ESG Policy

Policy as at:


Board’s Approach to Environmental, Social & Governance (ESG) issues

We are mindful of investors’ responsibilities, through the companies chosen as investments, to society as a whole: and of our role as shareholders’ Board of Directors in guiding our Investment Manager to implement a Environmental, Social and Governance (ESG) policy consistent with those responsibilities. Additionally, we share our Investment Manager’s belief that ESG issues can have a material impact on the value of a company, its social licence to operate and therefore on investors’ capital.

Investment Manager’s Approach to ESG issues

The Manager believes that companies run in a prudent, sustainable manner for all its stakeholders are ultimately more successful, resilient and financially rewarding for shareholders than those that are not. Integrating ESG considerations into the investment process and ensuring an investee company’s business model is sustainable for the long term are thus fundamental to the Manger’s approach. Where a company does not screen well in some of these areas even when it does in others, the Manager believes in actively engaging with the company to support it in a transition to a fully sustainable business model. The Manager believes that in doing so (rather than, for example, by simply disinvesting), the outcome can be better for shareholders and society and help support economic prosperity. Where a business model is or has over time become unsustainable and no transition is possible, the Manager will not invest in the stock.

Stewardship, Standards and Codes

The Board embraces the concept of active stewardship; this is central to the achievement of its aim to preserve and grow the long term purchasing power of the assets entrusted to it by shareholders. The Board asks its Manager, in adopting a stewardship role, to monitor, evaluate and actively engage with investee companies with the aim of preserving or adding value to the portfolio. The Board shares its Investment Manager’s belief that this stewardship role is wholly consistent with supporting companies to grow in a sustainable way, and is strongly supportive of the Manager engaging collaboratively with other investors as well as individually. The Manager is a signatory of the UK Stewardship Code 2020, the UN Principles of Responsible Investment (UNPRI) and uses the Investor Forum and PRI Collaboration Platform for its collaborative efforts.

Externalities & Non-Environmental Issues

In addition to the above, the Board asks the Manager to include externalities when assessing a stock’s suitability for investment. Externalities are costs, usually to society or the environment, which are not captured by market pricing and can include nonfinancial factors. In particular, there are some areas where companies operating legally and ethically may, through their joint (unco-ordinated) action, create a globally catastrophic result. These are specifically in the areas of climate change, global financial fragility and antimicrobial resistance (pandemics). These are areas where the Board believes that engagement with investee companies, in conjunction with other asset owners, is essential to prevent disastrous unintended consequences. The Board therefore asks the Manager to report to it regularly with regard to its engagement in these specific areas.