ESG-activism
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What it takes to be an effective ESG ‘activist’

Although Head of SRI, Hamish Chamberlayne, champions sustainability every day, it takes authenticity and a desire to take part in resolving real world issues to make any meaningful dent in environmental and social challenges.

Hamish Chamberlayne often finds himself speechless. As an avid follower of any news, reports and other information on sustainability, it is difficult to rationalise the environmental and social woes of the world around him.

Yet he is fortunate enough to be able to do something positive to effect real change. In his role as Head of SRI at Janus Henderson Investors, and Portfolio Manager of the firm’s US$1.3 billion* Global Sustainable Equity Strategy. Chamberlayne can exert an influence via the portfolio’s investment process by allocating capital towards companies that are playing a positive role in the transformation of the global economy – and avoiding allocating to those which do harm.

It is not a perspective or responsibility that comes overnight. And being able to ‘walk the talk’ is what determines whether any fund manager is cut out for such a task.

But his approach is grounded in the conviction he feels every day – that he and his team can generate better risk-adjusted returns by backing those businesses that provide solutions to environmental and social challenges.

At the same time, being an ‘activist’ on environmental, social and governance (ESG) matters does not have to mean demanding that a company changes its business model.

Instead, following clear investment criteria about the kind of companies to invest in and those to avoid can often have a positive knock-on effect.

Take the engagement of the Global Sustainable Equity Team on the issue of cobalt.

They identified cobalt, which is used in batteries for mobile devices, as a key risk for the Strategy and an area for engagement. This is based on the majority of the world’s cobalt being located in the Democratic Republic of Congo (DRC), which suffers continued violence and conflict, and subsequently has very poor human rights, health and child labour track records.

The team’s approach is to engage with companies that have cobalt in their supply chain, along with a non-governmental organisation (NGO) to understand the challenges involved in implementing the OECD’s five-step framework for ensuring due diligence within a mineral supply chain.

Microsoft is one example. As one of the world’s largest technology companies, it has a material influence on the demand for cobalt. Yet when Janus Henderson first started engaging Microsoft on this topic, the company had not traced the cobalt used in its supply chain to the original mines in the DRC.

By the time the team met Microsoft’s Senior Director, Responsible Sourcing and Certifications towards the end of 2018, however, the tech giant had increased the transparency of cobalt within its supply chain by improving traceability, due diligence and controls, in line with OECD guidance. Furthermore, the company had started to support an NGO that provides financial support to families and education services.