Liontrust Sustainable Investment Engagement and Voting Annual Review 2021 - Flipbook - Page 22
2021 Initiative
Description
We said we would:
Encouraging
the transition
to sustainable
investment
• Continue to engage
To date, savings and
with our financial
investments have typically
holdings to encourage
been geared towards
greater integration of
traditional investments
sustainability issues,
that don’t necessarily
including responsible
incorporate ESG.
investment policies,
However, as demand for
lending practices and
sustainable and ESGincreased adoption of
integrated investments
sustainable investing.
grows, and regulations
to better classify what
constitutes ‘sustainable’
investment follow suit,
companies should play
their part to promote
it to further accelerate
the transition needed
for a more sustainable
economy. We will focus
on determining which
companies are leading
the way and which need
to do more.
In 2021:
In 2022, we will:
• We met with six
investee companies on
this issue.
• Encourage wider
adoption of ESG/
Sustainable funds on
financial platforms.
• Continue to push
for comprehensive
responsible investment
policies for insurance
holdings.
Case study: Legal & General
Held under our Saving for the future theme,
Legal and General manages capital and
associated risks in order to provide customers
with pension income and long-term savings. It
benefits from the rise in defined contribution
pensions and the de-risking of workplace institutional pensions.
We engaged to understand how actively the company is investing
in the oil & gas, tobacco and weapons sectors with its internal
assets and how ESG is integrated into investments. L&G said it
has not excluded these sectors overall but there are issuers within
them that it would not invest in (and has also actively divested) due
to ESG and/or for credit reasons. Overall, its exposure to these
sectors remains small: tobacco is less than 1% of the portfolio and
oil & gas is around 2.5%, predominantly in integrated oil companies
with transition plans. At present, there are around 50 oil & gas
companies excluded because of the coal contribution to revenues or
high emissions, and around 45 companies are excluded because of
controversial weapons exposure.
L&G’s philosophy is that engagement is always its first choice
over exclusion, believing it can make a bigger impact on
market standards by remaining invested and ultimately deliver
better outcomes for clients. There are exceptions to this, such as
the controversial weapons and thermal coal policies, which the
company expects to evolve later this year. The company considers
all active funds are ESG integrated and engagement is undertaken
by the Stewardship team.
Case study: St. James’s Place
Also held under our Saving for the future
theme, St. James’s Place provides a platform
for a network of financial advisers to service
their clients. The demand for financial advice
is greater than ever, yet the pool of advisers is
shrinking due to complex regulatory requirements. SJP’s addressable
market is individuals with £500,000 to £5million in investable
assets, of which there are 11 million such people in the UK.
Since we first invested in 2017, we have been engaging with both
management and the Board of St. James’s Place. From discussions
in 2021, however, we believe the management team increasingly
understands the need for a more comprehensive offering of sustainable
investment solutions, particularly when it comes to remaining relevant
to younger generations.
A key new hire who is highly regarded in the industry could be a
catalyst in transitioning the company to fully embrace sustainable
investing. This will be an ongoing conversation but, over time, we
should expect to see improvements in the company’s sustainable
investment offering. It is worth noting, for example, that all of the
external fund management houses on its buy list are now signatories
to the UN’s Principles for Responsible Investment, up from 70% in
2018, the year St James’s Place itself became a signatory.
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22 - Liontrust Sustainable Investment: Engagement and Voting: Annual Review 2021
