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The information and material contained in this website are designed to provide information on Martin Currie and is only directed at Institutional Investors and Consultants.

By accepting where indicated, you hereby acknowledge, agree and represent to Martin Currie that you are eligible by confirming that you are based in the UK, you are an authorised to conduct regulated activities in the UK and that you have read and understood the "Legal & Regulatory Information", which applies to any investment in our products referred to in this website.

The information contained within this website does not constitute an offer of or an invitation to apply for securities:

In any jurisdiction where such offer or invitation is unlawful or
In which the person making such offer is not qualified to do so or
To whom it is unlawful to make such offer or solicitation.

Martin Currie Investment Management Limited is authorised and regulated in the UK by the Financial Conduct Authority.

The distribution of this information in written format is restricted to the UK. The information contained in this site has been compiled with considerable care to ensure its accuracy at the date of publication. But no representation or warranty, express or implied, is made to its accuracy or completeness. Any research or analysis contained in this website has been procured by Martin Currie for its own use. It is provided to you only incidentally, and any opinions expressed are subject to change without notice.
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Important information

The information and material contained in this website are designed to provide information on Martin Currie and is only directed at Institutional Investors and Consultants.

By accepting where indicated, you hereby acknowledge, agree and represent to Martin Currie that you are eligible by confirming that you are based in the UK, you are an authorised to conduct regulated activities in the UK and that you have read and understood the "Legal & Regulatory Information", which applies to any investment in our products referred to in this website.

The information contained within this website does not constitute an offer of or an invitation to apply for securities:

In any jurisdiction where such offer or invitation is unlawful or
In which the person making such offer is not qualified to do so or
To whom it is unlawful to make such offer or solicitation.

Martin Currie Investment Management Limited is authorised and regulated in the UK by the Financial Conduct Authority.

The distribution of this information in written format is restricted to the UK. The information contained in this site has been compiled with considerable care to ensure its accuracy at the date of publication. But no representation or warranty, express or implied, is made to its accuracy or completeness. Any research or analysis contained in this website has been procured by Martin Currie for its own use. It is provided to you only incidentally, and any opinions expressed are subject to change without notice.
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Please read this important information. If you cannot make the representations below, please do not enter the website.

By clicking on this link, you agree and represent to Martin Currie that you are a resident of or incorporated in the United Kingdom have read and understood the "Important Information and Risk Factors", which apply to any investment in our products referred to in this website, and that you are categorised as a per se or elective Professional Client for the purposes of COBS 3 of the FCA Handbook or rules and guidance. The information on this section of the website is not intended for use by any other person, including members of the public.

Martin Currie Investment Management Limited, registered in Scotland (no SC066107) is authorised and regulated by the UK Financial Conduct Authority. Martin Currie Fund Management Limited, registered in Scotland (no SC104896) is authorised and regulated by the UK Financial Conduct Authority as a full-scope UK AIFM.

For the avoidance of doubt, nothing excludes, limits or restricts our obligations to you under the UK Financial Services and Market Act 2000 or any other applicable law or regulation.

The opinions and views in this website do not take into account your individual circumstances, objectives, or needs and are not intended to be recommendations of particular financial instruments or strategies to you. This website does not identify all the risks (direct or indirect) or other considerations which might be material to you when entering any financial transaction. You should consult with your professional advisers before undertaking any investment activity. The information provided on this website should not be treated as advice or a recommendation to buy or sell any particular security or other investment. The information on this website has not been reviewed by any competent regulatory authority.

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Please read this important information. If you cannot make the representations below, please do not enter the website.

By clicking on this link, you agree and represent to Martin Currie that you are a resident of or incorporated in the United Kingdom have read and understood the "Important Information and Risk Factors", which apply to any investment in our products referred to in this website, and that you are categorised as a per se or elective Professional Client for the purposes of COBS 3 of the FCA Handbook or rules and guidance. The information on this section of the website is not intended for use by any other person, including members of the public.

Martin Currie Investment Management Limited, registered in Scotland (no SC066107) is authorised and regulated by the UK Financial Conduct Authority. Martin Currie Fund Management Limited, registered in Scotland (no SC104896) is authorised and regulated by the UK Financial Conduct Authority as a full-scope UK AIFM.

For the avoidance of doubt, nothing excludes, limits or restricts our obligations to you under the UK Financial Services and Market Act 2000 or any other applicable law or regulation.

The opinions and views in this website do not take into account your individual circumstances, objectives, or needs and are not intended to be recommendations of particular financial instruments or strategies to you. This website does not identify all the risks (direct or indirect) or other considerations which might be material to you when entering any financial transaction. You should consult with your professional advisers before undertaking any investment activity. The information provided on this website should not be treated as advice or a recommendation to buy or sell any particular security or other investment. The information on this website has not been reviewed by any competent regulatory authority.

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Important Information:

We do not give investment advice so you need to decide if an investment is suitable for you. If you are unsure whether to invest, you should contact a financial adviser.

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By clicking on this link, you agree and represent to Martin Currie that you have read and understood the "Important information and risk factors", which apply to any investment in our products referred to in this website, and that you are incorporated in a country listed below and that you are either an institutional investor, a corporate professional investor or a consultant business. The information on this section of the website is not intended for use by any other person in any other jurisdiction, including members of the public. If you cannot make these representations, please do not enter the website.

All residents of Hong Kong: Neither Martin Currie Investment Management Limited nor Martin Currie Inc. carries on a business in a regulated activity in Hong Kong or is licensed by the Securities and Futures Commission. The content of this section of the website is intended for Professional Investors only.

All residents of Singapore: The information in this section of the website is intended for institutional investors (as defined in the Securities and Futures Act, Chapter 289 of Singapore, as amended) and consultants in Singapore only.

All residents of China: Neither Martin Currie Investment Management Limited nor Martin Currie Inc. is authorised by the China Securities Regulatory Commission to market its strategies in China. By clicking on this link, you warrant and represent that you are entering this website on your own initiative and without being influenced or induced by any third party to do so.

All residents of South Korea: The information in this section of the website is intended only for qualified professional investors and consultants based in South Korea.

Martin Currie Investment Management Limited, registered in Scotland (no SC066107). Martin Currie Inc, incorporated in New York and having a UK branch registered in Scotland (no SF000300), Saltire Court, 20 Castle Terrace, Edinburgh EH1 2ES Tel: (44) 131 229 5252 Fax: (44) 131 222 2532 www.martincurrie.com. Both companies are authorised and regulated by the UK Financial Conduct Authority. Martin Currie Inc, 620 Eighth Avenue, 49th Floor New York, NY 10018 is also registered with the Securities Exchange Commission as an investment adviser for the purposes of the Investment Advisers Act 1940.

For the avoidance of doubt, nothing excludes, limits or restricts our obligations to you under the UK Financial Services and Market Act 2000, the Investment Advisers Act 1940 or any other applicable law or regulation.

The opinions and views in this website do not take into account your individual circumstances, objectives, or needs and are not intended to be recommendations of particular financial instruments or strategies to you. This website does not identify all the risks (direct or indirect) or other considerations which might be material to you when entering any financial transaction. You should consult with your professional advisers before undertaking any investment activity. The information provided on this website should not be treated as advice or a recommendation to buy or sell any particular security or other investment. The information on this website has not been reviewed by any competent regulatory authority.

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Please read this important information

By clicking on this link, you agree and represent to Martin Currie that you have read and understood the "Important information and risk factors", which apply to any investment in our products referred to in this website, and that you are incorporated in a country listed below and that you are either an institutional investor, a corporate professional investor or a consultant business. The information on this section of the website is not intended for use by any other person in any other jurisdiction, including members of the public. If you cannot make these representations, please do not enter the website.

All residents of Hong Kong: Neither Martin Currie Investment Management Limited nor Martin Currie Inc. carries on a business in a regulated activity in Hong Kong or is licensed by the Securities and Futures Commission. The content of this section of the website is intended for Professional Investors only.

All residents of Singapore: The information in this section of the website is intended for institutional investors (as defined in the Securities and Futures Act, Chapter 289 of Singapore, as amended) and consultants in Singapore only.

All residents of China: Neither Martin Currie Investment Management Limited nor Martin Currie Inc. is authorised by the China Securities Regulatory Commission to market its strategies in China. By clicking on this link, you warrant and represent that you are entering this website on your own initiative and without being influenced or induced by any third party to do so.

All residents of South Korea: The information in this section of the website is intended only for qualified professional investors and consultants based in South Korea.

Martin Currie Investment Management Limited, registered in Scotland (no SC066107). Martin Currie Inc, incorporated in New York and having a UK branch registered in Scotland (no SF000300), Saltire Court, 20 Castle Terrace, Edinburgh EH1 2ES Tel: (44) 131 229 5252 Fax: (44) 131 222 2532 www.martincurrie.com. Both companies are authorised and regulated by the UK Financial Conduct Authority. Martin Currie Inc, 620 Eighth Avenue, 49th Floor New York, NY 10018 is also registered with the Securities Exchange Commission as an investment adviser for the purposes of the Investment Advisers Act 1940.

For the avoidance of doubt, nothing excludes, limits or restricts our obligations to you under the UK Financial Services and Market Act 2000, the Investment Advisers Act 1940 or any other applicable law or regulation.

The opinions and views in this website do not take into account your individual circumstances, objectives, or needs and are not intended to be recommendations of particular financial instruments or strategies to you. This website does not identify all the risks (direct or indirect) or other considerations which might be material to you when entering any financial transaction. You should consult with your professional advisers before undertaking any investment activity. The information provided on this website should not be treated as advice or a recommendation to buy or sell any particular security or other investment. The information on this website has not been reviewed by any competent regulatory authority.

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By clicking on this link, you agree and represent to Martin Currie that you are an Australian wholesale client for the purposes of section 761G of the Corporations Act 2001 (Cth) and have read and understood the "Legal and Regulatory Information”", which apply to any investment in our products referred to in this website. The information on this section of the website is not intended for use by any other person, including members of the public. If you cannot make these representations, please do not enter the website.

Important Information:

Martin Currie Australia is a division of Legg Mason Asset Management Australia Limited (ABN 76 004 835 849). Legg Mason Asset Management Australia Limited holds an Australian Financial Services Licence (AFSL No. AFSL 240827) issued pursuant to the Corporations Act 2001.

Martin Currie Investment Management Limited, registered in Scotland (no SC066107) is authorised and regulated by the UK Financial Conduct Authority.

The FCA's regulatory regime differs from the Australian regulatory regime.
This material is provided on the basis that you are a wholesale client within the definition of ASIC Class Order 03/1099. Martin Currie is registered as a foreign company under the Corporations Act 2001 (ARBN 131 134 613). It is exempt from the requirement to hold an Australian Financial Services Licence under the Corporations Act 2001 in respect of financial services provided to Australian wholesale clients by virtue of the application of ASIC Class Order 03/1099.

The opinions and views in this website do not take into account your individual circumstances, objectives, or needs and are not intended to be recommendations of particular financial instruments or strategies to you. This website does not identify all the risks (direct or indirect) or other considerations which might be material to you when entering any financial transaction. You should consult with your professional advisers before undertaking any investment activity. The information provided on this website should not be treated as advice or a recommendation to buy or sell any particular security or other investment. The information on this website has not been reviewed by any competent regulatory authority.

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Please read this important information

By clicking on this link, you agree and represent to Martin Currie that you are an Australian wholesale client for the purposes of section 761G of the Corporations Act 2001 (Cth) and have read and understood the "Legal and Regulatory Information”", which apply to any investment in our products referred to in this website. The information on this section of the website is not intended for use by any other person, including members of the public. If you cannot make these representations, please do not enter the website.

Important Information:

Martin Currie Australia is a division of Legg Mason Asset Management Australia Limited (ABN 76 004 835 849). Legg Mason Asset Management Australia Limited holds an Australian Financial Services Licence (AFSL No. AFSL 240827) issued pursuant to the Corporations Act 2001.

Martin Currie Investment Management Limited, registered in Scotland (no SC066107) is authorised and regulated by the UK Financial Conduct Authority.

The FCA's regulatory regime differs from the Australian regulatory regime.
This material is provided on the basis that you are a wholesale client within the definition of ASIC Class Order 03/1099. Martin Currie is registered as a foreign company under the Corporations Act 2001 (ARBN 131 134 613). It is exempt from the requirement to hold an Australian Financial Services Licence under the Corporations Act 2001 in respect of financial services provided to Australian wholesale clients by virtue of the application of ASIC Class Order 03/1099.

The opinions and views in this website do not take into account your individual circumstances, objectives, or needs and are not intended to be recommendations of particular financial instruments or strategies to you. This website does not identify all the risks (direct or indirect) or other considerations which might be material to you when entering any financial transaction. You should consult with your professional advisers before undertaking any investment activity. The information provided on this website should not be treated as advice or a recommendation to buy or sell any particular security or other investment. The information on this website has not been reviewed by any competent regulatory authority.

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Please read this important information. The information on this section of the website is not intended for use by any other person in any other jurisdiction, including members of the public. If you cannot make the following representations, please do not enter the website.

All residents of Luxembourg, Republic of Ireland, Netherlands, Germany, Sweden, Finland, Norway, Denmark, Italy, Belgium and France: By clicking on this link, you agree and represent to Martin Currie that you have read and understood the "Important information and risk factors", which apply to any investment in our products referred to in this website, and that you are categorised as a per se or elective Professional Client for the purposes of Directive 2014/65/EU (“MiFID II”). The information on this section of the website is not intended for use by any other person, including members of the public.

All residents of Switzerland: By clicking on this link, you agree and represent to Martin Currie that you have read and understood the "Important information and risk factors", which apply to any investment in our products referred to in this website, and that that you are resident in or incorporated in Switzerland and that you are a Qualified Investor for the purposes of Article 10 of the Collective Investment Schemes Act. The information on this section of the website is not intended for use by any other person, including members of the public.

Martin Currie Investment Management Limited, registered in Scotland (no SC066107) is authorised and regulated by the UK Financial Conduct Authority. Martin Currie Investment Management Limited has a MiFID II passport to provide investment services to Professional Clients in the European Union.

For the avoidance of doubt, nothing excludes, limits or restricts our obligations to you under the UK Financial Services and Market Act 2000 or any other applicable law or regulation.

The opinions and views in this website do not take into account your individual circumstances, objectives, or needs and are not intended to be recommendations of particular financial instruments or strategies to you. This website does not identify all the risks (direct or indirect) or other considerations which might be material to you when entering any financial transaction. You should consult with your professional advisers before undertaking any investment activity. The information provided on this website should not be treated as advice or a recommendation to buy or sell any particular security or other investment. The information on this website has not been reviewed by any competent regulatory authority.

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Please read this important information.

All residents of Luxembourg, Republic of Ireland, Netherlands, Germany, Sweden, Finland, Norway, Denmark, Italy, Belgium and France: By clicking on this link, you agree and represent to Martin Currie that you have read and understood the "Important information and risk factors", which apply to any investment in our products referred to in this website, and that you are categorised as a per se or elective Professional Client for the purposes of Directive 2014/65/EU (“MiFID II”). The information on this section of the website is not intended for use by any other person, including members of the public.

All residents of Switzerland: By clicking on this link, you agree and represent to Martin Currie that you have read and understood the "Important information and risk factors", which apply to any investment in our products referred to in this website, and that that you are resident in or incorporated in Switzerland and that you are a Qualified Investor for the purposes of Article 10 of the Collective Investment Schemes Act. The information on this section of the website is not intended for use by any other person, including members of the public.

Martin Currie Investment Management Limited, registered in Scotland (no SC066107) is authorised and regulated by the UK Financial Conduct Authority. Martin Currie Investment Management Limited has a MiFID II passport to provide investment services to Professional Clients in the European Union.

For the avoidance of doubt, nothing excludes, limits or restricts our obligations to you under the UK Financial Services and Market Act 2000 or any other applicable law or regulation.

The opinions and views in this website do not take into account your individual circumstances, objectives, or needs and are not intended to be recommendations of particular financial instruments or strategies to you. This website does not identify all the risks (direct or indirect) or other considerations which might be material to you when entering any financial transaction. You should consult with your professional advisers before undertaking any investment activity. The information provided on this website should not be treated as advice or a recommendation to buy or sell any particular security or other investment. The information on this website has not been reviewed by any competent regulatory authority.

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Investors resident in the Canada: By clicking on this link, you agree and represent to Martin Currie that you have read and understood the "Important information and risk factors", which apply to any investment in our products referred to in this website, and that you are resident in, or incorporated in, Canada and are a Permitted Client for the purposes of NI 31-103. The information on this section of the website is not intended for use by any other person, including members of the public.

Investors resident in the United States of America: By clicking on this link, you agree and represent to Martin Currie that you have read and understood the "Important information and risk factors", which apply to any investment in our products referred to in this website, and that you are either incorporated in, or a resident of, the United States of America and that you meet the definition of an Accredited Investor as defined in Rule 501 of the United States Securities Act of 1933, as amended (‘The 1933 Act’). The information on this section of the website is not intended for use by any other person in any other jurisdiction, including members of the public.

Martin Currie Inc, incorporated in New York with its registered office at 620 Eighth Avenue, 49th Floor New York, NY 10018 and having a UK branch registered in Scotland (no SF000300), Saltire Court, 20 Castle Terrace, Edinburgh EH1 2ES Tel: (44) 131 229 5252 Fax: (44) 131 222 2532 www.martincurrie.com, is registered with the Securities Exchange Commission as an investment adviser for the purposes of the Investment Advisers Act 1940 and is also authorised and regulated by the UK Financial Conduct Authority. Martin Currie Inc. operates under the International Adviser Exemption with the Ontario Securities Commission (‘OSC’) and is therefore currently not required to be registered as a portfolio manager for the purposes of MI 31-103.

For the avoidance of doubt, nothing excludes, limits or restricts our obligations to you under the UK Financial Services and Market Act 2000, the Investment Advisers Act 1940, National Instruments or any other applicable law or regulation.

The opinions and views in this website do not take into account your individual circumstances, objectives, or needs and are not intended to be recommendations of particular financial instruments or strategies to you. This website does not identify all the risks (direct or indirect) or other considerations which might be material to you when entering any financial transaction. You should consult with your professional advisers before undertaking any investment activity. The information provided on this website should not be treated as advice or a recommendation to buy or sell any particular security or other investment. The information on this website has not been reviewed by any competent regulatory authority.

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Investors resident in the Canada: By clicking on this link, you agree and represent to Martin Currie that you have read and understood the "Important information and risk factors", which apply to any investment in our products referred to in this website, and that you are resident in, or incorporated in, Canada and are a Permitted Client for the purposes of NI 31-103. The information on this section of the website is not intended for use by any other person, including members of the public.

Investors resident in the United States of America: By clicking on this link, you agree and represent to Martin Currie that you have read and understood the "Important information and risk factors", which apply to any investment in our products referred to in this website, and that you are either incorporated in, or a resident of, the United States of America and that you meet the definition of an Accredited Investor as defined in Rule 501 of the United States Securities Act of 1933, as amended (‘The 1933 Act’). The information on this section of the website is not intended for use by any other person in any other jurisdiction, including members of the public.

Martin Currie Inc, incorporated in New York with its registered office at 620 Eighth Avenue, 49th Floor New York, NY 10018 and having a UK branch registered in Scotland (no SF000300), Saltire Court, 20 Castle Terrace, Edinburgh EH1 2ES Tel: (44) 131 229 5252 Fax: (44) 131 222 2532 www.martincurrie.com, is registered with the Securities Exchange Commission as an investment adviser for the purposes of the Investment Advisers Act 1940 and is also authorised and regulated by the UK Financial Conduct Authority. Martin Currie Inc. operates under the International Adviser Exemption with the Ontario Securities Commission (‘OSC’) and is therefore currently not required to be registered as a portfolio manager for the purposes of MI 31-103.

For the avoidance of doubt, nothing excludes, limits or restricts our obligations to you under the UK Financial Services and Market Act 2000, the Investment Advisers Act 1940, National Instruments or any other applicable law or regulation.

The opinions and views in this website do not take into account your individual circumstances, objectives, or needs and are not intended to be recommendations of particular financial instruments or strategies to you. This website does not identify all the risks (direct or indirect) or other considerations which might be material to you when entering any financial transaction. You should consult with your professional advisers before undertaking any investment activity. The information provided on this website should not be treated as advice or a recommendation to buy or sell any particular security or other investment. The information on this website has not been reviewed by any competent regulatory authority.

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Please read this important information. If you cannot make the representations below, please do not enter the website.

By clicking on this link, you agree and represent to Martin Currie that you have read and understood the "Important information and risk factors", which apply to any investment in our products referred to in this website, and that: (i) you are an institutional investor, an intermediary investor a consultant or other professional investor; and (ii) you are entering this website on your own initiative and without being influenced or induced by any third party to do so. The information on this section of the website is not intended for use by any other person, including members of the public.

Martin Currie Investment Management Limited, registered in Scotland (no SC066107). Martin Currie Inc, incorporated in New York and having a UK branch registered in Scotland (no SF000300), Saltire Court, 20 Castle Terrace, Edinburgh EH1 2ES Tel: (44) 131 229 5252 Fax: (44) 131 222 2532 www.martincurrie.com. Both companies are authorised and regulated by the UK Financial Conduct Authority. Martin Currie Inc, 620 Eighth Avenue, 49th Floor New York, NY 10018 is also registered with the Securities Exchange Commission as an investment adviser for the purposes of the Investment Advisers Act 1940.

For the avoidance of doubt, nothing excludes, limits or restricts our obligations to you under the UK Financial Services and Market Act 2000, the Investment Advisers Act 1940 or any other applicable law or regulation. The information on this website has not been reviewed by any competent regulatory authority in any jurisdiction.

The opinions and views in this website do not take into account your individual circumstances, objectives, or needs and are not intended to be recommendations of particular financial instruments or strategies to you. This website does not identify all the risks (direct or indirect) or other considerations which might be material to you when entering any financial transaction. You should consult with your professional advisers before undertaking any investment activity. The information provided on this website should not be treated as advice or a recommendation to buy or sell any particular security or other investment. The information on this website has not been reviewed by any competent regulatory authority.

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Please read this important information. If you cannot make the representations below, please do not enter the website.

By clicking on this link, you agree and represent to Martin Currie that you have read and understood the "Important information and risk factors", which apply to any investment in our products referred to in this website, and that: (i) you are an institutional investor, an intermediary investor a consultant or other professional investor; and (ii) you are entering this website on your own initiative and without being influenced or induced by any third party to do so. The information on this section of the website is not intended for use by any other person, including members of the public.

Martin Currie Investment Management Limited, registered in Scotland (no SC066107). Martin Currie Inc, incorporated in New York and having a UK branch registered in Scotland (no SF000300), Saltire Court, 20 Castle Terrace, Edinburgh EH1 2ES Tel: (44) 131 229 5252 Fax: (44) 131 222 2532 www.martincurrie.com. Both companies are authorised and regulated by the UK Financial Conduct Authority. Martin Currie Inc, 620 Eighth Avenue, 49th Floor New York, NY 10018 is also registered with the Securities Exchange Commission as an investment adviser for the purposes of the Investment Advisers Act 1940.

For the avoidance of doubt, nothing excludes, limits or restricts our obligations to you under the UK Financial Services and Market Act 2000, the Investment Advisers Act 1940 or any other applicable law or regulation. The information on this website has not been reviewed by any competent regulatory authority in any jurisdiction.

The opinions and views in this website do not take into account your individual circumstances, objectives, or needs and are not intended to be recommendations of particular financial instruments or strategies to you. This website does not identify all the risks (direct or indirect) or other considerations which might be material to you when entering any financial transaction. You should consult with your professional advisers before undertaking any investment activity. The information provided on this website should not be treated as advice or a recommendation to buy or sell any particular security or other investment. The information on this website has not been reviewed by any competent regulatory authority.

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How asset owners can drive sustainability

David Sheasby, Head of Stewardship and ESG, looks at why asset owners must drive forward ESG and sustainability factors if they are to generate long-term returns.

Executive summary

  • Asset owners sit at the top of the investment chain, often with very long-term investment goals.
  • A clear mission statement and set of investment beliefs establish a framework for investment strategy, asset allocation and investment decisions.
  • Long-termism is an important contributor to value creation.
  • Environmental, social and governance (ESG) factors are sources of long-term (as well as shorter-term) risk and opportunity.
  • Stewardship adds value by protecting and improving both investment returns and company sustainability practices.
  • Sustainability goes hand in hand with long-termism, but is distinct from it.
  • Asset owners can drive sustainability and ESG forward, and it is their responsibility to do so.

Introduction

Asset owners sit at the top of the investment chain – often with very long-term investment goals, such as funding liabilities, building an endowment for perpetuity, or providing for subsequent generations.

Someone’s sitting in the shade today because someone planted a tree a long time ago.

Warren Buffet

How asset owners consider long-term material risks and opportunities will therefore have a significant impact on the overall investment system. As such, they are in a strong position to communicate to managers and other stakeholders how sustainability and ESG factors are critical in generating long-term returns and in addressing multi-decade, systemic risks such as climate change.

We are all on a journey across this fast-changing landscape and our industry’s well-intentioned efforts can be confusing and counterproductive. Based on our experience, we have set out our learnings below – ultimately asset owners are the ones who have to set the pace.

It starts with a mission

A crucial element is for asset owners to set out a mission statement – effectively its ‘reason for being’. This captures how the organisation will serve its stakeholders (for example, its beneficiaries, employees, or society as a whole), as well as – where competing for assets – it can differentiate itself from its peers.

A second element is the asset owners’ view of the future, which may reflect broad economic or demographic trends and systemic challenges and opportunities.

With the need to balance multiple stakeholder objectives, setting out a mission statement is challenging, requiring it to be:

  • Broad enough to be relevant in an ever-changing environment, but also sufficiently specific to allow necessary differentiation from competitors.
  • Enduring enough over the long term to be a useful navigation aid for long-term investment objectives, while allowing for adaptation when circumstances change, or the organisation evolves.
  • Practical and achievable, but also aspirational enough to appeal to individuals, teams, customers and other stakeholders.

However, each asset owner is unique with its own specific investment objectives, linked to liabilities or to deliver attractive outcomes for a given level of risk. In order to achieve these objectives, asset owners will diversify their investments across a range of asset classes, risk factors, themes, strategies and time horizons.

We are all on a journey across this fast-changing landscape and our industry’s well-intentioned efforts can be confusing and counterproductive.

Setting out investment beliefs

Having defined its mission statement, an asset owner needs to support it with a set of more specific investment principles or investment beliefs. These should be a set of clear, impactful statements that will help select the investment strategy, inform asset allocation and align all investment decisions.

Investment beliefs are ‘assertions about investments and the way the investment world works which, when developed and shared, help with investment decision making’1.

By definition, because investment beliefs are the views held by a particular institution, they can not be imposed from outside. They represent explicit and codified expressions of the assumptions an institution makes about how it should invest, and the principles it follows as a result.

They are framed by the view of fiduciary duty and guided by the answers to the questions set out below:

  • How broad is the fiduciary duty beyond strictly financial benefits for stakeholders? For example, is there a wider consideration of the investment impact on people and planet? How is this translated into investment decisions?
  • To what extent are ESG factors viewed as material to investment returns (through risk or opportunity)?
  • Will ESG be incorporated into investment decision making? If so, what degree of ESG consideration will be applied, from basic norms-based screening all the way through to integrating active ownership and ESG factors within traditional investment decision-making criteria?
  • Are there particular sectors/industries or companies that will be screened regardless of their financial attractiveness?

However, in our experience one key driver is the views on long-term investment and sustainability. These focus on the extent to which:

  • long-termism is viewed as conducive to value creation by companies and in the wider economy.
  • ESG issues are considered sources of long-term (as well as shorter-term) risk and opportunity; and
  • stewardship adds value by protecting and improving returns and company sustainability practices.

Driving ESG and sustainability and Forward

The process of developing investment beliefs requires buy-in from different stakeholders and, as such, the process can take time as the board/investment committee debates and fleshes out these beliefs.

A good articulation of this process is demonstrated by the US pension fund, the California State Teachers’ Retirement System ‘CalSTRS’. The timeline for this processwas about two and a half years and encompassed a peer review, leveraging external experts and consultants and extensive discussions.

Links to some strong examples of investment beliefs from asset owners such as New York State, CalSTRS, APG, HESTA, USS and Brunel are provided at the end of this document.

Common themes of all of these examples include: a focus on the long term, the influence of strategic asset allocation, the benefits of diversification and the importance of responsible investment considerations.

Armed with clear investment beliefs, an asset owner is therefore able to identify managers who are aligned to their approach to investment. As such, the contracts or ‘mandates’, where the asset owners set out their requirements and expectations are one of the most important elements in ensuring that institutional investor partnerships fulfil long-term objectives. Equally, in setting out these mandates, the asset owners can clearly drive sustainability and ESG forward.

It is important to note that long-termism and sustainability are two distinct concepts. Not all investment that is longterm is necessarily sustainable.

Long-Term and sustainable investment

There has been extensive research produced looking at the benefits of long-termism – notably the work done by the initiative Focusing Capital on the Long term (FCLT).

In addition, there is a growing body of evidence showing that businesses which adopt effective sustainable business practices, specifically through consideration of ESG factors, enhance their competitive advantage, increase operational effectiveness, and ultimately improve their long-term financial performance. We wrote about this extensively in a paper produced last year called, The Value of ESG here .

As such, one robust approach that some leading asset owners have chosen to adopt is to focus on long-term sustainable investment – essentially targeting long-term value creation by companies and the economy as a whole.

It is important to note that long-termism and sustainability are two distinct concepts. Not all investment that is long-term is necessarily sustainable. Equally, investment does not need to be long-term in order for sustainability factors to be relevant – ESG factors can have a material impact on a business in both the near and the long term. However, the two concepts are complementary for an asset owner in its search to maximise long-term value creation.

Manager selection - what to look for - Types of questions

Once investment beliefs are in place they can then be built into the investment strategy and manager selection.

One of the key aspects of manager selection will be an alignment of values and beliefs. In examining the process for manager selection, it is interesting to look at the example set out by the Environment Agency Pension Fund (EAPF) in the UK (now part of the Brunel pension pool). It developed the following high-level checklist for long-term asset owners in seeking an investment manager:

  • Integrate your investment beliefs into your manager selection criteria, especially when looking at investment process and organisational qualities.
  • Ensure you explicitly evaluate managers on their stewardship and governance capabilities – their involvement in voting and engaging with the companies they invest in.
  • Pay little attention to short-term performance ‘past performance is no guide to future performance’ – focus on the process; if you must consider performance, look long term.
  • Ensure your contractual relationships don’t create inadvertent short-term pressures.
  • Ensure reporting is relevant to a long-term mandate and to your needs.
  • Monitor your managers – but not by looking at short-term market performance: look for idea generation, strategic insight, team renewal, and real indicators of business performance of the underlying companies. Think like a manager of an industrial holding business!
  • Communicate with your managers regularly, particularly sharing your expectations of them, and your own pressures and concerns – consider a covenant or similar.2

Equally, with a belief in the value of incorporating ESG, it looked at the following areas to explore with the potential manager:

  • Seeking good examples and case studies.
  • Asking the fund manager (not the RI/ESG specialists) the ESG questions – to evidence whether the fund manager is serious about ESG.
  • Challenging on whether they are ahead of the market in understanding the impact and financial consequences of ESG factors.
  • Exploring the links between stewardship and investment process and whether they feed off each other.
  • Using UNPRI transparency reports and assessment to reduce questions and enhance due diligence.3

Monitor your managers – look for idea generation, strategic insight, team renewal, and real indicators of business performance of the underlying companies.

Incorporation into mandates

One key way to set out expectations as an asset owner is through the investment mandate.

An investment mandate sets the parameters of the investment relationship and defines the incentives that will guide the asset manager. As such, it is developed to meet the long-term needs of the particular asset owner. This will include careful consideration of the benchmark, the risk targets and control measures, and the fee and incentive structures.

Stewardship is also a crucial element of the relationship and an opportunity to enhance the long-term sustainability of the businesses invested in. Unless an asset owner chooses to conduct engagement themselves, they will expect their asset managers to engage with companies on material sustainability or ESG matters, and to thoughtfully vote at all company meetings unless there are overriding reasons not to do so.

Once appointed, it is then crucial for asset owners to monitor and engage with managers on their stewardship activities. This then also serves as a key tool to drive long-termism and incorporation of sustainability. The reporting by asset managers should explain their stewardship activities and illustrate the outcomes of stewardship. This may include, for example the companies with which engagement has been conducted and sustainability quality metrics such as CO2 intensity, carbon footprint or ESG ratings.

Conclusion

With often very long-term goals and in some cases very substantial funds under their control, asset owners are in a prime position to drive sustainability, ESG and long-term value creation.

By clearly understanding their own mission and setting out a set of clear investment beliefs there is the opportunity to identify asset managers who are aligned and able to deliver on their desired outcomes. The role of stewardship and reporting to the asset owners is key and offers the opportunity for an asset manager to demonstrate long-term value creation and help the asset owners deliver the outcomes required.

The importance of sustainability in aligning the relationship between the owners and users of capital is best encapsulated by the statement from the International Corporate Governance Network:

‘Sustainability implies that the company must manage effectively the governance, social and environmental aspects of its activities as well as its financial operations. In doing so, companies should aspire to meet the cost of capital invested and generate a return over and above such capital. This is achievable sustainably only if the focus on economic returns and strategic planning includes the effective management of company relationships with stakeholders such as employees, suppliers, customers, local communities and the environment as a whole4.’

1Source: University of Cambridge Institute for Sustainability Leadership (CISL). (2016, May). Taking the long view: A toolkit for long-term, sustainable investment mandates. Cambridge, UK: Cambridge Institute for Sustainability Leadership.
2Source: Environment Agency Pension Fund. ‘Being a Long-term Investor’ (December 2016).
3Source: Environment Agency Pension Fund. ‘Observations form our search and tender’ (July 2015).
4Source: International Corporate Governance Network. ICGN Global Governance Principles
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Appendix

Good examples of investment beliefs from asset owners:

CALSTRS – https://www.calstrs.com/sites/main/files/file-attachments/calstrs_investment_beliefs.pdf
APG – https://www.apg.nl/en/asset-management/our-beliefs
HESTA – https://www.hesta.com.au/content/dam/hesta/Documents/Core-investment-beliefs.pdf
USS – https://www.uss.co.uk/how-uss-invests/investment-approach/investment-beliefs-and-principles
Brunel – https://www.brunelpensionpartnership.org/wp-content/uploads/2018/07/Our-Investment-Principles.pdf


Regulatory information and risk warnings

Past performance is not a guide to future returns

This information is issued and approved by Martin Currie Investment Management Limited (‘MCIM’). It does not constitute investment advice. Market and currency movements may cause the capital value of shares, and the income from them, to fall as well as rise and you may get back less than you invested.

The analysis of Environmental, Social and Governance (ESG) factors form an important part of the investment process and helps inform investment decisions. The strategy does not necessarily target particular sustainability outcomes.

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