Our focus areas

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. Failure to take action on climate change has been ranked as the highest risk in terms of impact by the World Economic Forum, and in terms of likelihood it ranks second only to extreme weather.¹

As investors, we understand that climate change poses a complex problem which has already impacted, and will continue to impact different assets in different ways.

Human rights is a complex issue attracting increasing levels of scrutiny and which can affect multiple asset classes.

Corporations have legal, moral and commercial responsibilities to respect human rights and manage the human rights impacts of their operations. They are not only expected to meet their human rights responsibilities, but may face reputational, legal or other consequences if they fail to do so. As an investor in these businesses on behalf of our clients, it is imperative that we fully understand the risks and seek to mitigate them.

Modern slavery has been a particular area of focus for us at First Sentier Investors. The International Labour Organization has estimated that there are over 40 million victims of modern slavery. Women and girls account for 71 per cent of modern slavery victims, while one in four victims are children.²

Modern slavery includes crimes such as forced labour, debt bondage, human trafficking, child labour and forced marriage and disproportionately affects vulnerable communities.

Against this backdrop, investors, regulators and markets have an obligation to address modern slavery risks as a key aspect of their ESG obligations. The opportunity to influence positive change for the millions of victims of modern slavery is central to our stewardship responsibilities.

Additionally, we recognise that there are business risks associated with human rights, and this impacts our investment portfolios.

We believe that representation matters in business and recognises that diversity goes beyond gender, with factors such as race, religion, socioeconomic background, sexuality and disability being of equal importance. A diverse workplace fosters an environment of informed decisions and stakeholder engagement.

We believe diversity is a business issue as well as an ethical one. For example, there is a raft of research demonstrating that gender diversity contributes to better business and economic outcomes. This includes:

• An increase in the share of female ‘top-tier’ managers by 10 percentage points or more led to a 6.6 per cent increase in the market value of ASX-listed companies.³
• Improving gender equality would lead to an increase in EU (GDP) per capita from 6.1% to 9.6%, which amounts to €1.95 to €3.15 trillion.⁴

As we increase our focus on climate change, we must also increase our focus on biodiversity. Although the world’s 7.6 billion people represent only 0.01% of all living things by weight, humanity has already caused the loss of 83% of all wild mammals and half of all plants.⁵

The current rate of extinction is tens to hundreds of times higher than the average over the past 10 million years – and it is accelerating. Current production and consumption patterns, land use and urbanization, population dynamics, trade, industry and governance models underpin this loss.

As investors, we know that biodiversity loss creates risks for the companies we invest in together with the broader economy, and that we need to do more to both understand and mitigate those risks.