A new acronym for ESG?

The E emphasises engagement - not exclusion

We see merit in taking a nuanced approach to ESG investing. While we know the E here stands for environmental, for us as a firm it could equally mean engagement. It could also point to experience, which tells us that engaging with companies tends to lead to better financial outcomes.

SEI views active management as an inherent part of sustainable investing – unlike passive management, which buys the whole market, active management considers financially material information in stock selection. If an investor integrates ESG factors into an active approach, they will necessarily select companies with more sustainable policies and practices, as well as better governance. This is believed to lower risk, and offer an opportunity to generate increased returns.

S is for stewardship

So if E can mean engagement and experience, we see the S in ESG as standing for stewardship.

In short, stewardship sees investors, like pension schemes, use their shareholder status to better a company’s sustainability practices. We partner with a number of best-in-class engagement service providers to allow greater influence here. 

We have two approaches to engagement, which complement one another.

The first emphasises norms and standards. Alongside our engagement partners, we will engage reactively with companies that consistently breach or violate global norms and standards relating to sustainability. This can include companies with a disregard for environmental standards, human rights and ethical business conduct.

The second is thematic. Our teams will work with businesses at risk of falling foul of sustainability “megatrends” to develop, embed and implement best practice. This approach engages both laggards and leaders in support of the UN Sustainable Development Goals (SDGs).

For more than a decade, this is how we have approached holdings in SEI’s UCITS funds, and it’s given us valuable insight when translating principle into practice.

G – Governance remains key

Key to our approach as a manager of managers, SEI retains power of attorney on the vast majority of its listed equities. As such, we can vote with one strong voice on substantial issues affecting the sustainability of companies across all our shares.

Our proxy voting provider, Glass Lewis, is one of the largest and most established in the business, with the reach necessary to enable high voting rates.

Important Information

This is a marketing communication

This webpage contains marketing material about our fiduciary management services. This webpage does not present impartial advice on this service. In certain cases, you are required to conduct a competitive tender process prior to appointing a fiduciary manager. Guidance on running a tender process is available from the Pensions Regulator.

This information has been created, issued and approved by SEI Investments (Europe) Ltd ("SIEL"). This web page is not intended to constitute an offer to buy or sell, or a solicitation of an offer to buy or sell any particular product. Please note you may not be able to invest in any of the investment products described in the film directly.

While considerable care has been taken to ensure the information contained within this web page is accurate and up-to-date and complies with relevant legislation and regulations, no warranty is given and no representation is made as to the accuracy or completeness of any information and no liability is accepted for any errors or omissions in such information or any action taken on the basis of this information.

Sustainability guidelines may cause a manager to make or avoid certain investment decisions when it may be disadvantageous to do so. This means that these investments may underperform other similar investments that do not consider sustainability guidelines when making investment decisions. There can be no assurance goals will be met. If a product or strategy is subject to certain sustainable investment criteria it may avoid purchasing certain securities when it is otherwise economically advantageous to purchase those securities, or may sell certain securities when it is otherwise economically advantageous to hold those securities. Sustainability is not uniformly defined and scores and ratings may vary across providers.

SEI considers ESG factors as part of its Portfolio Manager Research and due diligence process including an evaluation of each Portfolio Manager's approach to integrating sustainability risk in its investment process; however, no minimum threshold has been established with respect to these capabilities in order for a firm to be hired as a Portfolio Manager.

Past performance does not predict future returns. Investment in SEI funds are intended as a medium to long-term investments. The value of an investment and any income from it can go down as well as up. Investors may not get back the original amount invested. This web page and its contents are for Institutional Investors only and not for further distribution.

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