Performance, Risk and ESG Criteria Combined

| Private Equity | Perspektiven

  • Unigestion has been an active proponent of ESG for a long time, having launched its first SRI mandate in 2004.
  • We believe that integrating ESG criteria into our investment processes is essential to reducing risks.
  • ESG is equally important in less liquid strategies such as private equity. Here we take the UN’s Sustainable Development Goals as the basis of our investment activities, ensuring that all of our investment themes are aligned with the SDGs and, in most cases, support multiple goals.

Sara Razmpa, Head of Responsible Investment, discusses the importance of ESG in investment management, how Unigestion interacts with companies and how ESG is incorporated in both liquid and illiquid strategies.

What is your view on the importance of ESG in investment management?

Asset managers have a major role to play in helping solve some of the most pressing problems that the world currently faces. We are in the privileged position of being a link between the providers of funding, and those who need it. We must make the most of this position in order to identify opportunities to improve the world we live in, as well as grow the value of our clients’ assets.

Sustainability is at the core of our DNA here at Unigestion. We are owned by a foundation which supports a wide range of projects in the charitable, educational, cultural and medical fields. The foundation is also a strategic long-term shareholder of the firm for the benefit of all stakeholders, while at the same time providing a platform to make a real difference to society.

What measures have you taken to incorporate ESG?

We have been an active proponent of responsible investing for a long time. We launched our first Socially Responsible Investing (SRI) mandate back in 2004 and since then we have introduced a number of ESG-specific initiatives and products and significantly accelerated our SRI-related activities. Today, SRI is ingrained into everything we do, from the integration of the Principles for Responsible Investment (PRI) into our investment processes, to the promotion of our beliefs and behaviours, both internally and externally.

Promoting responsible investing to our stakeholders is an important part of our SRI effort. It is also a key component of the PRI which we signed in 2013. We are committed to adhering to these Principles in everything we do and over recent years we have also taken significant steps to integrate them into all asset classes that we manage.

We believe that integrating ESG criteria into our investment and decision-making processes is essential to reducing the risks of our investments. A 360-degree approach to risk assessment is at the heart of all our investment processes, this enables us to identify ESG criteria as a source of risk, and so affects the way we select investments and build portfolios. In addition to key ESG considerations within our risk assessment, we explicitly control the carbon footprint of our investments, and watch for potential controversies. We firmly believe that SRI is key to protecting our clients’ assets against the emergence of these new risks.

How do you interact with companies to bring about change for the greater good of society as a whole?

We aim to be an active owner of companies and we therefore choose to engage with companies where we believe we have a reasonable chance of positively influencing their behaviour and positioning. This is because we believe that, over the long term, this process will contribute positively to our portfolios’ risk/return profile.

Since 2016, we have engaged with companies on a variety of issues relating to directorship, reorganisation and mergers, health and environment, and social and corporate governance.

Recently, within the framework of our ESG integration process, we have defined and incorporated a rule to identify portfolio companies within the worst decile of our proprietary ESG score that have shown signs of improvement over the long-term. We have decided to keep these companies in our portfolios, while engaging with them based on our internal evaluation of their ESG issues. We believe that engaging with them can be constructive and helps to drive positive change in their behaviours.

How do you incorporate ESG into your less liquid strategies?

Private Equity (PE) is strategically important to Unigestion, accounting for around 40% of our total assets under management. In this space, ESG has always played an important role in our investment decision-making process. Today, our approach to ESG is far more sophisticated and proven. We take the United Nations Sustainable Development Goals (SDGs) as the basis of our investment activities, ensuring that all of our PE investment themes are aligned with the SDGs and, in most cases, support multiple goals.

In addition, we engage on an ongoing basis with our direct company investments or the fund managers to ensure the right direction of improvement regarding ESG criteria is pursued.

What progress do you hope to make going forward?

We have a lot of aspirations about where we want to be and how to get there. One of our main goals over the next three years is to take a good look at the SDGs and align our investment philosophies and processes with those where we feel we can contribute, whilst ensuring they remain in line with the overall ESG framework of the firm. But, we have to remain realistic and set ourselves achievable targets. After all, Rome wasn’t built in a day.


Important Information

Past performance is no guide to the future, the value of investments, and the income from them change frequently, may fall as well as rise, there is no guarantee that your initial investment will be returned. This document has been prepared for your information only and must not be distributed, published, reproduced or disclosed by recipients to any other person. It is neither directed to, nor intended for distribution or use by, any person or entity who is a citizen or resident of, or domiciled or located in, any locality, state, country or jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

This is a promotional statement of our investment philosophy and services only in relation to the subject matter of this presentation. It constitutes neither investment advice nor recommendation. This document represents no offer, solicitation or suggestion of suitability to subscribe in the investment vehicles to which it refers. Any such offer to sell or solicitation of an offer to purchase shall be made only by formal offering documents, which include, among others, a confidential offering memorandum, limited partnership agreement (if applicable), investment management agreement (if applicable), operating agreement (if applicable), and related subscription documents (if applicable). Please contact your professional adviser/consultant before making an investment decision.

Where possible we aim to disclose the material risks pertinent to this document, and as such these should be noted on the individual document pages. The views expressed in this document do not purport to be a complete description of the securities, markets and developments referred to in it. Reference to specific securities should not be considered a recommendation to buy or sell. Unigestion maintains the right to delete or modify information without prior notice. Unigestion has the ability in its sole discretion to change the strategies described herein.

Investors shall conduct their own analysis of the risks (including any legal, regulatory, tax or other consequences) associated with an investment and should seek independent professional advice. Some of the investment strategies described or alluded to herein may be construed as high risk and not readily realisable investments, which may experience substantial and sudden losses including total loss of investment. These are not suitable for all types of investors.

To the extent that this report contains statements about the future, such statements are forward-looking and subject to a number of risks and uncertainties, including, but not limited to, the impact of competitive products, market acceptance risks and other risks. Actual results could differ materially from those in the forward-looking statements. As such, forward looking statements should not be relied upon for future returns. Targeted returns reflect subjective determinations by Unigestion based on a variety of factors, including, among others, internal modeling, investment strategy, prior performance of similar products (if any), volatility measures, risk tolerance and market conditions. Targeted returns are not intended to be actual performance and should not be relied upon as an indication of actual or future performance.

No separate verification has been made as to the accuracy or completeness of the information herein. Data and graphical information herein are for information only and may have been derived from third party sources. Unigestion takes reasonable steps to verify, but does not guarantee, the accuracy and completeness of information from third party sources. As a result, no representation or warranty, expressed or implied, is or will be made by Unigestion in this respect and no responsibility or liability is or will be accepted. All information provided here is subject to change without notice. It should only be considered current as of the date of publication without regard to the date on which you may access the information. Rates of exchange may cause the value of investments to go up or down. An investment with Unigestion, like all investments, contains risks, including total loss for the investor.

Additional Information for US Investors

The performance figures are based on estimated fees and expenses as well as on the underlying strategy’s estimated performances given by fund managers, administrators, custodians and third party sources at a given date. Where performance is reflected gross of fees, potential investors should be aware that the inclusion of fees, costs and charges will reduce the overall value of performance. Unless otherwise stated, the performance data source are Unigestion, Bloomberg and Compustat.

This information is provided to you solely to give you background information relating to Unigestion, certain strategies it implements and currently offers. Before making an investment decision with respect to the strategy discussed herein, potential investors are advised to consult with their tax, legal, ERISA and financial advisors. Note that not all strategies may be available or suitable for investment by U.S. investors.

This document may contain forward-looking statements, including observations about markets and industry and regulatory trends as of the original date of this document. Forward-looking statements may be identified by, among other things, the use of words such as “expects,” “anticipates,” “believes,” or “estimates,” or the negatives of these terms, and similar expressions. Forward-looking statements reflect Unigestion’s views as of such date with respect to possible future events. Actual results could differ materially from those in the forward-looking statements as a result of factors beyond a strategy’s or Unigestion’s control. Readers are cautioned not to place undue reliance on such statements. No party has an obligation to update any of the forward-looking statements in this document

Return targets or objectives, if any, are used for measurement or comparison purposes and only as a guideline for prospective investors to evaluate a particular investment program’s investment strategies and accompanying information. Performance may fluctuate, especially over short periods. Targeted returns should be evaluated over the time period indicated and not over shorter periods.

The past performance of Unigestion, its principals, shareholders, or employees is not indicative of future returns.

Except where otherwise specifically noted, the information contained herein, including performance data and assets under management, relates to the entire affiliated group of Unigestion entities over time including that of Unigestion UK. Such information is intended to provide the reader with background regarding the services, investment strategies and personnel of the Unigestion entities. No guarantee is made that all or any of the individuals involved in generating the performance on behalf the other Unigestion entities will be involved in managing any client account on behalf of Unigestion U.K. More specific information regarding Unigestion UK is set forth herein where indicated and is available on request.

There is no guarantee that Unigestion will be successful in achieving any investment objectives. An investment strategy contains risks, including the risk of complete loss.

The risk management practices and methods described herein are for illustrative purposes only and are subject to modification.

Legal Entities Disseminating This Document

UNITED KINGDOM

This material is disseminated in the United Kingdom by Unigestion (UK) Ltd., which is authorized and regulated by the Financial Conduct Authority („FCA“).

This information is intended only for professional clients and eligible counterparties, as defined in MiFID directive and has therefore not been adapted to retail clients.

US

This material is disseminated in the U.S. by Unigestion (UK) Ltd., which is registered as an investment adviser with the U.S. Securities and Exchange Commission (“SEC”). This information is intended only for institutional clients and qualified purchasers as defined by the SEC and has therefore not been adapted to retail clients.

EU

This material is disseminated in the European Union by Unigestion Asset Management (France) SA which is authorized and regulated by the French “Autorité des Marchés Financiers” („AMF“).

This information is intended only for professional clients and eligible counterparties, as defined in the MiFID directive and has therefore not been adapted to retail clients.

CANADA

This material is disseminated in Canada by Unigestion Asset Management (Canada) Inc. which is registered as a portfolio manager and/or exempt market dealer in nine provinces across Canada and also as an investment fund manager in Ontario, Quebec and Newfoundland & Labrador. Its principal regulator is the Ontario Securities Commission („OSC“).

This material may also be distributed by Unigestion SA which has an international advisor exemption in Quebec, Saskatchewan and Ontario. Unigestion SA’s assets are situated outside of Canada and, as such, there may be difficulty enforcing legal rights against it.

SWITZERLAND

This material is disseminated in Switzerland by Unigestion SA which is authorized and regulated by the Swiss Financial Market Supervisory Authority („FINMA“).

Document issued November 2020.

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