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Integrating ESG factors into our investment process

We use our responsible investment tier framework in the selection and monitoring of our investments with respect to environmental, social, and governance (ESG) factors. For more details, please see our responsible investment policy.

Our responsible investment tier criteria

 

RI tier category

Characteristics of the firm where the fund is managed

Characteristics of the fund within this tier category

Characteristics of the fund’s investment exposures*

Tier 1 funds

 

‘Minimum RI expectations’
  • Have ESG or RI policies
  • Signatory to the UK FRC Stewardship Code, or equivalent
  • PRI signatories or adequately explain non-signatory status
  • Fund managers should have access to material ESG risk data
  • No exposure to cluster munitions and anti-personnel mines in any actively managed fund

Tier 2 funds

 

‘Leaders in ESG integration’
  • Tier 1 expectations +
  • Credible resource to support ESG integration and active ownership processes
  • Tier 1 expectations +
  • Leading ESG integration (using 4Ps analysis)
  • No exposure to cluster munitions or anti-personnel mines
  • Minimised exposure to:
    • ESG and climate risk
    • Corporate behaviours (related to controversies and violations of principles such as UNGC)

Tier 3 funds

 

‘Sustainable outcomes’
  • Tier 2 expectations
  • Tier 2 expectations +
  • Clear Do No Significant Harm (DNSH) criteria
  • Targets positive sustainable outcomes
  • Tier 2 expectations +
  • No exposure to:
    • Controversial weapons
    • Tobacco manufacture
    • Thermal coal extraction*
    • Unconventional oil and gas*

*As there can be difficulties in measuring exposure, we allow a company to generate up to 5% of their revenue from thermal coal and unconventional oil and gas extraction (arctic oil and gas exploration, oil sands and shale energy).