Strategies using a thematic framework to gain exposure to a diverse range of sustainability megatrends.
What makes a fund suitable for the Sustainable pathway?
Our Sustainable funds have the following in common:
- The use of a thematic lens to identify companies contributing to sustainability megatrends
- An emphasis on sustainable values, reinforced by industry exclusions
- A sustainability objective that pits the portfolio against a reference index; for example, a fund in this pathway might aim to have a smaller environmental footprint than the index
What does this mean in practice?
Investors in our Sustainable funds can expect the following:
Exposure to companies on a growth trajectory, thanks to the sustainability transition
Our world is facing a sustainability crisis. From climate change to the loss of biodiversity, a major shift in production and consumption habits is required, and urgently. The companies we invest in are not only at the forefront of this transition, they are thriving as a result. Championing products and solutions that contribute to a more sustainable future, these are the businesses of tomorrow, driving everything from financial inclusion in emerging markets, to the electrification of historically carbon-intensive industries, such as mining.
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A clear process for considering sustainability credentials
We believe sustainability megatrends represent an opportunity – in theory, companies making a meaningful contribution to the United Nations Sustainable Development Goals (SDGs) stand to profit over the long-term. Our teams use rigorous exclusions, proprietary sustainability scores and a clear thematic framework to determine stock suitability, in this respect. Investors can expect a sustainability assessment that carries weight, and feeds directly into investment decision making.
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In-depth reporting across an array of environmental metrics
Our Sustainable funds target long-term capital appreciation and superior environmental performance. Many pursue a smaller environmental footprint than their reference index, and investors can therefore expect robust reporting on metrics including carbon, waste and water.
A commitment to partnering with companies, long term
The companies we invest in are on a journey. We, as investors, can influence that journey.
Through engagement, we help companies realise their growth potential, both from a financial standpoint and as ESG leaders. Collaboration is key – our teams partner with companies to drive positive change from within, supported by our world-leading stewardship service, EOS at Federated Hermes. With £1.2tn in stewardship assets under advice (as of 31 December 2021), EOS has significant influence and expertise.
A profitable, competitive and resilient business model
Evidence of strong or improving ESG factors
Products and services that benefit people and the planet
Sustainable company
20 years ago, sustainability was not the board-level issue it is today. While there did exist some vague notion of corporate social responsibility (CSR), maximising profits remained the priority.
How things have changed. Companies must now consider a whole host of sustainability issues – from climate change and disruptive technology, through to human rights and diversity – just to stay afloat.
Funds within our Sustainable pathway focus on exactly this: sustainability as a corporate imperative. This range invests in quality businesses that are not only run sustainably, but that drive environmental and social outcomes as ESG leaders. Long-term investors, looking to explore sustainable change as a potential source of alpha, may be suited to this pathway.
