Schroders has pledged its sustainable investing process will “go beyond box ticking” as it launched a pair of environmental, social and governance focused UK-based funds.
Katherine Davidson, manager of the Global Sustainable Growth fund, said the qualitative approach applied to the funds centred on debate and discussion rather than number crunching, and resulted in a dynamic and forward-looking assessment of companies.
Ms Davidson said: “We go beyond the box ticking approach using a 20-question framework driven on stakeholder relationships.
“We use all the standard data but also draw on unconventional data from our insight team, things like Glassdoor reviews and Trustpilot posts.”
Ms Davidson said such an approach helped the team collect better information, and that “a well-informed CEO talking passionately about the environment” was more meaningful than a “shiny report”.
It also avoided the “false sense of precision” provided by third-party ESG scores, Ms Davidson said, which skewed towards large-cap companies and certain geographies, and often had low correlations between score providers.
The comments come as Schroders launches UK versions of its Global Sustainable Growth and Global Energy Transition funds.
Both portfolios, launched in 2010 and 2019 respectively, had previously only been available as offshore funds.
The Global Sustainable Growth fund is centred around sustainability as stakeholder relationships, with the premise that only companies which treat customers and employees fairly and take a long-term approach will succeed in the long run.
Ms Davidson said: “The way a company treats employees will come back to impact it through its ability to retain and attract talent and in turn, innovation.
“Companies that are run in a stakeholder-centric way have been shown to have better operational performance.”
She added that such a trait was not well-priced by the market, meaning there was an opportunity for investors who “really do their homework”.
The Luxembourg-based equivalent of the Global Sustainable Growth fund has returned 186 per cent over the past decade, producing 28 per cent in 2020 alone.
Meanwhile the Global Energy Transition fund looks to identify opportunities across the clean energy-focused investment universe, an area manager Mark Lacey described as a “long-term investment opportunity [...] over the next 30 years and beyond”.
The fund has returned 114 per cent since its launch in 2019 and 92 per cent over 2020.
Mr Lacey added: “As we look ahead into 2021, demand for clean energy looks set to rise as costs fall. Improvements in technology and economies of scale mean that renewable energy is now cost-competitive with fossil fuels, even without subsidies.
“And the desire of consumers for more emissions-friendly technologies — such as electric vehicles — is set to fuel the growth of clean power generation.”
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