The Board believes that investing in stocks which have the right ESG momentum behind them can be a positive way for our portfolio to potentially generate alpha. Investors and investment managers are paying greater attention to environmental, social and governance matters for reasons including regulatory change and the growing public discourse on climate change.
Investment manager’s process
The Board has delegated the management of the Company’s investments to the Manager, who incorporates ESG into the investment process. The portfolio managers consider ESG factors as inputs as part of a holistic assessment of the risk and opportunity associated with each investment.
The core aspects of the Manager’s ESG philosophy are; Materiality, ESG Momentum and Engagement.
- Materiality: The consideration of ESG issues on a risk- adjusted basis and in economic context. Invesco does not view ESG aspects as constraints, aside from certain restrictions driven by legal obligations in certain territories.
- ESG momentum: The concept of improving ESG performance over time, is particularly interesting. Invesco finds that companies that are improving in terms of their ESG practices may enjoy favourable financial performance in the longer term.
- Engagement: Invesco takes its responsibility as active owners very seriously and sees engagement as an opportunity to encourage continual improvement. Dialogue with portfolio companies is a core part of the investment process for its investment teams. Taking advantage of Invesco’s scale, the firm often participates in board-level dialogue and is instrumental in giving shareholder views on management, corporate strategy, transparency, and capital allocation as well as wider ESG aspects.
The Board agrees with this approach in managing the Company’s assets.
Investment manager’s industry engagement
Invesco is an active member and supporter of several external organisations as well as participants in various industry advocacy groups, including:
- signatory of the Principles for Responsible Investment;
- signatory of Climate Action 100+;
- partner of the Climate Bond Initiative;
- supporter of the Transition Pathway Initiative (TPI);
- member of the One Planet Asset Managers (OPAM) initiative;
- signatory of the Confluence Philosophy Belonging Pledge to Advance Racial Equity.
Further details of the Manager’s ESG process including examples of how the Manager has sought to exercise effective stewardship and influence over investee companies can be found on the Company’s web pages at