Investing sustainably is at the core of our approach to Responsible Investment
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.
Active Ownership & ENGAGEMENT
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.
How we intregrate ESG factors at GAM
ESG Scores
- Multi-level ESG scoring
- Separate E, S, G pillars with underlying scores
- Utilising the Sustainability Accounting Standards Board’s (SASB) materiality map to identify key focus areas
Business Involvement Screening
- Screening company’s involvement in various activities including for example the production of tobacco and alcohol or involvement in gambling
- Screening in a number of ways, e.g. True/False, % revenues, or % ownership
Carbon Footprint
- CO2 Emissions
- Company level indicators tracking carbon footprint
Controversies
- Controversies connected with a company’s business practices, which has negative company and ESG impacts
- Flags non-compliance with global norms – for example the UN Global Compact
- Determine a company’s alignment with the Sustainable Development Goals
Governance and Policy Framework
Responsible Investment Policy
- Sets out GAM’s overall approach to responsible investment, including the proxy voting process
- Based on our overarching aim to advance the potential of our clients’ capital
Proxy Voting Policy
- Sets out GAM’s global approach to proxy voting
- Process managed by the GRI team
- Supported by a proxy voting procedure and guidelines
Proxy Voting Guidelines
- Based on accountability, stewardship, independence and transparency, which underlie GAM’s approach to proxy voting and corporate governance
- Set out GAM’s position on voting on individual issues, including ESG