The RBGE’s assets should be invested in line with its mission and aims. The Investment Committee delegates the investment management to Brewin Dolphin on a discretionary basis. The investment process at Brewin Dolphin incorporates Ethical, Social and Governance (ESG) analysis whereby they review prospective investments against a wide range of ESG Criteria alongside robust financial analysis. This approach is also reflected in their selection of collective investments with the requirement for fund managers on the ‘buy list’ to meet strict ESG criteria as part of the selection process.
An ethical policy has been agreed for the RBGE which reflects the charity’s standpoint through the avoidance of certain types of investment and consistent with the mission. Specifically, the areas that we have been asked to refrain from direct investment in are companies primarily involved in the following:
- Tobacco production and sales
- Turnover from mining
- Companies whose operations directly impact on biodiversity in a negative way
- Companies who have limited of no evidence of commitment to improving climate change
- Any exposure to use of palm oil
The above restrictions negatively screen against the investment universe. The utilisation of the EPM (ethical portfolio manager) database through Moody’s (a global data analytics and responsible investment research specialist) to screen the portfolio and investment universe, ensuring that all stocks held are compliant with the specific policy criteria. The system does not currently screen directly for use of palm oil, but any involvement is determined on a Controversies screen, whereby any accusations or references to Palm Oil in the press are flagged to Brewin Dolphin. For example, Shell Plc (an oil company listed in the UK) is engaged in producing biofuels from vegetable oils, including palm oil, as a part of its Renewable & Energy Solutions business. This exposure is estimated to be less than below 5% of total turnover but such a business would be excluded for investment purposes.
The Trustees also wish to include companies making positive steps to address issues outlined in the RBGE’s mission. Moody’s ESG Solutions’ Sustainable Goods and Services (SGS) screening provides an in-depth assessment of the proportion of a company’s commercial activity that is linked to the sale of goods or the provision of services, that support the achievement of the 17 UN Sustainable Development Goals (SDGs). They have further simplified this into 9 main themes where users can apply selectively depending on the charity’s goals. This includes:
- Access to information
- Capacity building
- Health
- Responsible Finance
- Food & Nutrition
- Infrastructure
- Water & Sanitation
- Energy & Climate Change
- Protection of Ecosystems
For RBGE, the selected the themes are highlighted in bold as they apply to the charity’s Mission. Any new direct investment should be made in line with this, and all current holdings remain suitable. Examples include the work being done by Apple and Diageo to improve recycling infrastructure.
Performance may from time-to-time differ from the benchmark due to the restricted investable universe, but the ethical restraints are very important to the Charity. The process detailed above gives the Committee confidence in the ability of the appointed investment manager to invest responsibly on their behalf and also to ensure that any investments that could conflict with the Garden’s aims can be excluded from the investable universe. The policy is confirmed at six monthly meeting and formally reviewed annually.
Brewin Dolphin is a signatory to the UN Principles of Responsible Investment and has a Tier 1 rating for stewardship from the FRC (Financial reporting Council). As a Member of the Investor Forum, they actively engage with companies on such issues as executive remuneration, workplace safety and greenhouse gas emissions. They work with other asset managers, including BMO, to collectively engage with companies in a proactive way. As such, the committee has confidence that Brewin Dolphin are good stewards of the charity’s assets and are in regular contact with the investment team.
The Trustees have noted that investment in collective or pooled funds is acceptable in some situations. For example, for investment in the fixed income, alternatives and commercial property sectors. In addition, in areas within the equity exposure, such as Emerging Markets and the Far East, collectives are also acceptable.
The Trustees would not wish to see any investment in companies, restricted by the above criteria within collective or pooled funds. Due to the changing nature of businesses, the list of companies which have been restricted and indeed those currently permitted will be reviewed regularly and thus the impact on the stock universe available will change through time. Further to the agreed policy, it is also appreciated that other areas may arise, from time to time, that the Trustees may wish to avoid investing in and thus continuing dialogue between the Trustees and RBC Brewin Dolphin between meetings may be necessary.
Approved by RBGE Board of Trustees 07.12.22