Partners in Confidence: Assisting with integrating responsible principles into an equity portfolio

The Client: Land management company

Understanding the client challenge

The sponsoring employer was seeking to align with the United Nations Sustainable Development Goals (“UN SDG”) and has an ambition to achieve net zero carbon emissions by 2030. 

The existing equity portfolio consisted of a global index-tracking fund with no specific ESG/responsible investment considerations, other than the stewardship actions of the investment manager with the underlying investee companies.

We were approached by the trustees of a UK Defined Benefit pension scheme who wanted to align the pension scheme’s investments with their core investment beliefs and also consider the responsible investment policy of the sponsoring employer.

Providing a big name service on a first name basis

Working with the trustees, we provided training on the history of responsible investing and the various approaches that can be adopted. This helped the trustees to set their objectives and focus on their core beliefs. The Quantum investment team provided information on products available which could help the trustees better align the scheme’s approach to responsible investing with the trustees’ investment beliefs and the policy of the sponsoring employer.

Armed with the information provided, the Trustees switched their equity portfolio into a fund which tilts more towards companies that score better on various E, S and G (Environmental, Social and Governance) metrics and excludes some companies :

• who persistently violate the UN Global Compact, which is the world’s largest corporate sustainability initiative;
• are involved in the manufacture and production of cluster munitions, anti-personnel landmines, biological and chemical weapons; or, 
• Who generate a significant proportion of their revenues from coal.

Client impact

The scheme’s investments are now more aligned with the trustees’ core beliefs and the approach of the sponsoring employer. Furthermore, by taking ESG considerations into account, this will serve to better protect the scheme’s investments from the risks that arise from ESG factors, including climate change.

Quantum Advisory continues to work with the trustees to identify more opportunities where ESG considerations can be integrated into the portfolio to better align with the trustees’ responsible investment policy.