Our approach to responsible investment
As long-term investors, we uphold the highest standards of responsible investment, guided by the principles of human rights, environmental stewardship and adherence to international norms.
We refuse to invest where there have been frequent incidents of malpractice or where the business model is structurally challenged. We believe this high hurdle rate helps to mitigate risk – we have no interest in owning poor-quality companies and do not believe that there is a price for everything.
Stewardship
Stewardship is at the heart of our approach. We recognise that our investment activities can have an impact on society and the environment, and good governance is the foundation on which great companies are built.
Team approach
We believe it is everyone’s responsibility to think about sustainability issues during their daily decision-making and interactions with company management. Our analysts incorporate company engagement as part of their responsibilities.
Since 1988
We believe that sustainability issues are effectively investment issues – and the challenges and opportunities arising from them can have a significant impact on a company’s returns. We have been consistent in this belief since the team’s establishment in 1988.
Exclusions policy
In seeking quality companies, we first remove the businesses we would not invest in. While some are screened out by FSSA’s exclusions policy, most companies are excluded through the team’s research and comprehensive understanding of corporate histories and misdemeanours, governance issues, bad actors, weak franchises and sustainability challenges.
Please see our exclusions policy for more details of our exclusions and additional screening criteria.
Sustainability analysis and corporate engagement
Sustainability analysis is at the core of our investment process. We take a stakeholder-alignment approach, which considers risks from the perspective of owners, employees, suppliers, customers and society at large. Using this framework, each company is benchmarked against its peer group on a range of environmental, social and governance metrics. This assessment forms the baseline for our sustainability analysis and highlights any gaps which may require further engagement.
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Stewardship and proxy voting
We engage regularly with company management to augment our initial research, raise any material concerns and share best practices in sustainability matters. We believe this is a critical part of our stewardship duties and, ultimately, adds to our long-term performance. We also aim to vote on all eligible resolutions at annual and extraordinary general meetings, with the votes being made in the best interests of our clients at the time of asking.
Examples of our engagement in practice can be found in our Sustainability Report, while our proxy voting record can be found on the First Sentier Investors website.
Climate change and the environment
Climate change is a key consideration in FSSA’s investment process. We accept the evidence of climate change and the need to transition to a low-carbon global economy. We consider it our duty to assess climate-related risks and opportunities in our investment decision-making and ownership practices.
Read more about how we manage climate risks and learn about our decarbonisation targets in our climate change statement. Our portfolio carbon footprint is available quarterly and can be found here.