"An investment in knowledge, pays the best interest." Benjamin Franklin
At First Sentier Investors, we're driven by our Responsible Investment principles. Our commitment to RI research and analysis enables us to make more informed decisions that not only benefit our clients, but our environment and our society. To do this, we use a wide variety of tools and resources some of which are listed below.
We accept the science of climate change and support the global transition to net zero emissions in line with the goals of the Paris Agreement. Climate change and global warming pose systemic risks to society and the global economy. It impacts the availability of resources, the price and structure of the energy market, the vulnerability of infrastructure and the valuation of companies. For investors it poses a complex problem which has already, and will continue to, impact on different investments in a number of ways.
In response to this, in 2016 First Sentier Investors established a climate change working group to take a broader view of the issue and its investment implications. From this work, we identified five key areas of climate change risk and opportunity facing investors today and into the future.
- Physical Impacts of Climate Change
- Carbon Emissions / Regulatory Intervention
- Business Transition / Stranded Asset Risk
- Fiduciary Duty / Legal Risk
- License to Operate/Reputational Risk
We have released a series of five white papers (below) which present the context for each issue, the implications for investors, and provide guidance on how investors can incorporate these issues into their risk management and investment decision-making processes.
We've also sought to align our Climate Change Statement with the Task Force for Climate Related Financial Disclosure's recommendations.
Physical risks of Climate Change
- First Sentier Investors - The physical risks of climate change whitepaper
- Centre for climate and energy solutions: Extreme Weather and Climate Change: Understanding the Link and Managing the Risk
- 2015 Corporate Adaption Survey
- European Commissions Joint Research Centre Projection of Economic Impacts of Climate Change
- Investor Group on Climate Change
- Mercer Climate Change Study
Business transition and stranded asset risk
Director duties and legal risk
- First Sentier Investors - Climate change fiduciary and directors duties whitepaper
- AICD Climate Change & Directors Duties
- Centre for Policy Development Updated Legal Opinion on Climate Change and Directors’ Duties
- EU Directive 2014/95/EU on non-financial disclosures
- Sustainable Stock Exchanges Initiative
- Grantham Institute on Climate Change and the Environment Climate Change Laws of the World
Human rights is a complex issue attracting increasing levels of scrutiny, which can affect multiple asset classes. In 2016 we formed a Human Rights Working Group composed of members of our investment teams globally to develop a more structured approach to the problem across different regions and asset classes. This working group created a Human Rights Toolkit to help all investment teams globally better manage human rights risks in our portfolios. The toolkit provides research and guidance for each of the following steps:
- Identifying companies with a risk of human rights in their operations or supply chains
- Assessing companies’ approach to the issues identified
- Engaging with the companies identified as at risk of human rights violations.
- Internal reporting on our progress
This has formed the basis of our approach to addressing human rights risks within our investment portfolios, which we are required to report on in accordance with legislation in Australia.
The following tools and resources have been developed by or are used by our Responsible Investment team and our broader investment teams.