ESG/sustainability reporting (SFDR disclosures for Stewart Investors Article 9 Funds)

This information relates to the Stewart Investors Asia Pacific Leaders Sustainability Fund, Stewart Investors Asia Pacific Sustainability Fund, Stewart Investors European Sustainability Fund, Stewart Investors Global Emerging Markets Leaders Fund, Stewart Investors Global Emerging Markets Sustainability Fund, Stewart Investors Worldwide Leaders Sustainability Fund and Stewart Investors Worldwide Sustainability Fund (the “Funds”)

The Funds listed above and shown below seek to achieve long-term capital appreciation by investing in companies which both contribute to, and benefit from, sustainable development, achieving positive social and environmental sustainable outcomes.

Positive social sustainability outcomes include the enablement of improved health and wellbeing; access to income-generating and enterprise opportunities; fair employment and workplace safety; access to education and learning opportunities; communication and access to information; financial inclusion; sustainable transport and mobility; better access to housing, water, sanitation and electricity; and social inclusion and reduced inequality.

Positive environmental sustainability outcomes include more careful, efficient and productive use of natural resources; reduced waste and improved waste management; the wider adoption of circular economy practices and measures; the adoption of renewable and cleaner energy technologies; reduced greenhouse gas emissions; reduced water, air and other environmental pollution; a slowing in the rate of land degradation, land use change and loss of forests and biodiversity; and measures and technologies that enable climate change adaptation and resilience.

The Funds only invest in companies that are sustainable investments which contribute to a social and/or environmental objective. The contribution of the Funds' investments to the social and environmental objectives are assessed by reference to two framework indicators – the Investment Manager’s human development pillars and Project Drawdown climate change solutions.

Project Drawdown is a non-profit organisation, founded in 2014, which has mapped, measured and modelled over 90 different solutions to global warming, with the ultimate goal of reaching drawdown – i.e. the point in the future when emissions stop increasing and start to steadily decrease. Each Fund investment is mapped by the Investment Manager against the c.90 solutions (which are captured in eight broader solutions of Buildings, Circular economy / industry, Conservation / restoration, Energy, Food system, Human development, Transport and Water). The Investment Manager’s focus is on whether the companies themselves are making a meaningful contribution and will have meaningful involvement with the delivery of any of those solutions. Where the companies in which the Fund invests do contribute to any of the solutions, they will be involved in making products and delivering services directly, or by enabling/supporting those solutions.

These frameworks, alongside the Investment Manager’s own bottom-up analysis, lean on measurable and reportable outcomes as evidence for determining a company’s meaningful contribution to sustainable development.

Meaningful company contribution:

1. Demonstrates a clear link to the underlying issue and solution, including whether the contribution is direct or enabling/supporting.
2. Is relevant for the company either as a revenue/growth driver, as strategic initiatives backed by research and development or capital expenditure, or a function of strong culture or behaviours and ‘how they do things’ e.g. for equality and diversity.
3. Recognises negative impacts from the company, including contradictions and risks of perverse outcomes.
    

How did the sustainability indicators perform?

Companies can contribute in many different ways to a better future for people and planet. To align with their bottom-up investment approach, the Investment Manager provides descriptions on their website, via their interactive Portfolio Explorer tool, on how they believe each company is contributing towards sustainable development. 

Users can explore the stories of individual companies organised by the diverse contributions they make including towards human development pillars and climate solutions. This information is updated on a quarterly basis.

Source for analysis and mapping: Stewart Investors investment team, company data and © 2014–2023 Project Drawdown (drawdown.org) as at 31 December 2022.

Contributions are defined by the team as demonstrable contributions to any solution, either direct (directly attributable to products, services or practices provided by that company) or enabling (supported or made possible by products or technologies provided by that company). More information is available on the manager’s website - stewartinvestors.com/all/how-we-invest/our-approach/portfolio-explorer.

Glossary

Sustainable investment means an investment in an economic activity that contributes to an environmental or social objective, provided that the investment does not significantly harm any environmental or social objective and that the investee companies follow good governance practices.

Sustainability indicators measure how the environmental or social characteristics promoted by the financial product are attained.