Three routes.
One destination.
Long-term investing which aims to enrich investors, society and the environment
Three routes to Sustainable Wealth Creation
An increase in sustainable funds has helped to satisfy rising demand for investments that deliver profits with principles, but, makes navigating the landscape harder for investors. In their pursuit of Sustainable Wealth Creation, which pathway should they take?
We have reclassified our product range under three distinct and clearly labelled categories or pathways.
Choose your primary investment objective:
Financial
Responsible, active investing for long-term performance.
- Financial objective
- Best-practice integration of ESG analysis and engagement insights
- Some capabilities may enforce exclusions that reflect Portfolio Managers’ investment views
- Delivery of outcomes through effective stewardship
Financial & Sustainability
Thematic and values-based approaches for sustainable outcomes.
- Financial and sustainability objectives
- Best-practice integration of ESG analysis and engagement insights
- Exposure to sustainability themes and to ESG leaders that reflect sustainability values
- Delivery of sustainable outcomes through effective stewardship
Financial & Impact
Mission-led investment strategies to create positive impact.
- Financial and impact objectives
- Best-practice integration of ESG analysis and engagement insights
- Focus on companies generating impact or undergoing positive transformation
- Some capabilities may enforce exclusions that reflect defined sustainability values, impact considerations, or both
- Delivery of sustainable outcomes through effective stewardship
1
The Active ESG pathway offers a range of products that best serve investor needs. Along the way, they offer a variety of differing styles: high conviction, diversified, thematic and contrarian.
What they all have in common is their best-practice integration of deep-dive ESG analysis. This includes insights from the broad range of engagement activity with policymakers and companies undertaken by EOS at Federated Hermes, our specialist stewardship services team. In this, we see ourselves as partners, working alongside companies to drive positive change.
Key attributes
Capital growth
Our strategies target strong, consistent capital growth throughout market cycles.
High active share
High-conviction active investing as shown by the differentiated weightings of our capabilities relative to their benchmarks.
Fundamental research
Intensive, bottom-up research which considers corporate fundamentals, ESG factors and the economic backdrop.
Long-term investing
We take advantage of enduring structural change, secular growth drivers and mispriced securities.
ESG and engagement
ESG analysis is integrated throughout, and we engage companies in conjunction with stewardship team EOS.
Close collaboration
A skilled, experienced team applying its diverse expertise in a collaborative environment.
2
Our sustainable pathway offers exposure to the best-in-class companies that are driving the transition to a zero-carbon world, or innovative companies with the potential to affect change through their own operations or their products and services.
Alongside a clear financial objective, strategies in this pathway have additional ESG-focused objectives, such as delivering a lower environmental footprint than the benchmark across carbon, water and waste, for instance.
From companies addressing social inequality, to resource management and circular economy, or to those adapting their business to align with a low-carbon world. We invest and engage over the long-term to drive real, scalable change.
What defines a sustainable company?
A profitable, competitive and resilient business model
Evidence of strong or improving ESG factors
Products and services that benefit people and the planet
3
Impact strategies generate (or have the potential to generate) a positive societal or environmental impact. Our mission-led investment strategies seek to deliver real world change in the following ways:
- Investing in companies that provide products and services that are solving environmental or social challenges.
- Identifying companies with potential to make a more profound impact and engaging with them to bring about positive change. This can include companies that are re-positioning their business to a more sustainable model.
We invest in companies that deliver intentional and additional impact, one that is quantifiable, and which we can monitor and report on. We use effective engagement as a catalyst to progress companies towards making a material difference to the world in which we live.
Key attributes
Investing for positive societal or environmental change
Delivering quantifiable impact
Using engagement to make a difference
Our approach
Our focus on Sustainable Wealth Creation aims to ensure that all our investment capabilities are guided by this philosophy and driven by a fusion of four characteristics. These are:
High-active-share fundamental investment.
Best in class ESG integration in public and private markets.
Effective and active stewardship to act as responsible owners.
Overseen by the Responsibility Office
Our investment capabilities aim to deliver Sustainable Wealth Creation through active, responsible investment and effective stewardship over genuine long-term horizons, promoting intergenerational fairness.
Classifying our funds under Sustainable Disclosure Regulation (SFDR)
Set up by the EU and effective from 10 March 2021, the Sustainable Finance Disclosure Regulation (SFDR) looks to improve transparency among financial market participants in relation to sustainability-related information. SFDR requires asset managers to provide standardised disclosures on how environmental and social factors are integrated at both the entity and product level.
We support greater transparency and a clearer framework around how environmental and social factors are considered in financial markets.
Under SFDR, funds are classified in three categories:
Article 6
- Financial products not covered by Article 8 or 9
- Product Characteristics: Makes sustainability risk disclosures and may integrate ESG safeguards.
Article 8
- Financial products promoting environmental or social characteristics
- Product characteristics: Strong, demonstrable consideration of ESG factors in the investment process.
Article 9
- Financial products with a targeted sustainability objective
- Product characteristics: Specific sustainability objectives and intentionality, which can be measured and reported on.
