Stage two: Environmental, Social & Governance considerations
Data about ESG practices can provide insight into how effectively a company operates. This can help investors to better understand:
- The quality of a business
- Potential vulnerabilities to future cash generation
- The likelihood of a company seeing a large drop in value – a negative tail-risk event
Businesses that have high ESG standards are also more likely to attract top talent due to:
- Having strong corporate cultures
- Treating staff well, often with good compensation and career opportunities
- Not significantly damaging the planet
By attracting top talent, a business may be more likely to produce higher levels of knowledge-based intellectual property, which often leads to higher profitability.
ESG is essential to our investment due diligence process as it gives us more information to make better investment decisions.
Compared to the global Lipper mutual fund universe of over 28,000 funds, this ranks the strategy in the top 10% globally, showing the quality of the businesses we invest in
Next, we integrate this with independent MSCI ESG research to ensure we only invest in companies that score well from an ESG perspective. MSCI provides ESG ratings on each company within an investment portfolio, ranging from ‘AAA’ to ‘CCC’ based on a range of ESG factors. Our strategy is currently 'AA’.
Compared to the global Lipper mutual fund universe of over 28,000 funds, this ranks the strategy in the top 10% globally, showing the quality of the businesses we invest in.
Sustainable portfolio: Top 10 equity positions
|Companies||Active weight||ESG rating|
Active weight relative to position size in MSCI all Country World Index ESG rating provided by MSCI ESG research as of 31 December 2019
Investments can fall as well as rise in value. Your capital or the income generated from your investment may be at risk.
You could get back less than you invest. Adding leverage to your portfolio may amplify returns in a rising market, but will amplify losses in a falling market
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Any past or simulated past performance including back-testing, modelling or scenario analysis, or future projections contained in this communication is no indication as to future performance. No representation is made as to the accuracy of the assumptions made in this communication, or completeness of, any modelling, scenario analysis or back-testing. The value of any investment may also fluctuate as a result of market changes.
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Where information in this communication has been obtained from third party sources, we believe those sources to be reliable but we do not guarantee the information’s accuracy and you should note that it may be incomplete or condensed.
Neither Barclays nor any of its directors, officers, employees, representatives or agents, accepts any liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this communication or its contents or reliance on the information contained herein, except to the extent this would be prohibited by law or regulation. Law or regulation in certain countries may restrict the manner of distribution of this communication and the availability of the products and services, and persons who come into possession of this publication are required to inform themselves of and observe such restrictions.
The value of any investment may also fluctuate as a result of market changes.
You have sole responsibility for the management of your tax and legal affairs including making any applicable filings and payments and complying with any applicable laws and regulations. We have not and will not provide you with tax or legal advice and recommend that you obtain independent tax and legal advice tailored to your individual circumstances.
This report contains certain information (the "Information") sourced from MSCI ESG Research LLC, or its affiliates or information providers (the "ESG Parties"). The Information may only be used for your internal or personal use, may not be reproduced or disseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices.
Although they obtain information from sources they consider reliable, none of the ESG Parties warrants or guarantees the originality, accuracy and/or completeness, of any data herein and expressly disclaim all express or implied warranties, including those of merchantability and fitness for a particular purpose.
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