ESG statement

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

A foundational belief of our philosophy is that integrating consideration of Environmental, Social and Governance (ESG) and sustainability risks into financial analysis enhances investment decision making and can improve long term risk adjusted returns for our clients. As such, we have a responsibility and interest in doing so.

Active ownership and stewardship refers to the use of the rights attaching to securities ownership to influence the activities or behaviour of investee companies. This is achieved through corporate engagement, proxy voting and other advocacy activities undertaken more broadly with policy makers and other stakeholder initiatives to improve industry standards.

As an active manager, we believe that such practices are critical tools to support the investment goals of our clients, to manage risks and to realise opportunities. We seek to be an active and responsible steward of the investments we make, influencing the companies in which we invest to improve ESG risk management and, where appropriate, improve sustainability practices.

Consistent with our multi-boutique structure, we do not subscribe to a ‘house’ approach to ESG integration or stewardship. JOHCM fundamentally believes that decision-making around responsible investment practices should remain with the fund managers as part of their overall management of their strategies

JOHCM fund managers use a variety of tools in order to select investments. These include applying sustainability metrics, exclusionary screens, best-in-class investment criteria, managing the strategy on a thematic basis, or impact investing.

Some of our strategies exclude, for instance, all tobacco, alcohol, armaments, fossil fuels, gambling and pornography companies. Others adopt an integrated approach, addressing the specifics of the companies in which they invest, across all sectors.

Each of our investment teams continue to evolve their own approach to integrating ESG and sustainability considerations into their investment process and stewardship practices as seen most relevant to their respective strategies.

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

Consistent with our multi-boutique structure, we do not subscribe to a ‘house’ approach to ESG integration or stewardship. JOHCM fundamentally believes that decision-making around responsible investment practices should remain with the fund managers as part of their overall management of their strategies. The investment teams consider ESG issues to be an integral part of their investment process for which the fund managers are directly responsible.

JOHCM fund managers have a high degree of autonomy and they incorporate ESG issues at the level of each investment decision hence, ESG research is carried out directly by the investment teams.

Front line investment oversight of our different investment strategies is the principal responsibility of the Head of Investments, who is part of our senior management team.

JOHCM requires that quarterly reviews are undertaken whereby sustainable investment activities and processes of each investment team and the ESG risk profile of fund holdings are evaluated. The delivery of these sustainable investment reviews is a responsibility of the Head of Investments who is supported in this activity by the Sustainable Investments, Risk and Performance teams.

On a quarterly basis, the Head of Investments provides summary findings of the sustainable investment reviews to the Executive Committee.

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

As part of its broader risk management processes, JOHCM has implemented procedures to identify, measure, manage and monitor sustainability risks within investment analysis and decision-making.  For example, JOHCM has an Investment Oversight Committee (IOC) that monitors sustainability risk across all of its funds and ensures each investment team manages these risks consistent with the Prospectus and relevant Supplement and in line with perceived best practices. This monitoring by the IOC is aided by quarterly review meetings and reporting provided by JOHCM’s Sustainable Investments team who use JOHCM’s proprietary data platform (‘Affinity’) to bring together relevant voting, engagement and ESG data for their consideration.

JOHCM’s approach to integrating sustainability risks seeks to build around the strength of its individual and active approaches to investing. Each investment team has a minimum standard of behaviours that they expect from investee companies and areas of the market that they avoid. JOHCM believes its active fund managers are best positioned to determine which stocks do or do not contribute to sustainable outcomes. Therefore, each investment team has autonomy to integrate ESG and sustainability considerations in a manner consistent with their investment approach.  Where any ESG or sustainability considerations may materially and negatively impact the financial performance of an investment, those factors are taken into account as part of the investment team’s investment processes in the same way as it considers other potential risk factors.

The investment teams use a variety of tools in order to select investments.  These include applying sustainability metrics, exclusionary screens, best-in-class investment criteria, managing the strategy on a thematic basis, or impact investing.  Once investments have been made, the investment teams will then conduct periodic monitoring of their portfolio to check that positions remain within sustainability risk limits, and take corrective action if those limits are breached. The monitoring and review provided by the IOC and quarterly review meetings are JOHCM’s governance of these processes.

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

To complement our investment teams’ ESG analysis, JOHCM uses third party ESG research to monitor potential areas of concern pertaining to our holdings. These tools also allow us to analyse the profile of each investment strategy against its investment benchmark and access detailed analysis from these providers. Companies which fall into the lowest category in MSCI’s Company ESG ratings are reviewed for justification of the holding by the fund manager. Ratings downgrades are monitored to ensure we capture the changing risk profiles of our investments. This analysis is incorporated into the regular quarterly review of each strategy conducted by JOHCM’s Head of Investments.

In addition, the Sustainable Investments team has launched a bespoke data platform (Affinity) that provides fund managers with additional tools and data sets to further enhance their integration of non-financial metrics in capital allocation decisions. All ESG related data relevant to holdings (from Sustainalytics and ISS or open sourced from the web) is integrated into the system and provided to each of the teams in tabular and graphical form. Each investment team can review the data for accuracy and apply updates to ensure that JOHCM’s data platform is up to date and accurate.

Finally, JOHCM is supported by Regnan, owned by our parent company (Pendal). Regnan is a responsible investment pioneer with a long, proud heritage in providing advice and insights on ESG issues. Regnan produces thematic ESG research and provides ad hoc support to JOHCM’s investment teams, helping them enhance their own ESG integration processes, improve their engagement with companies and consider factor specific issues, such as climate change. Additionally, members of the Regnan team support the development of internal training and education.

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

At JOHCM, our broad purpose is to deliver resilient, sustainable financial returns for clients (in line with the investment objective) through active management that seeks to guide them through a world in constant flux, identifying emerging structural themes and managing emerging risks. Many of the structural forces at play will be associated with changing environmental and social norms that will reshape business and economic models but are not independent of wider investment considerations.

Investment teams set out clearly the role of sustainability considerations in their decision-making with the intent to deliver good long-term investment outcomes that consider the quality of management (governance) and how they balance the production of resilient future financial returns with changing social norms and environmental impacts. Our portfolio managers have a clear statement of the purpose of their funds, and how environmental and social considerations are integrated into their investment processes.

JOHCM’s Head of Investments, Risk and Performance teams provide comprehensive oversight of the investment teams and their strategies.  For each team, on a quarterly basis, there is a formal review that incorporates analysis of the performance of each fund against the ESG characteristics it promotes and/or its sustainable objective. These reviews use data from our proprietary ESG data platform, Affinity, the same platform that the investment teams use for their own ESG due diligence and monitoring. This ensures there is only one version of the truth. This is this same data that we report to our clients to help them understand our funds’ ESG performance.

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

JOHCM is a signatory of the Principles for Responsible Investment (PRI). Our firm is committed to ESG issues as set out in the PRI. We have been a PRI signatory since 13 June 2011.

Investment & Stewardship Policy ★ ★ ★ ★ ☆
Direct – Listed equity

Active fundamental – incorporation

★ ★ ★ ★ ☆
Direct – Listed equity

Active fundamental – voting

★ ★ ★ ☆ ☆


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

At the Pendal Group level (JOHCM’s parent company) we continue to enhance our management, measurement and reporting of climate-related risks and opportunities, consistent with the recommendations of the TCFD. JOHCM plans to report against TCFD in January 2023.

Our Group Climate Change Statement sets out our strategy for managing the direct and indirect environmental impacts of the Group and provides guidance to our investment teams as well as to our corporate activities more broadly.

For further details, please refer to our Group Climate Change Statement published on our website at:

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

JOHCM adheres to the principles of the Financial Reporting Council’s (FRC) UK Stewardship Code. JOHCM has met the expected standard of reporting under the UK Stewardship Code in 2021 and has been approved as a signatory.

JOHCM also has active participation / is a member of the following industry initiatives:

  • Investment Association, the UK’s peak body for the investment management industry, representing the industry’s interests to policymakers and regulators in the UK and EU.

  • Investor Forum (UK), an organisation led by institutional investors to facilitate collaborative engagement on material issues with UK-listed companies.

  • The Investing and Savings Alliance (TISA), an organisation whose ambition is to improve the financial wellbeing of UK consumers by bringing the financial services savings industry together to promote collective engagement, to deliver solutions and to champion innovation for the benefit of people, the industry and the nation.

  • Share Action’s Healthy Markets Initiative, an organisation whose ambition is to improving children’s health by increasing access to affordable, healthy food.

  • International Corporate Governance Network (ICGN), an organisation which advances the highest standards of corporate governance and investor stewardship worldwide in pursuit of long-term value creation, contributing to sustainable economies, societies, and the environment.

Pendal Group Limited

JOHCM’s ultimate parent, Pendal Group Limited, has demonstrated its commitment to responsible investing through active participation in a range of industry initiatives:

  • Signatory to the PRI
  • An active member of the Responsible Investment Association Australasia (RIAA), in addition to being an active participant in RIAA’s human rights and corporate engagement working groups and is represented on the RIAA board via Regnan.
  • A founding member of the Investor Group on Climate Change (IGCC) and is currently represented on the management committee.
  • A proud signatory and investor participant to the Climate Action 100+
  • A formal supporter of the Task Force on Climate-related Financial Disclosures (TCFD)
  • Member of the Australian Advisory Board on Impact Investing. Pendal Group is represented on the Board.
  • Pendal Group is represented by appointees to the Australian Sustainable Finance Initiative (ASFI) steering committee and one of the four technical working groups.