Liontrust Sustainable Investment Annual Review 2021 - International - Report - Page 41
Encouraging the transition to sustainable investment
Individuals are having to take responsibility for their
long-term finances, and adequate savings and pension
provision is critical. To date, the majority of savings
has been into non-sustainable funds but as demand for sustainable
investment grows, companies should do all they can to promote
these. We will focus on determining which are leading the way and
which need to do more.
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Over the year, we engaged with 12 companies on this initiative
and have been encouraged by some good progress, notably for
holdings with consumer savings platforms where we have seen
a greater emphasis on information and investment options for
sustainable strategies.
We have also seen a number of leading insurance companies
furthering their knowledge of sustainability by devoting capital to
researching ESG issues. The best companies in the sector research
specific sustainability, environmental and social risks, for example,
and are therefore able to better understand and price these and help
clients protect against them. Not only does this make them better
underwriters, greater understanding of such issues also turns these
companies into more prudent investors through the inclusion and
adoption of responsible practices.
In addition, we continue to educate investors and the market on
sustainable investment by providing presentations for financial
advisers as part of their ongoing training (CPD). Over the year,
we presented at the SimplyBiz ESG events, one of the largest IFA
organisations in the UK, which reached hundreds of advisers. This
is in addition to ad hoc presentations of this type to clients and
potential clients.
IN 2021, WE WILL:
• Continue to engage with our financial holdings to
encourage greater integration of sustainability
issues, including responsible investment policies,
lending practices and increased adoption of
sustainable investing.
Case study: Skandinaviska Enskilda Banken
In 2020, SEB developed a sustainability classification model for
assessing, classifying and measuring how its corporate and real
estate customers impact the planet and people from a climate
perspective. It said this model will enable the company to steer and
set strategic targets for the credit portfolio from a climate perspective.
By measuring customers’ transition trajectories and comparing them
against sector-specific transition pathways related to temperaturebased scenarios, the model enables SEB to assess to what extent
customers’ business activities are in line with the climate objectives of
the Paris Agreement. The model is currently being piloted and will be
fully validated and implemented during 2021.
SEB’s sustainability goal is based on the conviction that companies
working structurally with sustainability issues become more
successful in the long term, and thus can become more profitable
for its investors. SEB signed the UN’s Principles for Responsible
Investments (PRI) in 2008 and these guide its fund management
company’s sustainability activities.
Reaction to Covid-19
As would be expected, Covid-19 was a key engagement focus
over 2020 and we looked to understand how the companies in
our SF strategies were impacted by the pandemic. We pushed for
companies to take a longer-term view where possible and manage
their businesses for eventual recovery, adopting a stakeholder
approach to minimise the impact on staff and supply chains, which
will be needed as the economy gradually opens up again.
We engaged with companies about how they were ensuring the
health and safety of their workers. Where appropriate, we also
investigated companies’ actions and responses within their supply
chains as a result of the pandemic, asking what percentage of
orders had been cancelled, how suppliers were compensated and
whether the company had changed payment terms with suppliers.
Liontrust Sustainable Investment: Annual Review 2020 - 41
