Our independent consultants, Fundhouse use a proprietary process to annually score our funds on an ESG (Environmental, Social, Governance) basis. We believe that these scores give a fair and balanced representation of the depth and quality of responsible activity that is taking place within each of our funds.
Firstly, they survey each of our investment managers to understand the ESG characteristics of their investment approach. This includes measuring to what extent they consider ESG factors when making investment decisions, any ethical exclusions that might be applied within the portfolio, and the degree to which the manager has pedigree in responsible investing.
Secondly, they survey our investment managers’ firms to understand how deep responsibly investing goes within their organisations. This includes aspects such as the extent to which they plan to reduce greenhouse gas emissions, whether governance structures are in place to ensure good ESG behaviours, whether the firm engages with supranational bodies and governments to bring about change, and the promises and progress that the firm has made towards responsible goals. They also test the proportion of each firm’s capital that is run to investment mandates that have specific ESG goals.
Thirdly, using input from a specialist third-party data provider, every investment inside our funds is measured for ESG characteristics.
Every year, Fundhouse raises the bar with their ESG scoring, to keep up with ESG best practices and regulatory advances.
Finally, these inputs are then blended together to create a final score, which we show in the table on the next page and ranks each fund from an ESG perspective as follows:
Please note that these scores refer only to ESG considerations and are in no way designed to indicate whether or not a fund is an attractive investment. ESG factors are more applicable to some regions and asset classes than others, and a fund rated lower on the ESG scale may excel in other parts of its process and/or be investing in an asset class or region where ESG considerations are simply less relevant. The fund ESG scoring system
Some funds in the UK investment market have a mandate to invest with ‘positive impact’ or may have many restrictions placed on their portfolios (perhaps to the detriment of returns). Those funds would be likely to rank higher in our framework. The Omnis funds do not have such mandates, but we believe that our funds score as expected, or better, for funds of their type and for the approaches that our investment managers take to ESG implementation.
Since our last annual review, published in May 2021, what responsible improvements have been made to the Omnis fund range?
Two of our funds have improved their scores, and none have fallen in score.
Climate change - More of our managers now measure the carbon footprint of their investment portfolios, and exclude investment opportunities on environmental issues.
Weapons exclusions - More of our managers screen-out investment opportunities that are linked to nuclear weapons and other controversial weapons.
Carbon neutral goals - We have asked our investment managers to disclose their carbon neutral objectives. We are pleased that, out of the 15 different asset management companies that we partner with, 12 have carbon neutral objectives, 2 are currently carbon neutral today, and one will become carbon neutral within 12 months.
The FCA are currently consulting with the industry and other stakeholders on changing regulations around sustainability disclosures and labels, in order to make sustainable investing easier and more transparent for consumers. Omnis has been working closely with Fundhouse to ensure that our investment managers are well prepared to meet any such regulatory changes and achieve a minimum level of sustainability.
Please note that we have been unable to rate some Omnis funds because we were not able to meaningfully assess their holdings for ESG characteristics for one of several reasons: either they contained a high proportion of government bonds (assessing government bonds for ESG is difficult and highly subjective), or they invest in other funds, which we are not currently able to accurately assess.
These funds are:
