We take pride in addressing today’s global challenges proactively. Developing enduring relationships delivers value to our clients and communities, and sustainable economic growth protects markets, enhancing resiliency and creating a healthier, more sustainable world for us all.
As a major global financial institution, we consider the impacts that our business has on the environment and society. We strive to contribute to sustainable economic growth that protects healthy markets, enhances our own business resiliency and longevity, and delivers a positive impact for key stakeholders such as clients, employees, shareholders, and communities.
Environmental, social, and governance (ESG) factors are key considerations in our investment approach—we dig deep to understand the long-term sustainability of the companies in which we invest. Our in-house ESG teams help our investors identify, analyze, and integrate the ESG factors most likely to have a material impact on the long-term performance of an investment.
ESG considerations are analyzed by two teams: Responsible Investing, which covers environmental and social factors, IDENTIFICATION ANALYSIS INTEGRATION and Governance. Together, they help our investors make more informed investment decisions.
tools signal companies
with ESG issues.
Indicator Model (RIIM)
ESG specialists apply
further analysis to
companies flagged by
our ESG tools.
Companies flagged by RIIM are subject to further analysis, including engagement and proxy voting recommendations
Companies divergent from proxy guidelines are subject to further analysis, including engagement and proxy voting recommendations
ESG analysis is delivered to investment analysts and portfolio managers.
Analysts and portfolio managers incorporate ESG factors into:
Proxy voting decisions
The Race to Harness ESG and Sustainability
Global investors report on ESG and sustainable investment practice. A recent Partfield client survey shows that sustainability and ESG are a priority for the financial industry.
Investment aligned to ESG and sustainable principles continues to soar. In a global survey conducted among 288 of Partfield’s clients (representing asset managers, asset owners, alternative asset managers, banks, broker-dealers, and insurance firms), we uncovered the ESG and sustainable investment practices market participants are adopting, and which ones they may remain committed into the future.
Projected commitment to ESG integration over the next 3-5 years could signal more requirements for ESG disclosure within alternative asset classes. 75% of respondents said they are likely to implement, or continue implementing, ESG integration across one or multiple asset classes over this time frame, while 55% of respondents seek disclosures on ESG issues from the private investment entities/structures in which they invest.
Passive approaches to investing sustainably, namely screening methods, seem likely to become a “minimum safeguard” in the future. 49% of surveyed participants said that they are likely to apply screening (negative, positive, norms-based) to some or all of their portfolios over the next 3-5 years. This figure remains flat when compared to the percentage rate of respondents implementing negative screening today.
The “lack of quality ESG-related data [available] to accurately inform investment decisions” is considered the greatest hindrance to ESG integration among survey participants. However, there is room for improvement and investors seek solutions to the problem. A small number of surveyed participants map investment information against taxonomies and ESG standards frameworks, while a greater number would consider using a solution to do so.
A majority of respondents have adopted or will adopt more active methods of ESG implementation going forward. 75% of respondents said they would implement or continue to implement ESG integration over the next 3-5 years, compared to 46% who are integrating ESG today.
Engagement is an important facet of the sustainable investment process. 69% of respondents actively engage with investee companies on sustainability issues.
Investors demonstrate a strong commitment to sustainable and impact investing, with 63% of respondents saying they will conduct or continue to conduct sustainability-themed or impact investing over the medium term.
ESG INVESTING THEME
Sustainability pressures set reshape plastics industry.
Global demand for plastics has increased twentyfold over the
past 50 years, and the International Energy Agency
that demand will grow by an additional 45% by 2040, with
nearly two-thirds of that growth coming from Asia
The obsession with plastic is easy to understand—cheap,
lightweight, and durable, the material is beneficial to society
in a multitude of ways, including:
Reducing food waste—by extending the freshness period
Lowering vehicle emissions—by making cars lighter
Increasing energy efficiency—through improved building insulation
Accordingly, we believe that the sustainability debate should
center on how, not if, we use plastic and, most importantly,
how we dispose of it.
Vast consumption of plastic is a major sustainability problem
that the world must solve. Most plastics have a very short
life span of less than one year, yet they can take up to
an estimated 450 years to break down, creating a major
environmental impact if not disposed of properly.
Globally, most plastics (40%- 45%) end up in a landfill, while
a significant portion (25%-30%) is land leakage or litter.
Only a small portion is incinerated (12%-14%) or recycled
(10%-15%).' While comparatively less plastic may end up in
the ocean, it has been suggested that by 2050 there could be
more plastic in the ocean than fish.
Given the magnitude of the disposal problem, we believe
the plastics industry will be fundamentally reshaped in
four key areas:
1. Reducing usage
2. Increasing recycling
3. Increasing incineration (waste to energy)
4. Replacing plastic with alternatives and/or
new biodegradable products
Many companies targeted as problem actors will likely be
solutions providers, as packaging products are adopted
to solve their end-of-life problems. We believe the key
drivers of success among packaging companies will be
product innovation and the ability to develop a circular
When it comes to implementing sustainability strategies, value creators place more importance than other companies do on translating the sustainability strategy into definite terms: value creators are significantly more likely to establish clear and focused priorities, set targets or goals, and develop key performance indicators for sustainability.When it comes to implementing sustainability strategies, value creators place more importance than other companies do on translating the sustainability strategy into definite terms: value creators are significantly more likely to establish clear and focused priorities, set targets or goals, and develop key performance indicators for sustainability.
According to respondents, another noteworthy difference between companies that create value from sustainability and those that don’t is that value creators are doing more to engage their workforces in sustainability efforts. Nearly three-fifths of respondents at value creators say that sustainability is a part of the corporate culture. A significantly lesser share of respondents at other companies, 39 percent, say the same.
Among the value creators, employee engagement is also a more important element of the sustainability agenda than it is for other companies. A greater share of respondents at value creators say that all employees receive training on integrating sustainability practices into their work and that employees understand how sustainability efforts align with the company’s strategy. Incentives are another factor: a greater share of respondents at value creators say their organizations consider sustainability performance to a moderate or significant extent when making decisions about employees’ compensation.
Asset manager rights and responsibilities vary by asset class
• Issuer engagement
• Collaborative engagement
• Issuer angagement
• Collaborative engagement
• Proxy voting
• Sustainable operations
• Sustainable operations
• Board seats
• Board seats
The spectrum of our sustainability offering
analysis of ESG factors
as part of investment
industry sectors or
divested from to avoid
risk or better align
targets companies or
industries with better
(e.g., clean energy,
Meeting customer expectations.
Just as value creators engage employees in their sustainability programs, they also put more effort than other companies into understanding customers’ expectations and respond with changes to their products. Disproportionate shares of value creators seek customer input on the sustainability attributes of their products and services and highlight those attributes in their marketing efforts.
Their orientation toward sustainability issues in customer relations extends to the management of product portfolios: value creators are more likely than other companies to change product designs, develop new product-as-a-service models to address sustainability issues, and offer sustainable brands.
For most companies, the majority of sustainability impacts result from the activities of their suppliers, contract manufacturers, distributors, and other value-chain partners. Value-chain engagement can thus be a telling indication of how much companies are doing about sustainability—and it’s an area where value-creation leaders demonstrate distinctive approaches.
Value-creation leaders are more likely than others to make sustainability a priority in managing energy, water use, and waste generation at their own facilities, as well as making decisions about their site portfolios. They’re also more likely to collaborate with and monitor suppliers’ sustainability performance and to seek improvements in the efficiency of their transportation and distribution networks.
Climate in the RIIM—Looking Beyond Carbon
In addition to our investment analysts' fundamental research, climate change factors are systematically identified in our
Responsible Investor Indicator Model. The model helps our analysts and portfolio managers identify climate change-
related issues not detected by traditional financial analysis (such as water supply within a local community or migration
issues). RIIM helps keep climate change considerations on their radar.
RIIM is particularly useful as it systematically identifies climate change considerations beyond greenhouse gas emissions.
While carbon is the focus of public debate and data are widely available, we believe limiting analysis to this factor is
short-sighted. Many other climate change factors — such as water availability, local pollution, and waste management —
are more likely to be catalysts for regulatory change that can impact company and industry performance.