Environmental, Social, and Governance (ESG) issues can be material for investment risk and return and therefore require consideration.
For example, a company’s greenhouse gas emissions may have a material effect on a company’s long-term profitability, sustainability and investor returns.
Some climate change-related risks include:
In addition to the potential for the material risks highlighted above, the climate crisis also leads to investment opportunities as countries engage in the race to net zero.
These investment opportunities are discussed at investment Committee level, as a thematic driver of above market risk-adjusted returns, and this is an area of focus for our manager due diligence.
We have a fiduciary responsibility to our clients and therefore any Responsible Investment fund included in a Tideway portfolio will first and foremost need to exceed the required financial, risk-adjusted return objective.
We may include ethical, ESG and thematic funds within our universe of potential investment. However, Impact Funds, where there is an explicit non-financial objective which compromises the financial one, are excluded.
Organisation for Economic Co-operation and Development (OECD)
Responsible Investment process in detail: