At Sparinvest we believe that investing responsibly goes to the heart of our fiduciary duty to clients to generate strong long-term investment returns. When considering investments, in order to build an understanding of value and the sustainability of that value, our analysts and portfolio managers consider a wide range of risks and opportunities. Some are shorter term, with the potential for an immediate impact. Others are longer term, but no less significant to the intrinsic value of the investment. It is only natural that as part of this assessment, we consider ESG (Environmental, Social and Governance) issues, many of which tend to impact over the longer term. We aim to incorporate these considerations throughout our investment processes, across our asset classes. This means looking at ESG-related risks and opportunities at the individual security level, and also considering the impact of broader themes which may impact on values across an entire sector, country, or portfolio.
Responsible investment does not end with an investment decision. It is crucial to continue monitoring investments in their treatment of risks and opportunities. We also seek to foster the long-term value of our investments and – in our corporate bond and equity funds - to improve corporate behaviour, by being active owners in communication with our holdings. We do this through voting and engagement. More details can be found in our Stewardship section.
This integrated way of thinking means that various elements of our responsible investment approach are firmly embedded within our investment teams, implemented by analysts and fund managers as part of their daily work. We also use external service providers to augment our internal capabilities in areas such as detailed ESG research, exercise of voting rights, screening of our ethical fund range, and for some types of engagement. It is important to note that while we seek external input, voting decisions are made by our own portfolio managers, and we generally seek to have an active relationship with our service providers.
Certain investments are universally excluded across our entire range of funds. We also offer a range of funds labelled Ethical, which exclude other investments based on international norms and industry exposures. Implementation of these exclusionary screens is carried out in partnership with external ESG service providers.
The development and implementation of responsible investment practices are driven by our Responsible Investment Committee, which includes representatives from Equity and Fixed Income investment teams, and is chaired by the Head of Responsible Investment. The RI Committee reports to both the Investment Committee and the Board of Directors.