Sustainability & ESG
Financial returns matter, but so too does the impact our investments have on society and the environment. Environmental, social and governance (ESG) factors are systematically integrated into F&C Investment Trust’s investment process, with a view to reducing risk and delivering sustainable growth over the longer term.
We have formally announced our commitment to transition our portfolio to net zero carbon emissions by 2050 and are working with our Manager, Colombia Threadneedle Investments, on the roadmap that will deliver this earlier if we can. Indeed, many of our investee companies are already engaged in activities that are positively aligned to the United Nations Sustainable Development Goals (“SDGs”). These goals provide an ambitious roadmap for creating a more sustainable global economy and society by 2030 – from ending poverty to tackling climate change – and provide a useful framework for company engagement. When it comes to investee companies that lag behind on these goals, our Manager seeks positive change through its long-established engagement and voting programme.
Fundamental to our policy is the systematic integration of ESG factors into the investment process with a view to reducing risk and delivering sustainable growth over the longer term. We support our Manager in the belief that companies with strong management focus on ESG factors have the potential to reduce risks facing their business and deliver sustainable performance over the longer term. Investee company boards are expected to disclose to their shareholders that they are applying appropriate oversight on material issues such as labour standards, environmental management and tax policies.
As a general rule, we believe that engaging with companies is best in the first instance rather than simply divesting or excluding investment opportunities. Engagement with companies on significant ESG matters, so as to reduce risk, improve performance, encourage best practice and underpin long-term investor value forms an important part of Colombia Threadneedle Investments’ approach towards responsible investment. As we move toward sharing a net zero carbon portfolio, our Manager will therefore continue to carry out strong engagement with investee companies and hold them to account for commitments they make and press them on having clear and credible pathways to meet their interim and longer term targets. Thus far, we have imposed only limited investment exclusions but will keep this under review in cases where engagement does not produce the outcomes that meet with our own net zero expectations quickly enough.
Supporting sustainable development
The 2030 Agenda for Sustainable Development, adopted by all United Nations Member States in 2015, provides a shared blueprint for peace and prosperity for people and the planet, now and into the future. At its heart are 17 goals that are an urgent call for action by all countries – developed and developing – in a global partnership. They recognise that ending poverty and other deprivations must go hand-in-hand with strategies that improve health and education, reduce inequality, and spur economic growth – all the while tackling climate change and working to preserve our oceans and forests.
ESG that’s not just box-ticking
Responsible investing goes beyond careful stock selection. Over the past two decades, our Manager has engaged with more than 5,700 companies resulting in 4,106 instances of positive change*. We have therefore had the benefit of being able to build a leading position in terms of engagement and voting and have substantially improved and expanded our ESG-related reporting.
Voting against management on key resolutions sends a clear signal to companies on the importance of improving their business practices. Through our Manager we regularly engage companies before and after voting to explain our expectations and invite comment, and to explain the reasons for any votes against management. In respect of the year to 31 December 2021, F&C Investment Trust voted at 364 meetings of investee companies held in the portfolio.
Each year we report to our shareholders on Key Performance Indicators that help assess the efficacy of our strategy and the delivery of our objective of long-term growth in capital and income. The roadmap towards the transition of our portfolio to net zero carbon will incorporate shorter term metrics to ensure that, over the medium term, we make measurable and realistic progress towards our objective. We will report annually on a new Key Performance Indicator that will begin to measure our progress in meeting our net zero carbon commitment.
*As at 31 December 2021
Reflects the assets of a group of legal entities whose parent company is Columbia Threadneedle Investments UK International Limited and that formerly traded as BMO Global Asset Management EMEA. These entities are now part of Columbia Threadneedle Investments which is the asset management business of Ameriprise Financial, Inc.