The actual letters stand for:

Environment – these factors include the contribution either a company or government makes to climate change through greenhouse gas emissions, along with waste management and energy efficiency. Given renewed efforts to combat global warming; cutting emissions and decarbonising have become more and more important, and these issues have become investable themes.

Social – this includes things such as human rights, labour standards in the supply chain, any exposure to illegal child labour, and more routine issues such as adherence to workplace health and safety. A social score also rises if a company is well integrated with its local community – in short treating everyone equally and fairly, as my mum says, treat people as you would like to be treated.

Governance – this refers to a set of rules or principles defining rights, responsibilities, and expectations between different stakeholders in the governance of corporations – by this we mean the duty of company directors. Historically companies were run with shareholder return as their main objective, times have changed, and governance is now relevant for all “stakeholders”.  A stakeholder is any party that has an interest in a company and includes, investors, employees, customers, and suppliers.

A well-defined corporate governance system can be used to balance or align interests between stakeholders and can work as a tool to support a company’s long-term strategy as well as enhancing return.

As with all things investment related, one size does not fit all under “ESG”, but looking at and evaluating “ESG” the three key investor objectives, enable us to evaluate how far companies and countries have come with their sustainability.

Sustainability is important when assessing companies and forms part of “ESG” as this helps to generate long term competitive returns, as well as having a positive impact on both the people and the planet.

Overall, integrating these three pillars into our investment process should aid in achieving better outcomes.

Ravenscroft became a signatory to the United Nations Principles for Responsible Investment in 2020. The Principles for Responsible Investment were developed by an international group of institutional investors reflecting the increasing relevance of environmental, social and corporate governance issues to investment practices.

In practice, this requires the group to periodically report against a progressive framework designed to deepen the integration of environmental, social and governance issues into investment processes.

We recognise that applying these Principles may better align investors with broader objectives of society. Therefore, where consistent with our fiduciary responsibilities, we commit to the following:

• Principle 1: We will incorporate ESG issues into investment analysis and decision-making processes.
• Principle 2: We will be active owners and incorporate ESG issues into our ownership policies and practices.
• Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.
• Principle 4: We will promote acceptance and implementation of the Principles within the investment industry.
• Principle 5: We will work together to enhance our effectiveness in implementing the Principles.
• Principle 6: We will each report on our activities and progress towards implementing the Principles.

We believe this will improve our ability to meet commitments to beneficiaries as well as better align our investment activities with the broader interests of society.