We also recognise that investment does not exist in isolation from the world we live in. As such, aiming to deliver the best overall outcomes to our clients involves pursuing our primary investment objectives without damaging either our clients' or our corporate responsibilities in non-financial areas such as environmental and social issues.
As stewards of clients' capital, we are committed to being a responsible investor. Responsible investment is commonly defined as an approach that seeks to integrate environmental, social and governance (ESG) considerations into investment management practices. We recognise that relevant and material ESG issues can meaningfully affect investment performance, and these factors are critical components of our integrated research analysis, decision-making, and ongoing monitoring. Ravenscroft is a signatory to the UN Principles for Responsible Investment (UN PRI). Under its reporting principles, our firm is provided with review and assurance that our approach to Stewardship and Engagement continues to service our client needs effectively.
The actual letters stand for:
Environment – these factors include the contribution either a company or government makes to climate change through greenhouse gas emissions, along with waste management and energy efficiency. Given renewed efforts to combat global warming; cutting emissions and decarbonising have become more and more important, and these issues have become investable themes.
Social – this includes things such as human rights, labour standards in the supply chain, any exposure to illegal child labour, and more routine issues such as adherence to workplace health and safety. A social score also rises if a company is well integrated with its local community – in short treating everyone equally and fairly, as you would like to be treated.
Governance – this refers to a set of rules or principles defining rights, responsibilities, and expectations between different stakeholders in the governance of corporations – by this we mean the duty of company directors. Historically companies were run with shareholder return as their main objective, times have changed, and governance is now relevant for all “stakeholders”. A stakeholder is any party that has an interest in a company and includes, investors, employees, customers, and suppliers.
A well-defined corporate governance system can be used to balance or align interests between stakeholders and can work as a tool to support a company’s long-term strategy as well as enhancing return.
As with all things investment related, one size does not fit all under “ESG”, but looking at and evaluating “ESG” the three key investor objectives, enable us to evaluate how far companies and countries have come with their sustainability.
Sustainability is important when assessing companies and forms part of “ESG” as this helps to generate long term competitive returns, as well as having a positive impact on both the people and the planet.
Overall, integrating these three pillars into our investment process should aid in achieving better outcomes.
Ravenscroft became a signatory to the United Nations Principles for Responsible Investment in 2020. The Principles for Responsible Investment were developed by an international group of institutional investors reflecting the increasing relevance of environmental, social and corporate governance issues to investment practices.
In practice, this requires the group to periodically report against a progressive framework designed to deepen the integration of environmental, social and governance issues into investment processes.
We recognise that applying these Principles may better align investors with broader objectives of society. Therefore, where consistent with our fiduciary responsibilities, we commit to the following:
We believe this will improve our ability to meet commitments to beneficiaries as well as better align our investment activities with the broader interests of society.
The PRI ( Principles for Responsible Investment) defines stewardship as "the use of influence by institutional investors to maximise overall long-term value including the value of common economic, social and environmental assets, on which returns and clients' and beneficiaries' interests depend".
Engagement is putting stewardship into practice. The underlying aim of the engagement dialogue should always be to preserve and enhance the value of assets on behalf of beneficiaries and clients.
Our investment process aims to capture the return potential of irrefutable trends and themes that we believe are shaping our world. Changes in demographics, globalisation and technological developments can put more strain on the planet's resources which leads to increasing global emissions.
This leads to the planet getting warmer, and while the increase in temperature of one degree may sound insignificant the effects can be huge. The thematic way in which we invest allows, where appropriate, to invest in solutions to address these issues.
