What responsible investment looks like

Rathbones’ stewardship director Matt Crossman explains the Principles for Responsible Investing and how we’ve been putting them into practice over the past 10 years.

Aerial photo of forest trees with a road in the middle

In early 2005, a group of the world’s largest institutional investors gathered at the United Nations (UN) to lay the groundwork for a more sustainable global financial system.

The result, just over a year later, was the launch of the UN’s Principles for Responsible Investment (PRI) encouraging asset managers to consider environmental, social and governance (ESG) factors in their investment decisions.

PRI signatories assert their belief in and commitment to an investment approach that examines how a company’s activities impact the planet and wider society, as well as how the business is run. The aim is also to improve long-term investment performance, while encouraging a more sustainable way of working.

Rathbones, led by its specialist ethical and sustainable investment team Rathbone Greenbank Investments, became a signatory of the PRI a decade ago and we have been working to align our investment process with the wider movement ever since.

When joining, members commit to six key principles:

  1. We will incorporate ESG issues into investment analysis and decision-making processes.
  2. We will be active owners and incorporate ESG issues into our ownership policies and practices.
  3. We will seek appropriate disclosure on ESG issues by the entities in which we invest.
  4. We will promote acceptance and implementation of the principles within the investment industry.
  5. We will work together to enhance our effectiveness in implementing the principles.
  6. We will each report on our activities and progress towards implementing the principles.

For many, committing to the PRI involves formalising the approach to ESG considerations. At Rathbones, this meant adoption of a formal stewardship policy and the formation of a responsible investment committee as well upping our efforts to increase transparency and reporting on the progress made in integrating ESG into the investment process. A clearer, streamlined structure to ESG has proven key in ensuring there is consistency in our approach, particularly when it comes to engagement with companies.

As a bespoke fund manager working to very specific client mandates, we have always felt our best contribution can come in our engagement activities under the UN PRI. We have joined with a wide and varied number of ESG topics over the last few years, always looking to play a role in the biggest issues facing society. From bribery and corruption to deforestation, professional staff from across the business work through the PRI Engagement Committee to play lead and supporting roles on many coordinated ESG engagements.

The area we have worked on in most detail is governance, or how a company is run. Over time many environmental and social issues are becoming governance issues, as governments have brought in legislation on measures like carbon footprint and gender pay gap reporting. Looking at executive pay levels, board diversity and shareholder rights often offers good insight into the long-term sustainability of a firm, and can often raise warning signs in areas such as political lobbying and tax strategy, which may be a cause for concern. Our work to integrate insights in this area into the research process is the most advanced, setting a template for further integration of social and environmental factors to be implemented in future.

In the 10 years since we signed up to the PRI, signatories have grown to the thousands, driving collaboration across the industry and the wider world. Over the next ten years we plan to build on this rapidly expanding interest, both internally and externally. It’s exciting to see the impact we can have, and the great opportunities that lie ahead for our clients, through engaging more on these issues.

Important legal information

This area of the site is for professional advisers

Please read this page before proceeding, it explains certain legal and regulatory restrictions applicable to the distribution of this information. It is your responsibility to inform yourselves of and to observe all applicable laws and regulations of the relevant jurisdiction.

This section of the website is directed only at investment advisers and other financial intermediaries who are authorised and regulated by the Financial Conduct Authority (FCA).

The information provided in this site is directed at UK investment advisers only and must not be circulated to private clients or to the general public. It does not constitute an offer to sell, or solicit an offer to purchase any investments by anyone in any jurisdiction in which such offer or solicitation is not authorised or in which a member of the Rathbone Group is not authorised to do so.

I confirm that I am an investment intermediary authorised and regulated by the Financial Conduct Authority. I have read and understood the legal information and risk warnings below:

Important Information (Terms and Conditions)

The information contained on this site is believed to be accurate at the date of publication but no warranty of accuracy is given and the information is subject to change without notice. Any opinions or estimates included herein constitute a judgement as of the date of publication and are subject to change without notice. Furthermore, no responsibility is accepted for the accuracy of any information contained within sites provided by third parties that may have links to or from our pages.

Rathbone Investment Management Limited ("RIM") is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered Office: Port of Liverpool Building, Pier Head, Liverpool L3 1NW. Registered in England No 01448919.

In accordance with regulations, all electronic communications and telephone calls between Rathbones and its clients are recorded and stored for a minimum period of six months.

The information provided in this site is directed at UK investors only. It does not constitute an offer to sell, or solicit an offer to purchase any investments by anyone in any jurisdiction in which such offer or solicitation is not authorised or in which a member of the Rathbone Group is not authorised to do so.

In particular, the information herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in France and the United States of America to or for the benefit of United States persons (being resident in the United States of America or partnerships or corporations organised under the laws of the United States of America or any state, territory or possession thereof).

In order to comply with money laundering and other regulations, additional documentation for identification purposes may be required.

Rathbones shall have no liability for any data transmission errors such as data loss, damage or alteration of any kind including, but not limited to, any direct, indirect or consequential damage arising out of the use of services provided or referred to in this website.

Past performance should not be seen as an indication of future performance.

The value of investments and the income from them can fall as well as rise and you may not get back the amount originally invested, particularly if your client does not continue with the investment over the longer term.

Changes in the rate of exchange between currencies may cause the value of an investment to go up or down.

Interest rate fluctuations are likely to affect the capital value of investments within bond funds. When long term interest rates rise the capital value of units is likely to fall and vice versa. The effect will be more apparent on funds that invest significantly in long dated securities. The value of capital and income will fluctuate as interest rates and credit ratings of the issuing companies change.

Tax levels and reliefs are those currently applicable and may change and the value of any tax advantage will depend on individual circumstances.

Investing in emerging markets or small companies may be potentially volatile, as these investments are high risk.

The design, text and images are owned, except as expressly stated by members of the Rathbone Group. They may not be copied, transmitted, displayed, performed, distributed, licensed, altered, framed, stored or otherwise used in whole or in part or in any manner without the written consent of Rathbones except to the extent permitted and under the procedures specified in the copyright Designs and Patents Act 1988, as amended and then only with notices of Rathbones' rights.

Rate this page:
Average: 4.5 (2 votes)

Subscribe to the In the KNOW blog email