We are advocates of responsible investing and believe that it should generate better outcomes for our investors over the longer term.
Investing in well-managed companies that have a considered impact on society and the environment makes good financial sense – this is the foundation of the rationale for ESG (Environmental, Social, Governance) investing. In addition to any positive environmental and social benefits, these types of businesses are likely to be better managed, more capable of effective capital allocation, and less likely to face regulatory pressures. These factors should ultimately be reflected in a company’s share price and investors’ returns.
For example, if a company suffers reputational damage because it poorly manages greenhouse gas emissions, is discovered to be treating its workers poorly, or is accused of corruption, then its share price may suffer. Meanwhile, companies that use energy efficiently, invest in training their employees, and reward their executives for doing the right thing, may be more likely to outperform their competitors and return more value to shareholders. Over the long term, they may also be better prepared to meet future strategic challenges and take advantage of new business opportunities.
For these reasons, we set responsible standards for our investment funds:
Signatories to the United Nations-backed Principles for Responsible Investment (UN PRI) must adapt their investment processes to include ESG issues, and act as more responsible stewards of capital. Signatories acknowledge that acting in the best long-term interests of their investors must involve incorporating ESG issues into investment processes.
The UK Stewardship Code requires signatories to report on how they apply stewardship principles to their investments, which includes how they engage with the companies they invest and also improves transparency around corporate governance.
16Or can evidence that they are working towards signatory status and publicly adhere to all the policies set out by these schemes in the meantime
We want to select best-of-breed investment managers and approaches that are the right fit for the funds we offer to investors, focussed on our primary goal of generating good long-term financial outcomes. So, aside from the standards that we describe above, we refrain from applying too many other ESG restrictions to our funds. Whilst some of our appointed investment managers will choose to exclude companies from certain industries, for example, this is not something we currently mandate them to do. Nor do we ask our investment managers to engage in ‘impact’ investing (where generating a positive impact on the environment or society might come at the expense of financial returns) or to target more granular ethical outcomes (as an investor in an Omnis fund your ethical priorities may differ from other investors in our funds).
Our investment managers are working hard to deliver good financial outcomes for our clients in a responsible manner. We’re pleased to share some success stories about how they are pushing their portfolio companies to combat climate change, or making important changes within their own businesses.
