- 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.
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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.
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This material is disseminated in the United Kingdom by Unigestion (UK) Ltd., which is authorized and regulated by the Financial Conduct Authority („FCA“).
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Document issued November 2020.