ESG Policy

Policy as at:
16/09/2021

Responsible Investment and its Role

Personal Assets Trust’s investment objective is to protect and increase (in that order) the value of shareholders’ funds per share over the long term.  In prioritising capital preservation, the Trust’s Investment Manager (Troy) pays significant attention to the downside risk of any investment, it is Troy’s fiduciary duty to assess the drivers of long-term value in the investment process.  An important part of this is a consideration of the material Environmental, Social and Governance (“ESG”) factors that can impact the long-term success of an investment.  Responsible investment efforts include the fundamental integration of material ESG factors into investment analysis, portfolio construction and stewardship activities (voting and engagement). The Investment Manager’s responsible investment approach therefore aims to ensure alignment with the Trust’s investment objectives.

Research Process

A core part of the Investment Manager’s research process is understanding and assessing the material financial and non-financial risks and opportunities that may impact the long-term returns of an investment.  It is in this context that Troy’s Investment Team seeks to integrate the consideration of ESG factors into fundamental analysis during all stages of the research process.

Troy may seek to either mitigate the adverse impact or improve the positive impact of investments on the environment or society if doing so is aligned with improving the risk and return profile of the investment. The manager would only do so if this does not run contrary to the investment objectives of the Trust.  

Since materiality is dynamic, Troy does not seek to limit the categories that ESG encompasses. Rather, the aim is to facilitate the analysis and appreciation of relevant and material ESG factors specific to each company. The Investment Manager therefore does not employ a prescriptive checklist, nor score holdings on ESG criteria. Instead, a qualitative assessment is carried out to assess the risks and opportunities of each relevant ESG factor.

Analysis is materiality-driven and the factors considered will depend on the ESG risks and opportunities each company is exposed to, as well as the industry and geographies they operate in.  The ESG factors Troy may consider are outlined below, though this does not comprise an exhaustive list of all factors considered.

Climate Change

Natural Capital

Product Safety & Responsibility

Human Capital

Corporate Governance

  • Carbon pricing
  • Energy mix
  • Technological disruption
  • Net zero alignment
  • Physical risk
  • Natural resource management
  • Biodiversity
  • Pollution
  • Waste
  • Circularity
  • Product use and harm
  • Chemical use
  • Data privacy
  • Cyber security
  • Human rights
  • Workplace culture
  • Employee treatment and empowerment
  • Board effectiveness
  • Management capability
  • Corporate behaviour
  • Business ethics

Climate Change

The Investment Manager believes climate change to be one of the most significant and complex systemic risks facing the world today.  As a result, Troy assess all equity holdings for their exposure to climate-related risks and opportunities which includes an assessment of both transition and physical risks (and opportunities where relevant). Troy’s Climate (TCFD) Report further outlines how climate-related considerations are integrated into the investment process.

Time Horizon:  The Investment Manager aims to invest in stocks that can be held for the long term (five years or more). This time horizon clearly extends into the time frame over which one can reasonably expect the impact of climate change to be felt. As such the management of climate risk is implemented within the investment process.

Transition Risk: The Investment Manager assesses that the risks associated with a transition to a lower carbon economy fall well with Troy’s investment time horizon of more than 5 years. Whilst Troy’s investment process favours capital-light investments, and the Trust has limited exposure to the most carbon-intensive sectors, the analysis of transition risk at the individual stock and portfolio level remains an important part of the investment process.

Physical Risk:  The risks associated with a warming climate, including from rising sea levels, extreme weather and wildfire events, are extremely difficult to model and are risks that impact almost all companies. The understanding of how physical climate risk might impact financial markets and asset prices is in its infancy, but we continue to develop our understanding of this and apply it to the analysis of companies.

Monitoring of, and Engagement with, Investee Companies

Whilst the Trust seeks to invest in companies whose business strength and corporate governance policies mean they generally do not require significant shareholder intervention, the Investment Manager does recognise that engagement is an important aspect of fiduciary duty.  Engagement is generally conducted proactively and as part of an investee company’s decision-making process; Troy is also willing to engage reactively where a company has taken a course of action that conflicts with its standpoint. The impetus to engage may stem from a breach by the company of generally accepted business practice norms, Troy’s proxy voting process or integrated ESG analysis.  Any engagement would be expected to meet the following criteria:

  • There is a clear objective in engaging with a company;
  • The matter for engagement must be material; and
  • The engagement with the company is constructive.

Voting and Disclosure of Activity

The Trust considers (proxy) voting an important part of its stewardship activities and investment process and aims to use its voting rights to both safeguard the interests of investors and encourage environmental and social sustainability (where these objectives are aligned). The Investment Manager will seek to instruct votes, on behalf of investors, on all resolutions for which it has voting authority.

Troy conducts analysis of each management or shareholder resolution ahead of voting. Votes are then cast in line with what is deemed to be in the best long-term interest of shareholders.  Environmental and social sustainability are considered alongside governance factors in this analysis.

Whenever possible, voting on any resolution is incorporated as part of the wider engagement with management.  Troy’s preferred course of action would be to have dialogue with any company ahead of casting a vote against management.  Where appropriate Troy may also seek to engage with a company following a vote against management.

UN Principles for Responsible Investment

As part of the Investment Manager’s commitment to responsible investing, Troy became a signatory to the United Nations’ Principles for Responsible Investment in September 2016.

Useful links

Company Website
ESG