectives of the fund or mandate are met. These might be achieved through additional sector or stock exclusions, the alignment of stocks in the fund to the UN Sustainable Development Goals, net zero pathway or other sustainability standards and frameworks. We also use engagement and voting activity to help meet specific sustainability objectives of responsible or sustainable funds and mandates.

The following details how this applies to our Responsible Global Equity Fund.

Who conducts ESG analysis within the team? Is it done by PM, financial analysts or a central ESG team? 

The CT Responsible Global Equity Strategy is managed by the Global Equities team using fundamental, bottom-up research to construct a portfolio of companies from the acceptable universe. The investment team initially identifies companies for possible inclusion, and they submit the companies to the Responsible Investment team for assessment against the ethical and sustainable screening criteria. Following approval for inclusion in the investable universe, the investment team is then responsible for deeper investment analysis, portfolio construction and ongoing monitoring.

The resources that are central to this process include:

  • The 45+ member Responsible Investment team undertakes extensive research on ethical and environmental, and social and governance issues for each company proposed for inclusion or actively held within the strategy as outlined above. They reach a conclusion about whether a company should be included in the investable universe. The Responsible Investment Team is then responsible for managing ongoing engagement and proxy voting for all companies owned in the Strategy.
  • The independent Responsible Investment Advisory Council is an external body of sustainability experts who focus on providing advice on ethical and sustainability criteria, helping the firm maintain the integrity of the standards by which the strategies are run.
  • The Global Fundamental Research team is a centralised pool of research analysts that produce sector-based research that is available to the Global Equities team and contributes to idea generation. The team also includes dedicated thematic ESG researchers that work alongside our fundamental researchers to enrich their understanding of key sustainability trends as they relate to specific sectors and issuers.

Please summarise the key ESG metrics that are core to your strategy?

The RI team and the Global Equities team work together to fully incorporate ESG risks and opportunities into the fundamental valuation of each company. This might come through flexing revenue and profitability assumptions across different outcomes, or it will be incorporated through our proprietary “alternate weighted average cost of capital” (ALT-WACC) used as a discount rate within our DCF analysis. Within the ALT-WACC, we assess various factors, both operational and ESG, and this provides an aggregate assessment of quality, where higher quality companies warrant a lower discount rate applied to the DCF, which ceteris paribus drives a higher intrinsic valuation. Similarly, within relative valuation work, ESG leaders and improvers will deserve a premium valuation relative to peers, which again will be reflected in the generated valuation assessment.

How is this research carried out? Positive/negative screening? Qualitative?


We have developed stringent ethical and ESG criteria to determine the eligibility of companies for investment in the strategies. We review the criteria and indicators on a regular basis to ensure they reflect evolving responses to critical issues, emerging issues and changes in regulation, among other considerations. A summary of our screening criteria is below – they are grouped into product-based and conduct-based criteria. Our internal Responsible Investment (RI) team conducts an in-depth review of every company considered for inclusion in the product range. We exclude companies which do not meet sufficiently high standards in how they operate.


The Responsible strategies seek to invest in companies that meet high standards in how they operate, based on a detailed assessment of their policies and performance with respect to overall sustainability management. In addition, we have established positions on a range of relevant issues, such as climate change, and what we consider to be progressive approaches to these issues by companies. These positions are based on a range of inputs that include evolving international norms and agreements, extensive primary research, and the input of our Responsible Investment Advisory Council.


We believe we have a responsibility as investors to exercise the rights of ownership, and that through engagement and active voting we can encourage companies towards meeting or setting best practices in the management of ESG issues. This should ultimately support long-term performance, reduce risk and contribute to promoting a fairer and more sustainable world. Companies must meet our product- and conduct-based criteria. However, despite meeting the criteria we do sometimes identify weaknesses in some areas of their sustainability management practices. In such cases, we will enter a programme of engagement to encourage companies to improve their sustainability management. As part of such a programme, we will define clear objectives, communicate directly with companies, track progress and measure success.

How do you measure your success regarding ESG? Performance against benchmarks (which ones)? Reports? 

  • The fund is actively managed with the MSCI World Index used for a comparator benchmark. It

is not used to measure whether it attains the environmental and/or social characteristics. As such, the benchmark should only be used by investors as a comparison against the fund’s financial performance.

  • We produce quarterly fund reports that detail the ESG metrics alongside financial performance and we also produce an annual impact report detailing how the fund has achieved its sustainability objectives over the year.
  • We measure and report on the success of engagement through the assignment of “Milestones”, which recognize improvements in issuers’ ESG policy, management systems or practices against the objectives that were set. Milestones are ascribed using a three-star rating system, with three stars indicating the most significant impact of change and one star reflecting smaller, incremental change along a pathway for the issuer, or across a broader context, for the relevant industry as a whole. Active Ownership analysts also assign an annual “Responsiveness Rating” to issuers engaged.
  • We use the UN SDGs as our starting point to map how portfolio companies have a positive societal impact. We analyse the main sources of revenue for each company, specifically how the individual sources of revenue for each company correspond to the 169 targets that underlie the goals. Therefore, one company may have links to more than one goal. The results of this analysis are provided in full in our annual ESG Profile & Impact Report.

Is your business a signatory to PRI? Why, why not?

We were a founding signatory to the PRI in 2006. Responsible Investment has been an established pillar of our business for many years.

Are you disclosing climate change policies in line with the Task Force on Climate-Related Financial Disclosures (TFCD)? Please briefly outline your policies.

  • We are committed to both delivering long-term financial returns for clients, including managing the risks and opportunities presented by climate change, and supporting a constructive transition to a low-carbon economy.
  • We produce a high-level corporate report setting out the organisation’s approach to identifying and managing climate change risks and opportunities in line with the TCFD’s recommendations
  • We also produce product-level reports, giving data on certain key climate metrics for UK-domiciled funds and segregated accounts.
  • Our Corporate TCFD report can be found here

Has your business signed up or committed to any other campaigns relating to ESG?

  • We are a signatory to the Net Zero Asset Managers Initiative (NZAM) and, working in partnership with our clients, we aspire to reach net zero emissions by 2050 or sooner across our business operations and assets under management.
  • Engaging with companies on energy transition and decarbonisation goals is key for real-world decarbonisation and true emissions reductions. A cornerstone of our engagement here is Climate Action 100+, an investor-led initiative that aims to ensure action on climate change. At the end of 2022, we were directly engaged on behalf of our clients with 48 of the 167 companies covered by the initiative and are the lead investor on eight of those engagements.
  • We are also a founding member of Nature Action 100, a collaborative investor initiative to engage companies with the most material biodiversity impacts.
  • We collaborate with other investors through various industry working groups to help inform our understanding of emerging ESG issues as well as share our learnings with the broader industry. We also play an active role in public policy development and standard setting through engagement with governments and regulators on key ESG issues. Full details of these activities and memberships can be found in our Stewardship report here