Balancing Risk with Returns
At Skerryvore we have long believed that for a company to deliver valuable returns for shareholders over the long term, it has to behave sustainably. We always question whether any business we are considering for investment is doing anything that could threaten its long-term existence and future growth and returns. Our research process is designed to search for any hidden or unintended risks at either the business or portfolio level that would hinder the rate of return that we can produce for clients.
Our Sustainability & Stewardship Working Group
The drive to mitigate ‘greenwashing’ or even ‘greenhushing’ risk1 and increase investor confidence has seen a rising burden of both mandatory and voluntary sustainability reporting, which has impacted companies, asset managers and asset owners alike.
Regulatory and client-driven requirements are developing at varying paces around the world, but are increasing quickly. Responding to these developments and managing them has kept our Sustainability & Stewardship Working Group busy over the past 12 months. This group is made up of colleagues from across the business, whose key purpose is to ensure compliance, clarity and consistency in our disclosures and communications across our global jurisdictions in line with our investment philosophy and strategies.
The group undertakes regular review and development of our sustainability policies and procedures, ensuring robust internal processes. They assess data needs and monitor data quality to ensure they are fit for purpose, to satisfy the scrutiny of independent risk oversight and meet the needs of our investment research.
What’s in this Review?
With Scope 32 emissions reporting experiencing greater legislative interest of late, we continue our look at the challenges associated with measuring emissions in Do you know your Scope 3 from your Scope 4?
In particular, we highlight the breadth of assumptions involved in attempting to quantify the energy consumed by end customers when they use a company’s product. The good news is that even ostensibly large Scope 3 emitters, such as WEG and Voltronic, are able to make a substantial contribution to greener technologies and the transition to a lower-carbon world.
To avoid being deluged by ESG data, it’s crucial to focus on what is material. We demonstrate our bottom-up attitude to sustainability risk analysis through this important lens in A Material Approach to Sustainability, using our recent review of Hindustan Unilever as a case study.
Lastly, in addition to providing a snapshot of the carbon emissions profile for our strategies, we have also included a more in-depth look at our stewardship activity over the past 12 months. Recognising and addressing sustainability issues is a key part of our engagement process. Although Skerryvore is not an activist investor, we do seek to keep the spotlight firmly on the most relevant issues as we see them and encourage behaviour that contributes to the long-term maximisation of shareholder value.
We hope you will find this document interesting and useful. Should you have any follow-up questions or thoughts, please do feel free to get in touch.
