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Specialist in Asia Pacific, China, India and South East Asia and Global Emerging Market equities.

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Stewart Investors manage investment portfolios on behalf of our clients over the long term and have held shares in some companies for over 20 years. They launched their first investment strategy in 1988.

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Asian Fixed Income

Approach to responsible investment

Our ESG approach

ESG considerations have been an important and longstanding feature in our investment approach. By identifying and integrating material environmental, social and governance risks in our credit analysis, we are able to better ensure a high-quality investment outcome.

We tackle the known risks of issuers by integrating the ESG risks into the team’s fundamental credit analysis. These assessments of ESG-related risks are combined by including a separate ESG risk rating for each credit issuer, resulting in a combined integrated assessment that includes credit and ESG risk considerations. The output of this work plays a key role in our independent credit rating process to determine company’s creditworthiness. In doing so, we increase the likelihood of accomplishing portfolio and client objectives. 

Integration

Factor  
Environmental We assess the impact of a company’s operations and products on the environment, including but not limited to issues of waste/emission management, resource use, energy intensity and environmental sustainability . We also consider the resilience of the company’s operations in the face of climate change (physical risk) and tighter climate policy (transition risk).
Social We recognise that substandard social practices can lead to a significant financial cost, as well as reputational and brand image.  By analysing and assessing risks associated corporate’s human capital, data privacy, and business ethics, we aim to identify potential unrecognized financial risk. 
Governance Poor corporate and regulatory governance are recognised contributors in most corporate failures, and identifying related risk factors will mitigate the downside risk. Analysts assess board quality and effectiveness, as well as level of corporate disclosure and transparency, to identify companies with a higher default risk than the balance sheet implies. 

 

Our ESG assessment has an important bearing on proprietary internal credit ratings that are assigned to every credit we review, in turn influencing portfolio construction decisions.  As well as this bottom-up research, ESG factors are considered as part of our position sizing discipline.

Analysts rely on a combination of company engagement, company reports and third party research providers including Sustainalytics, MSCI, RepRisk, to arrive at their ESG risk assessment.

Analysts will assign an ESG risk rating to each company, using a 5 point scale, ranging from very low ESG risk to very high ESG risk.  As part of the credit analysis process, the ESG risk rating is integrated into our internal credit rating (ICR) for each company and their securities.  

We can work with clients to incorporate other ESG ideas into their investment portfolios, based on their individual views and requirements.

Engagement

Ongoing engagement with issuers forms a critical part of our research process. We seek to influence issuers in which we invest and use meetings as an opportunity to reassess ESG risks. As well as attending investor days and roadshows, we proactively try and meet key decision-makers where possible. These sessions typically present opportunities to engage and to raise pertinent ESG-related issues that we deem relevant and important. 

Case studies

We believe that a strong commitment to stewardship is an essential component of a strong approach to responsible investment, and that embedding responsible investment into the core of our investment activities is in the best long-term interests of our clients. For more than a decade we have systematically and progressively improved our practices and processes across our investment capabilities globally.

Climate change statement

Key climate-related risks in our team’s portfolio

How we identify these risks

How we address these risks

The targets and objectives we have set

Disclaimer

Any targets (including, but not limited to, the net zero targets) on this webpage are based on (i) available information and representations made to First Sentier Investors by third parties, including, but not limited to, portfolio companies; and (ii) assumptions made in relation to future matters such as the implementation of government policy in climate-related areas, enhanced future technology and the actions of portfolio companies. Such information and representations may ultimately prove to be inaccurate and such future matters may not ultimately be realised. As such, First Sentier Investors cannot guarantee the achievement of these targets. These targets are subject to ongoing review and may change without notice.

Any ESG related commitments, are current as at the date of publication and have been formulated by the relevant investment team in accordance with either internally developed proprietary frameworks or are otherwise based on the Institutional Investors Group on Climate Change (IIGCC) Paris Aligned Investment Initiative framework. The commitments are based on information and representations made to the relevant investment teams by portfolio companies (which may ultimately prove not be accurate), together with assumptions made by the relevant investment team in relation to future matters such as government policy implementation in ESG and other climate-related areas, enhanced future technology and the actions of portfolio companies (all of which are subject to change over time). As such, achievement of these commitments depend on the ongoing accuracy of such information and representations as well as the realisation of such future matters. Any ESG related commitments are continuously reviewed by the relevant investment teams and subject to change without notice.

To the extent this material contains any measurements or data related to ESG factors, these measurements or data are estimates based on information sourced by the relevant investment team from third parties including portfolio companies and such information may ultimately prove to be inaccurate.