An integrated ESG approach to fiduciary management

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An integrated ESG approach to fiduciary management

Industry Voice: Russell Investments says considering the extent to which ESG factors impact not just the financial results, but other outcomes, is a good starting point.

Responsible investing and environmental, social and governance (ESG) issues are important to our clients. Considering the extent to which ESG factors impact not just the financial results, but other outcomes, is a good starting point. Identifying issues driven by risk mitigation, return maximisation, complying with regulation or in response to particular beliefs, can also help trustees select a fiduciary manager that meets their requirements from an ESG investment perspective. 

A lot of fiduciary management is about making the most of the underlying investment managers; being comfortable with, and understanding, the process adopted by the manager - as well as the extent to which they're capturing and utilising ESG factors. That doesn't mean always picking the managers that have the greatest degree of ESG in their investment process, but recognising where there may be opportunities or risks through the portfolio of underlying managers.

Our fiduciary management clients benefit from a holistic approach to ESG integration across our business and culture, rather than it being a separate consideration or after-thought.

 

All of our funds integrate ESG factors

Manager evaluations: In our view, a sound awareness of ESG factors and a robust process are essential for responsible investing. We believe they can help deliver strong investment returns and meet objectives over the long term. As such, we have a dedicated ESG rank for managers' investment strategies. These ESG rankings are a qualitative assessment of how well active managers understand the impact of ESG factors on short and long-term security price evolution, portfolio level risk, and/or the return profile of the portfolio. This evaluation takes in to account the asset class, region and industry, and how their approach to ESG is evolving over time.

Screening: All our pooled funds for investors across Europe, the Middle East and Africa (EMEA) are prohibited from holding investment instruments of companies involved in controversial weapons or tobacco production named on our Issuer Exclusion List, which is reviewed quarterly.

Click here to learn more about fiduciary management and how it can help secure your scheme's long-term investment goal.

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