MAKING AN IMPACT THROUGH SUSTAINABLE INVESTING
At Schroders, ESG principles drive our investment process and the way we manage funds.
Sustainable companies not only have a positive impact on society and the environment but we believe their business models are more resilient and better placed to support long-term growth. So sustainable investing can make both investment and social sense.
Integrating ESG factors into our decision-making across all investments the firm manages.
Our integration approach spans the breadth of the ownership lifecycle. We have been doing this for more than twenty years. As at the end of 2020, we are integrating ESG factors into our decision-making across all investments the firm manages, fulfilling a commitment we made in 2019. ESG integration means that Schroders fund managers and analysts systematically consider ESG factors as part of their investment analysis.
All investments have an impact. Knowing exactly what they are is crucial to uncovering their true potential for profitability.
As investors, the way we direct capital not only shapes the financial returns we achieve but also the type of impact we have on the world.
Our approach to sustainable investing looks not only at what profits a company generates but how it generates them. This involves a fundamental shift in how companies are viewed and valued. A company’s activities are risks that can translate into financial costs. Identifying these risks means we can calculate their impact-adjusted profits and long-term growth prospects.
This is the very foundation of how we invest: there is more than just the relationship between risk and return. A third dimension – impact risk – needs to be embedded into the investment process and understood. Only by considering these three pillars together can we uncover an asset’s real investment potential and achieve the best outcomes for our clients.
Active ownership is a core part of this. We engage with the companies we invest in to encourage them to transition towards a more sustainable business model.
This commitment goes hand-in-hand with advocating for what our clients really care about. We can align the impact of their investments with their values so that they can drive changes in the areas that matter most to them.
Measuring impact and designing investment solutions
The way we do this is with impactIQ, our set of analytical ESG tools that quantify the impact that companies have on society and the environment through their activities, with the ultimate goal of enhancing investment performance. We built these tools based on over 20 years of ESG investing experience. Used as part of our investment process, impactIQ examines the externalities of companies, the risks that unsustainable practices pose to their business, as well as their overall alignment with the UN SDGs (Sustainable Development Goals).
SustainEx, one of the tools that our investors use, measures in dollar terms the positive or negative social impact that a company creates through the way it operates.
Another tool is ThemEx, which measures how a company’s products and services may positively or negatively contribute to the UN Sustainable Development Goal.
Through this we can design investment solutions with varying degrees and types of impact in both public and private markets.
- Our Sustainable range seeks to benefit stakeholders (customers, employees, local communities, governments and the environment) through portfolios that deliver, relative to benchmark, a positive impact to society.
- Our Impact Goals range looks to contribute to the solutions needed to solve societal or environmental challenges, such as Climate Change, Inclusion, Health and Wellness, Responsible Consumption and Sustainable Infrastructure.