Search this website. You can use fund codes to locate specific funds

SDG Engagement Equity commentary: Brunswick

The SDG Engagement Equity Fund focuses on attractive companies with the potential – through engagement aligned with the Sustainable Development Goals (SDGs) – to generate outcomes that benefit people, the planet and investors. Here we demonstrate how we are engaging with current holding Brunswick to create positive impacts on society.

Within the SDG Engagement Equity capability, both attractive investment fundamentals and the potential for a constructive engagement programme are equal pre-requisites for investment. This is well-illustrated through our exposure to Brunswick, a global leader in recreational marine products, producing marine engines, parts and accessories, and recreational boats.

From an investment perspective, Brunswick is comprised of three broadly equal segments: propulsion (Mercury engines), boats and parts and accessories, having offloaded its fitness business last year. In recent years, there has been substantial investment in diversifying the business with the expansion of its parts and accessories division, thereby reducing the company’s cyclicality. However, with consumer discretionary spend facing headwinds, this reduced cyclicality will soon be tested.

Brunswick is a genuine market leader: one in every two boats is powered by its Mercury engine, while the group contains three of the top four most recognisable boat brands in the US. As such, it has the potential to continue raising standards industry-wide, such as fuel efficiency. In addition, by extending its commitment to sustainability across the group, it can realise further efficiencies and brand enhancements.

Meanwhile, our SDG-aligned engagements with Brunswick focus on:

  1. Replicating Mercury’s sustainability strategy across the wider group
  2. Ensuring provision of decent pay and conditions
  3. Developing solutions for end-of-life recycling of fiberglass vessels
  4. Further ‘green’ product development
  5. Aiming for carbon neutral production

Responding to the coronavirus

A large majority of the US hourly workforce was furloughed because production was halted for about a month due to the coronavirus pandemic. However, there have been very few layoffs and no broad reductions in the workforce. The group was extremely transparent about the length of its production suspension, which in many locations in the US coincided with state ‘stay at home’ orders. During the furlough, the group maintained all of its health and welfare benefits, continued wages until it was able to obtain state/federal unemployment, and, even before the furloughs, it allowed staff to take paid annual leave to handle personal or family issues-related to the coronavirus.

To dive into the details of Brunswick’s theory of change, our engagement progress to date and our next steps, read the full commentary here.

Risk profile
  • Nothing in this document constitutes a solicitation or offer to any person to buy or sell any related securities or financial instruments.
  • Past performance is not a reliable indicator of future results and targets are not guaranteed.

More Insights

Can palm oil ever be considered sustainable?
With monocropping one of the main causes of deforestation, palm oil production needs to change. Rather than staging a boycott, responsible investors should engage with companies across the supply chain to encourage the adoption of globally recognised certification standards
Leading the way in climate-related engagement: Federated Hermes achieves A+ score in InfluenceMap study
Federated Hermes ranks among the top five firms in a study focusing on the climate-related engagement efforts of the world’s 30 largest asset management groups.
Weekly Credit Insight
A Lift-off in rates focuses attention on security selection and an unconstrained approach
A changing climate in fixed income: 360°, Q1 2021
In a sustainability-focused edition of 360°, we explore how sustainable finance shifted from a niche corner of the market to a position of prominence.
Credit Pulse: market update - 12 February 2021
What are our views on fixed income markets for the next coming months? How does the team prepare for the different possible outcomes?
The Meeting Room Webcast: Asia ex-Japan, February 2021
Join Jonathan Pines and Sandy Pei for the Federated Hermes Meeting Room: Virtual Portfolio Briefing on Asia ex-Japan