Schroder ISF* Global Sustainable Growth Fund

The pandemic has put companies’ treatment of their stakeholders under greater scrutiny than ever before. Beyond government pressure to protect jobs, close attention is also being paid to how companies treat staff – these factors can have a major impact on a company’s financial performance.

Despite this, the market continues to largely focus on traditional financial metrics, persistently ignores these sustainability factors, and therefore can underestimate the fundamental value and long-term growth potential of a company. This market inefficiency creates investment opportunities for active investors, like Schroders, to capitalise on.

The fund focuses on identifying companies that have the best potential for sustainable growth and durable investment returns over the long-term, underpinned by strong relationships with all their stakeholders.

Moving away from just ‘box-ticking’, we use our proprietary Sustainability Quotient (SQ) framework to aid in our sustainability analysis. The framework is an in-depth, forward-looking, qualitative assessment comprising of 20 questions framed around 4 broad pillars. These are complex issues that require us to consult a wide range of resources and interact directly with companies to determine their sustainability profiles or flag out existing issues. The process is highly rigorous and stringent, with ~50% of companies rejected post-analysis.

No doubt, it is often difficult to quantify a companies’ relationship with key stakeholders and understand the direct impact our investments have on society and the environment. That is why, like our proprietary SQ framework, we have developed a set of proprietary tools called the ImpactIQ platform that are essential in our analysis and stock picking of the sustainability winners.

As an active, long-term manager, we see ourselves as owners of the companies we invest in. Engagement is therefore a crucial part of our process. We believe proactive engagement is effective in influencing company practices which can help improve shareholder returns and broader societal outcomes.

The Fund is a genuine collaboration between the Schroders’ Global & International Equity and Sustainability Teams, leveraging the strength of Schroders’ fundamental research resources and expertise on sustainability and stewardship.

The bottom-up research by our Global & International Equity team compliments the top-down thematic research (across areas, such as climate change, the use of plastics and cybersecurity) conducted by our dedicated Sustainability team.