Environmental, Social and Governance
Consideration of relevant ESG factors is an integral part of the way in which SAINTS’ investments are managed.
The Board of SAINTS recognises the importance of considering Environmental, Social and Governance (ESG) factors when making investments. The Directors consider that Board oversight of ESG matters is an important part of their responsibility to shareholders.
The Board has adopted an ESG Policy and SAINTS produces an annual Stewardship Report and discloses its voting record. The Board considers that Baillie Gifford effectively integrates the consideration of ESG factors into its research and decision making. Links to SAINTS’ ESG Policy, Stewardship Report and voting record, to Baillie Gifford’s Governance and Sustainability Principles and Guidelines and to Baillie Gifford’s annual Stewardship and Task Force on Carbon Related Disclosure (TCFD) reports are included on the right.
Baillie Gifford’s approach to investment is based on identifying and holding high quality growth businesses that enjoy durable competitive advantages in their marketplace. Furthermore, in managing SAINTS, Baillie Gifford is only interested in income streams that will last for decades, which ultimately come from companies that are managed in a genuinely sustainable way. The managers’ approach therefore gives careful consideration to environmental, social and governance factors, and an experienced ESG analyst provides specialist input on any new investment being considered for the portfolio. The managers also seek to engage constructively with the companies in which SAINTS invests in order to help promote their continued long-term success.
Whilst consideration is given to sustainability matters, there are no restrictions on the investment universe available to the Company.
Standards and codes
Baillie Gifford is a signatory to the United Nations Principles for Responsible Investment and the Carbon Disclosure Project and is also a member of the International Corporate Governance Network. Baillie Gifford also became a supporter of the Taskforce on Climate-related Financial Disclosures (‘TCFD’) in May 2020 and published its firm-wide TCFD-aligned report in June 2022. The Company's own TCFD report can be found on the Company's webpage of the Managers' website. It explains the managers’ approach to addressing climate-related risks and opportunities through the investment process and describes a current view of how they may impact the portfolio. It also includes data and metrics to provide useful additional information. Baillie Gifford’s annual Stewardship Report explains how the 2020 UK Stewardship Code has been applied. The Company's Managers have outlined in the Statement of Climate-Related Intent and Ambition their commitment in relation to the investments they make for clients and their commitment to reducing emissions in their firmwide operations.
Baillie Gifford expects all holdings to operate in accordance with the principles and standards set out in the United Nations Global Compact. When a company’s performance on any material issues is significantly below what is expected, making it a material risk to the long-term performance of their business, and potentially society as a whole, the investment managers will engage with management with the aim of improving the relevant policies and management systems.
The Company considers that it does not fall within the scope of the Modern Slavery Act 2015 (‘Act’) and it is not, therefore, obliged to make a slavery and human trafficking statement. In any event, the Company considers its supply chains to be of low risk as its suppliers are typically professional advisers. A statement by the Managers under the Act has been published on Baillie Gifford’s website at the link on the right.
Section 172 statement (extract) and Due Diligence Policy on Principal Adverse Impacts
Having regard to the Company being an externally-managed investment company with no employees, the Board considers that the Company’s key stakeholders are its existing and potential new shareholders, its externally-appointed managers (Baillie Gifford and OLIM) and other professional service providers (corporate broker, registrar, auditors and depositary), lenders, wider society and the environment.
Whilst the Company’s operations are limited (with all substantive operations being conducted by the Company’s third-party service providers), the Board is keenly aware of the need to consider the impact of the Company’s investment strategy and policy on wider society and the environment. As stated above, the Board considers that its oversight of environmental, social and governance (ESG) matters is an important part of its responsibility to all stakeholders and that proper consideration of ESG factors sits naturally with the Company’s long-term approach to investment.
The managers believe that a company cannot be financially sustainable in the long run if its approach to business is fundamentally out of kilter with changing societal expectations. The managers consider a number of potential adverse impacts in the context of their focus on long-term investment performance. More detail on Baillie Gifford’s due diligence approach to consideration of principal adverse impacts can be found in its ESG Principles and Guidelines document, available publicly at the link on the right.
Baillie Gifford believes that it has a responsibility to behave as supportive and constructively engaged long-term investors. The approach favours a small number of simple principles which help shape interactions with companies: Prioritisation of Long-term Value Creation; Sustainable Business Practices; Fair Treatment of Stakeholders; A Constructive and Purposeful Board; Long-term Focused Remuneration.
Baillie Gifford also believes that ‘active ownership’ is as important as selecting the right investments in the first instance. Baillie Gifford has adopted a set of guidelines to provide an insight on its approach to voting and engagement. More detail on these guidelines can be found in Baillie Gifford’s Stewardship Report.
The Company has given discretionary voting powers to Baillie Gifford & Co. which votes against resolutions it considers may damage shareholders’ rights or economic interests and voting is reported on and reviewed at Board meetings.