Global Emerging Markets Impact
To generate a positive impact in terms of societal contribution as well as an attractive financial return.
The Global Emerging Markets Impact strategy invests in public companies that intentionally and materially contribute to having a positive impact to society in line with the United Nations Sustainable Development Goals (“SDG”), including in five key areas: Environment, Health and Wellness, Responsible Consumption, Sustainable Infrastructure and Inclusion.
The strategy is driven by fundamental bottom-up stock analysis conducted by fund managers and analysts globally. Each company in the strategy must offer a positive societal return, be managed in a sustainable way, and be an attractive investment from a financial perspective. For a company to be eligible for investment the positive societal return and sustainability are independently assessed by our Impact Assessment Group, consisting of senior members of Schroders Sustainable Investment and Global Emerging Markets Equity teams.
To qualify as a candidate for the Impact strategy, a company should satisfy all three of the following metrics.
- Societal Contribution – Companies that demonstrate a direct or indirect positive impact to society in line with the UN Sustainable Development Goals
- Sustainability – Companies that treat all stakeholders fairly and run the business for the long term
- Financial Return – Companies that generate sustainable returns above their cost of capital
The investment philosophy may be adjusted when deemed necessary.
EME Impact – characteristics
–Bottom up – concentrated 30-50 positions
–Aligned with UN SDGs
–Long term – low turnover 20-40%
Source: Schroders, as of October 2020. Schroders has been granted with UN license to use UN SDG logo.
Investment process summary
Source: Schroders. As of December 2020.
- The strategy invests in a concentrated portfolio of 30-50 publicly listed equities within emerging markets, with a low expected turnover given the long-term horizon of investments.
- The positive societal return is measured through mapping each holding to a primary SDG via a quantitative screen and a fundamental assessment, specific measurable key performance indicators (“KPIs”) related to those SDGs, and by a proprietary tool, SustainEx.
- Our analysts and fund managers employ a separate proprietary tool, Context, to frame their assessment of the sustainability of a business through its relationship with key stakeholders, and conduct standard fundamental financial analysis for each company. Key stakeholders include: Employees, Local Communities, Customers, Regulators, Environment, and Suppliers.
- Targeted engagement is a critical part of the investment process with the aim of improving societal and shareholder outcomes.
- Detailed reporting to evidence the strategy is delivering on its objectives will be provided at the overall portfolio level as well as on individual holdings.