ESG statement

Schroders

At Schroders, we see ourselves as long-term stewards of our clients’ capital and this philosophy naturally leads us to focus on the long-term prospects for companies in which we invest. We believe successful investment is intrinsically linked to identifying, understanding and incorporating the effects of social and environmental trends in our investment decisions.

We look beyond the numbers and take a forward-looking, holistic view of the investment landscape. We consider how companies are interacting with their stakeholders and adapting to structural social and environmental trends, and the contribution this might have (both positive and negative) to their long-term success.

Our integration approach spans the breadth of the ownership lifecycle, from identifying trends and analysing companies through ownership, engagement, voting and reporting. We recognise that different asset classes, portfolio strategies or investment universes will require different lenses to most effectively strengthen decision-making.

Schroders has been incorporating ESG considerations into our fundamental research and security selection process for more than twenty years. We published our first corporate governance policy in 1998, followed by our responsible investment policy in 2001. Since then, the information and tools available to us, our resources, the depth of our expertise and our approach to integrating responsible investment principles has evolved, but our commitment has remained the same: to be active owners of the companies in which we invest and to reflect sustainability and ESG factors as part of our overall investment process.

We regard stewardship as integral to our investment process. Good stewardship is important to understanding the sustainable value of companies and provides a standard of behaviour to protect and enhance the value of our clients’ investments. We firmly believe that companies which are well governed and operate transparently, responsibly and sustainably, will have the culture to support the long-term health of the organisation and increase shareholder value.

ESG credentials
  • For the fourth successive year, Schroders has achieved the highest rating of A+ for our Strategy & Governance approach to responsible investing in the latest UN PRI 2018 assessment.
  • We were rated No.1 in ShareAction’s 2017 Responsible investment survey of European asset managers.
  • We were ranked in the top 5 in the 2017 AODP Global Climate 50 Asset Manager Index.
  • We are a Tier 1 signatory to the UK Stewardship Code.
  • In 2017, our dedicated Sustainable Investment team undertook 1,014 specialist ESG engagements, across 50 countries globally to understand how they are addressing issues we have identified and encourage them to take appropriate actions where we are concerned they are not doing so. We voted on approximately 97% of total valid resolutions, and instructed a vote against management at 42% of meetings. In total, we voted on 5,378 meetings.

 


Funds to watch

Name ISIN Domicile Description
Schroder ISF Global Sustainable Growth LU0557290854 Lux

The Global Sustainable Growth Fund is managed by Schroders’ Global and International Equity team. The Fund is a concentrated, high-conviction portfolio comprising 30-50 stocks and invests in companies worldwide which are managed for the long-term, with stakeholder interests at heart. The team’s disciplined bottom-up approach, based on fundamental analysis, incorporates a proprietary sustainability assessment to provide a more holistic assessment of the durability of a company’s business model and the sustainability of its growth. The fund excludes stocks with material exposure to alcohol, tobacco, weapons, gambling and adult entertainment.


Fund fact sheet
Schroder ISF Global Climate Change Equity LU0302446132, LU0302446306 Lux

Launched in 2007, Schroder’s Global Climate Change Equity Fund is managed by members of Schroders’ Global and International Equity team. The Fund is a concentrated 40-60 stock portfolio comprising companies whose long-term business outlook, in our opinion, will be positively affected by efforts to mitigate or adapt to climate change. We believe companies that recognise the threats and embrace the challenges early, or that form part of the solution to the problems linked to climate change, will ultimately benefit from long-term structural growth that is underappreciated by the market. The Fund invests across five key themes – environmental resources, low carbon leaders, clean energy, sustainable transport and energy efficiency.


Fund Fact Sheet - C Acc share class | Fund Fact Sheet - I Acc share class
Schroder Responsible Value UK Equity Fund GB00BF783V38 UK

A UK equity fund that integrates environmental, social and governance factors in its value investment approach, with an ethical screen. Companies involved in military products and services, non-military firearms, pornography, tobacco, gambling, alcoholic drinks, high interest rate lending and human embryonic cloning are explicitly excluded. The investment manager also assesses companies on their environmental and social impact as well as the strength of their corporate governance. The fund focuses on companies that have certain “Value” characteristics. Value is assessed by looking at indicators such as cash flows, dividends and earnings to identify securities that the manager believes have been undervalued by the market.


Fund fact sheet
Schroder ISF QEP Global ESG LU1274618641 Lux

The QEP Global ESG fund is managed by the QEP investment team, who have managed global equity strategies for over 18 years. Analysing a universe of over 5,500 companies, we construct an unconstrained, highly diversified portfolio containing over 300 stocks. Stock selection is driven by company fundamentals, focusing on Value and Quality while incorporating ESG considerations: exclusions, ESG integration, engagement and voting. Integrating our proprietary QEP ESG Rating into our investment process, the portfolio favours those companies with stronger ESG credentials and a significantly lower carbon intensity. The fund excludes companies with material exposure to coal, tobacco, alcohol, weapons, gambling, predatory lending and adult entertainment.


Fund fact sheet

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

Our Sustainable Investment team sits alongside investment teams rather than operating in a silo, which facilitates regular dialogue with our analysts and investors. Sustainable Investment Analysts have a sector focus, enabling them to gain a deep understanding of sector-specific ESG issues and work in tandem with our analysts and portfolio managers to identify and assess ESG risk and opportunities, and incorporate consideration of these factors into their forecasts. In addition to holding dedicated meetings with company sustainability experts to discuss ESG topics, our ESG specialists attend company meetings with research analysts, portfolio managers and strategy analysts to discuss specific, material sustainability issues directly with company managements.

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

We are supportive of the aims of the SDGs. However, given the challenges associated with fitting the SDGs themes into a regular investment process, we regard the goals as a useful framework to articulate and organise impact measures, rather than as the sole basis for investment decisions. Our application of sustainability measures across investments – an approach that considers how companies are interacting with all their stakeholders and the contribution this might have (both negative and positive) to their long-term success – is a more holistic way of assessing companies, and leads to more relevant and material investment outcomes. While many of the topics involved in this assessment may overlap with certain SDGs, others do not.

We believe the SDGs can provide a framework for some of our engagement actives. Our analysis shows 11 targets that are relevant for corporates, including the proportion of corporates with CSR reports and the amount of women in senior management positions. These are areas that we have been committed to for some time and we will continue our efforts.

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

There may be occasions when it is more effective to work with other institutional shareholders to influence company management and effect positive change. For example, where our discussions with management have failed to achieve the desired outcome or where we own a very small percentage of the company.

We review collaborative engagements on a case-by-case basis to ensure that the objectives of such engagements are aligned with our ESG policy. All of the collaborative engagements are subject to our recording and monitoring processes.

Schroders will work with other institutional investors, either bilaterally or through various industry forums. Our collective engagement may involve meeting companies jointly with other shareholders, via membership organisations or other more informal groupings.

Schroders is a member, participant or signatory to a number of reputable industry organisations (for example, ICGN, PRI, ACGA) which enable us to collaborate with other investors on company specific and industry wide issues. We may also join collaborative engagements launched by the industry or co-ordinated by NGOs (for example, CDP, Workforce Disclosure Initiative, The Business Benchmark on Farm Animal Welfare) where we feel confident about the materiality of their concerns and their methods of engagement.

Partner content