Adjusting to a new environment
Murray International Trust managers discuss how global financial markets have bounced higher over the past few months, in eager anticipation of cuts to interest rates.
Environmental, Social and Governance
We consider environmental, social and governance factors as part of our investment process
The Manager’s Focus on ESG
Whilst ESG factors are not the over-riding criteria in relation to the investment decisions taken by the Manager for the Company, significant attention is given to ESG and climate related factors throughout the Manager’s investment process. The Manager gives particular weight to ESG factors when they are material to the investment case being made for an investee company. In the Manager’s view, companies that successfully manage climate change risks will perform better in the long term. It is important that the Manager assesses the financial implications of material climate change risks across all asset classes, including real assets, to make portfolios more resilient to climate risk.
Please see pages 19 to 20 of the annual report for more information.
Please see pages 19 to 20 of the annual report for more information.
Existing investors
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Whilst the management of the Company’s investments is not undertaken with any specific instructions to exclude certain asset types or classes, the consideration of ESG factors is a fundamental part of the Manager’s investment process and has been for over 30 years. It is one of the key criteria on which the Manager assesses the investment case for any company in which it invests for three key reasons.
Financial Returns - ESG factors can be financially material – the level of consideration they are given in a company will ultimately have an impact on corporate performance, either positively or negatively. In the Manager’s view, those companies that take their ESG responsibilities tend to outperform, over time, those that do not.
Fuller Insight - Systematically assessing a company’s ESG risks and opportunities alongside other financial metrics allows the Manager to make better investment decisions.
Corporate Advancement - Informed and constructive engagement helps foster better companies, protecting and enhancing the value of the Company’s investments.
By embedding ESG factors into our active equity investment process we aim to reduce risk, enhance potential value for our investors and foster companies that can contribute positively to the world.
Financial Returns - ESG factors can be financially material – the level of consideration they are given in a company will ultimately have an impact on corporate performance, either positively or negatively. In the Manager’s view, those companies that take their ESG responsibilities tend to outperform, over time, those that do not.
Fuller Insight - Systematically assessing a company’s ESG risks and opportunities alongside other financial metrics allows the Manager to make better investment decisions.
Corporate Advancement - Informed and constructive engagement helps foster better companies, protecting and enhancing the value of the Company’s investments.
By embedding ESG factors into our active equity investment process we aim to reduce risk, enhance potential value for our investors and foster companies that can contribute positively to the world.
The Manager conducts extensive and high-quality fundamental and first-hand research to fully understand the investment case for every company in its global universe. A key part of the Manager’s research involves focusing its extensive resources on analysis of ESG issues. The Manager’s investment managers, ESG Equity Analysts and central ESG Investment Team collaborate to generate a deep understanding of the ESG risks and opportunities associated with each company. Stewardship and active engagement with every company are also fundamental to the investment process helping to produce positive outcomes that lead to better risk-adjusted returns
Please see pages 21 to 27 of the annual report for more information.
Please see pages 21 to 27 of the annual report for more information.
abrdn has over 1,000 investment professionals globally including investment managers, ESG Equity Analysts and the central ESG Investment Team who systematically analyse ESG risks and opportunities as part of the Manager’s research output for each company.
Its central team and ESG equity analysts support the investment managers’ first-hand company analysis, producing research into specific themes (e.g. labour relations or climate change), sectors (e.g. forestry) and ESG topics to understand and highlight best practice
Please see pages 21 to 27 of the annual report for more information.
Its central team and ESG equity analysts support the investment managers’ first-hand company analysis, producing research into specific themes (e.g. labour relations or climate change), sectors (e.g. forestry) and ESG topics to understand and highlight best practice
Please see pages 21 to 27 of the annual report for more information.
The Manager has a duty to consider all factors that may have a financially material impact on returns. Climate change is such a key factor. The related physical and transition risks are vast and are becoming increasingly financially material for many of our investments. This is not only true in the obvious high-emitting sectors, such as energy, utilities and transportation, but also along the supply chain, providers of finance and in those reliant on agricultural outputs and water.
In the Manager’s view, companies that successfully manage climate change risks will perform better in the long term. It is important that the Manager assesses the financial implications of material climate change risks across all asset classes, including real assets, to make portfolios more resilient to climate risk. Adaptation measures are essential to help limit damages from the physical impacts of climate change.
Comparable climate-related data is necessary to enable effective decision making, and is something the Manager actively sources and incorporates into its process. The Manager is supportive of the Task Force on Climate-related Financial Disclosures (TCFD) framework to strengthen climate reporting globally.
Regular engagement with high-emitting investee companies allows the Manager to better understand its exposure and management of climate change risks and opportunities. In actively managed investments, ownership provides a strong ability to challenge companies where appropriate.
The Manager can also influence corporate behaviour positively in relation to climate-risk management. The Manager believes that this is more powerful for an effective energy transition than a generic fossil fuel divestment approach.
Through active engagement it is possible to steer investee companies towards ambitious targets and more sustainable low-carbon solutions. If there is limited progress in response to the engagement, the Manager will consider the ultimate option of selling its holdings.
The Manager strongly encourages companies to consider the social dimension of the energy transition to ensure it is inclusive and ‘just’. This means worker and community needs are considered on the path to a low-carbon economy so they are not left stranded.
Other social aspects, such as affordability and reliability of energy supply are also important. Influencing through engagement has worked particularly well in collaboration with other asset managers and asset owners as part of our involvement in Climate Action 100+. This is a five-year initiative to engage and influence high-emitting companies collaboratively. Consideration of climate change risks and opportunities is an integral part of the investment process and corporate engagement is seen as essential to ensuring that portfolio companies manage climate-related risks and support a ‘just’ energy transition. This is an important part of the role of an active investor.
The Manager provides climate change insights through research and data to investment decision makers. This helps assess the financial materiality of climate change risks and opportunities. The Manager aims to influence the management of climate-related risks through engagement and voting and is part of Climate Action 100+ having signed the 2018 Just Transition statement. The Manager is also a signatory to the Net Zero Asset Manager Initiative, which informs how the Manager conducts research, selects and manages investments.
The Manager also pledges to reduce its own operational carbon footprint. It has committed to reducing emissions from energy use by 50% by 2025, procuring 100% renewable electricity for its buildings, and offsetting those emissions that have not yet been eliminated.
Please see pages 21 to 27 of the annual report for more information.
In the Manager’s view, companies that successfully manage climate change risks will perform better in the long term. It is important that the Manager assesses the financial implications of material climate change risks across all asset classes, including real assets, to make portfolios more resilient to climate risk. Adaptation measures are essential to help limit damages from the physical impacts of climate change.
Comparable climate-related data is necessary to enable effective decision making, and is something the Manager actively sources and incorporates into its process. The Manager is supportive of the Task Force on Climate-related Financial Disclosures (TCFD) framework to strengthen climate reporting globally.
Regular engagement with high-emitting investee companies allows the Manager to better understand its exposure and management of climate change risks and opportunities. In actively managed investments, ownership provides a strong ability to challenge companies where appropriate.
The Manager can also influence corporate behaviour positively in relation to climate-risk management. The Manager believes that this is more powerful for an effective energy transition than a generic fossil fuel divestment approach.
Through active engagement it is possible to steer investee companies towards ambitious targets and more sustainable low-carbon solutions. If there is limited progress in response to the engagement, the Manager will consider the ultimate option of selling its holdings.
The Manager strongly encourages companies to consider the social dimension of the energy transition to ensure it is inclusive and ‘just’. This means worker and community needs are considered on the path to a low-carbon economy so they are not left stranded.
Other social aspects, such as affordability and reliability of energy supply are also important. Influencing through engagement has worked particularly well in collaboration with other asset managers and asset owners as part of our involvement in Climate Action 100+. This is a five-year initiative to engage and influence high-emitting companies collaboratively. Consideration of climate change risks and opportunities is an integral part of the investment process and corporate engagement is seen as essential to ensuring that portfolio companies manage climate-related risks and support a ‘just’ energy transition. This is an important part of the role of an active investor.
The Manager provides climate change insights through research and data to investment decision makers. This helps assess the financial materiality of climate change risks and opportunities. The Manager aims to influence the management of climate-related risks through engagement and voting and is part of Climate Action 100+ having signed the 2018 Just Transition statement. The Manager is also a signatory to the Net Zero Asset Manager Initiative, which informs how the Manager conducts research, selects and manages investments.
The Manager also pledges to reduce its own operational carbon footprint. It has committed to reducing emissions from energy use by 50% by 2025, procuring 100% renewable electricity for its buildings, and offsetting those emissions that have not yet been eliminated.
Please see pages 21 to 27 of the annual report for more information.
Once abrdn invests in a company, it is committed to helping that company maintain or raise their ESG standards further, using the Manager’s position as a shareholder to press for action as needed.
abrdn actively engages with the companies in which it invests to maintain ESG focus and encourage improvement. The Manager sees this programme of regular engagement as a necessary fulfilment of its duty as a responsible steward of clients’ assets. It is also an opportunity to share examples of best practice seen in other companies and to use the Manager’s influence to effect positive change.
The Manager’s engagement is not limited to the company’s management team. It can include many other stakeholders such as non-government agencies, industry and regulatory bodies, as well as activists and the company’s clients. What gets measured gets managed, so the Manager strongly encourages companies to set clear targets or key performance indicators on all material ESG risks.
Please see pages 21 to 27 of the annual report for more information.
abrdn actively engages with the companies in which it invests to maintain ESG focus and encourage improvement. The Manager sees this programme of regular engagement as a necessary fulfilment of its duty as a responsible steward of clients’ assets. It is also an opportunity to share examples of best practice seen in other companies and to use the Manager’s influence to effect positive change.
The Manager’s engagement is not limited to the company’s management team. It can include many other stakeholders such as non-government agencies, industry and regulatory bodies, as well as activists and the company’s clients. What gets measured gets managed, so the Manager strongly encourages companies to set clear targets or key performance indicators on all material ESG risks.
Please see pages 21 to 27 of the annual report for more information.