Select and monitor
We use our responsible investment tier framework to select and monitor the funds we invest in with respect to environmental, social, and governance (ESG) factors.
Our responsible investment tier framework
The manager research team apply a layering approach to our framework. i.e. if a fund is to be classified as tier 2 then it must meet the tier 1 criteria plus the tier 2 criteria, and a tier 3 fund must meet the tier 3 criteria in addition to the tier 1 and tier 2 criteria.
This is the base level for any fund that we invest in. The fund must:
- have an ESG/RI policy, or be a signatory of the PRI, or be a signatory of the FRC’s UK Stewardship Code
- have access to material ESG risk data
- attest to not invest in companies involved in manufacture of cluster munitions and anti-personnel mines
The next tier identifies funds that are leaders in the integration and management of ESG. We classify these as tier 2 funds (leading ESG integration).
We undertake a rigorous investment due diligence process, applying both quantitative and qualitative analysis. The process focuses on the ‘4Ps’ (philosophy, process, people, and portfolio).
The next tier are funds that we have identified as targeting sustainable outcomes. We classify these as tier 3 funds (sustainable outcomes).
For a fund to be classified as a tier 3 fund, it must first meet the tier 2 funds (leading ESG integration) criteria. We then undertake a further sustainable outcomes assessment to help us identify the funds that target sustainable outcomes.
More information on the criteria for each tier can be found in your guide to our responsible investment reporting.