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    Responsible investment

    For Insight, responsible investment is about value

    We believe all risks, including environmental, social and governance (ESG) risks, can affect the value of an investment.

    This means we take ESG issues into account when analyzing investments. We engage with companies and governments to better understand the risks they face and how those risks are managed.

    This is crucial to help us achieve an accurate valuation relative to an asset’s price.

    We have always sought to invest responsibly. We were a founding signatory to the UN-supported Principles for Responsible Investment (PRI) in 2006, and we publish regular reports detailing our efforts and the difference they make.

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    Investing responsibly is an essential part of managing risk. Understanding all the underlying material risks helps us decide whether an investment is fair value. For all our client portfolios we systematically consider ESG issues within our research process – and if we identify material ESG risks, we will engage to better understand the issues.

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    Abdallah Nauphal, CEO

    A committed responsible investor

    2006

    Founding signatory to PRI1

    A+

    PRI rating for our approach to corporate debt1

    $17bn+

    Assets managed in ESG overlay strategies2

    2016

    We introduced proprietary ESG ratings

    Putting principles into practice

    Our annual report aims to highlight how we are investing responsibly on your behalf.

    1

    Considering a responsible investment policy?

    We clarify what a responsible approach involves and offer steps to follow when developing a formal policy.

    2

    Seeking to understand the implications of responsible investment?

    We offer examples of how our approach makes a difference in practice.

    3

    Looking to make a positive impact?

    We consider impact bonds and explain our approach to sustainability and impact targets.
    Taking the initiative

    Information on ESG factors and related risks is offered by a wide range of institutions and providers but there are significant gaps. We seek to deepen our understanding of such issues through our own analysis, engagement and using proprietary ESG tools.

    For many smaller issuers, particularly emerging market or high-yield companies, the availability of relevant non-financial data lags behind information from larger issuers.

    Since 2016 we have generated internal ESG ratings for such issuers by sending tailored ESG questionnaires to management. These inform our credit analysts’ assessment and help them identify issues to address through further engagement.

    We believe investing effectively in sovereign debt requires analysis of ESG matters.

    In 2018, we introduced a proprietary country sustainability risk index, which generates ESG ratings for 186 countries. This aims to help us better understand the ESG risks at the country level across our portfolios.

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    Please see our white paper on the index for more details, including:

    • how metrics are generated
    • initial results and insights, and
    • details of underlying ESG datasets.
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    Download PDF
    3448 kb

    In 2017, we introduced our climate risk index for corporate debt. It ranks c.1,900 issuers according to how they manage climate change-related risks.

    We believe it to be the investment industry’s first comprehensive ranking of how fixed income corporate credit issuers manage their climate change-related risks and opportunities, and how they are positioning themselves for the transition to a low-carbon economy. The index is designed to be used to assess risks and opportunities related to climate change.

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    Please see our white paper on the index for more details, including:

    • how Insight uses the index,
    • the methodology underlying it, and
    • details of key findings.
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    Download PDF
    3448 kb
    
    

    Our responsible investment policies

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    We believe strong governance practices and management of environmental and social risks are important drivers of investment value over the short and the long term. We also believe that delivering sustainable investment returns is dependent on efficient and well-managed financial markets, and stable and transparent social, environmental and economic systems.

    Our objective is to achieve superior investment returns over clients' expected time horizons. We consider responsible investment to contribute towards this goal through providing investment solutions that deliver quality and excellence; managing financial and non-financial risks for our clients; and operating to high ethical and professional standards.

    We consider responsible investment as central to our investment activities, to our culture, to our relationship with clients and to our interaction with stakeholders.

    To deliver on our objectives, we:

    • Take account of financially material short and long-term risk factors in our investment research and decision-making processes. These risk factors may include ESG issues.
    • Exercise our stewardship role in the companies and other entities in which we invest. We believe that good stewardship can create investment opportunities and reduce investment risk. We therefore engage with management to discuss issues such as strategy, deployment of capital, performance, remuneration, risk management and ESG factors. We also vote our shareholdings.
    • Support efforts that seek to improve the operation, resilience and stability of financial markets. This includes sustainable economic development and health of the natural environment.

    Insight does not invest in companies involved with the production, sale or maintenance of cluster munitions or landmines.

    There are two major international conventions that address cluster munitions and landmines specifically:

    • The Convention on Cluster Munitions (2008): This Convention restricts the manufacture, use, and stockpiling of cluster munitions and the components of these weapons
    • The Convention on the Prohibition of the Use, Stockpiling, Production and Transfer of Anti-Personnel Mines and on Their Destruction (1997): This Convention, often referred to as the Anti-Personnel Landmines Convention, aims to eliminate antipersonnel landmines around the world

    In line with these international conventions and following their ratification into domestic law by a number of countries, Insight has adopted a global policy which commits it to avoiding direct investments in companies that:

    • Design, produce, sell or maintain cluster munitions and/or landmines
    • Undertake research and development to develop cluster munitions and/or landmines
    • Breach the requirements of the Convention on Cluster Munitions or the Anti-Personnel Landmines Convention

    This policy:

    • Applies across all asset classes
    • Excludes affiliated companies: that is, companies with affiliations or commercial relationships with screened companies will not be excluded from investments
    • Does not apply to passive holdings in index-tracking instruments

    With respect to share ownership, in the majority of the current equity investment strategies insight does not have material investments in physical holdings. Where insight does hold physical equity positions we routinely vote on behalf of our clients with regard to the uk companies in which they have a shareholding.

    Insight retains the services of a third party for proxy voting services and votes at all meetings where it is deemed appropriate and responsible to do so. The third party provider offers research expertise and voting tools through sophisticated proprietary IT systems allowing Insight to take and demonstrate responsibility for voting decisions. Independent governance analysis is drawn from thousands of market, national, and international legal and best practice provisions from jurisdictions around the world.

    Independent and impartial research provides advance notice of voting events and rules based analysis to ensure contentious issues are identified. The third party provider analyses any resolution against Insight-specific voting policy templates which will determine the direction of the vote. Where contentious issues are identified these are escalated to Insight for further review and direction. Insight will undertake a review of the voting policy templates on an annual basis.

    Having a positive impact
    You may be seeking a positive impact with your investments. We can work with you to build a portfolio that incorporates such objectives. For example, we can apply a range of overlays for corporate debt portfolios as highlighted below.

    Further reading

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