Global Emerging Markets Impact
To generate a positive impact to society and an attractive return to shareholders over the long term through investment in a carefully screened portfolio of emerging market equities.
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: Climate Change, 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 Return – 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
Source: Schroders, as of October 2020. Schroders has been granted with UN license to use UN SDG logo.
The investment philosophy may be adjusted when deemed necessary.
Source: Schroders. Data as of November 2020. This is a concept proposal and relates to a potential investment fund which may or may not be launched. All terms described herein are indicative and subject to change. There can be no guarantee that any investor risk/return objectives or outcomes will be achieved. 1Turnover figures are based on the lesser of purchases and sales over mean market value.
Source: Schroders. Stock ideas from the wider smaller companies universe are also included in the initial exclusion screen.
- 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 qualitative assessment, specific measurable key performance indicators (“KPI”) 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, 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.