As an asset manager we recognise our business’s tangible impact on society, the environment, and the communities in which we operate, both through our corporate actions and, more importantly, through our investment choices. How, where and to whom we deploy our clients’ capital are some of the critical questions we seek to answer when exercising our fiduciary duties on behalf of clients and helping them achieve their investment goals. Our approach considers all material factors that are part of the broader Responsible Investing (RI) umbrella, including those related to Environmental, Social and Governance (ESG) issues.
At GAM Investments, our Governance and Responsible Investment (GRI) team is committed to addressing ESG-related factors systematically. The team seeks to expand our understanding of the investment challenges related to systemic issues – such as climate change, malnutrition, inequality, poverty, ecological degradation and resource scarcity – and champion the broader sustainability mindset throughout our business. The GRI team supplements the ESG research being undertaken by our investment teams, as well as offering proxy voting and engagement services. They also oversee our responsible investment reporting obligations as a signatory to the United Nations Principles of Responsible Investment and the UK Stewardship Code. This approach ensures we have the platform from which long-term sustainable investment decisions can be made.
Our role as active long-term investors means engagement and this is fundamental to our investment process. We seek to actively engage with key stakeholders: from suppliers and clients to employees and executive / non-executive management, among others. We believe these actions not only build our understanding of business but help to establish standards and facilitate the disclosure of material information. In terms of sovereign credit and other supranational bodies, our ESG approach has been adapted to suit the asset class, so that we engage with the institutions that feed into international policy rather than directly with governments themselves (such as the Institutional Investors Group on Climate Change (IIGCC), the United Nations Environmental Programme Finance Initiative or the Extractive Industries Transparency Initiative (EITI)). Our GRI team leads this engagement.
We have built a system for integrating ESG factors to help investment teams make investment choices that offer sustainable and long-term risk adjusted returns; however, our GRI team continues to investigate new avenues for a deeper understanding of ESG risks and opportunities, strengthening processes, as well as augmenting the work of our investment teams. The GRI team is responsible for developing our firm level responses to systemic ESG related factors such as climate change or fraud and corruption, while also supporting proxy voting activities.
ESG factors are heterogeneous, and differ by industry and region, and our response should therefore be tailored. Our investment teams constantly evaluate not only the exposure to a particular factor but also the response to and management of it. There are likely to be a number of factors impacting any one company or country, be they ESG related or connected to some of the more traditional metrics of active investment. Our process seeks to systematically balance all of these various factors against each other so that the right investment choice is ultimately made, enabling us to provide long-term sustainable solutions suitable for our clients’ unique set of needs and investment goals.