JUST GROUP PLC Annual Report and Accounts 2019
18
sustainable investment strategy
Making just choices
Environmental, Social and Governance (“ESG”) factors are a growing focus for Just Group, and the way we manage our investment portfolio is increasingly influenced by ESG priorities
W e consider key ESG factors in all our investment analysis and decisions, and for some time we have excluded new investments into tobacco, oil and gas exploration and production companies. Our ESG credentials are evident in the significant investments we have already made in renewables such as offshore wind farms (Walney and Hornsea projects), solar and positive social impact, such as social housing. Additionally, we utilise the expertise of specialist asset managers to support the business community via small and medium-sized enterprises (“SME”) loans and provide microfinance in emerging markets via agriculturally dominated commodity trade finance. We expect to continue increasing investments in all of these areas going forward. We were the first UK insurer to sign up to the United Nations Principles for Responsible Investment (“PRI”) as an asset owner. In addition we are defining our enhanced ESG framework, measuring our portfolio ESG score through data analysis and assessing the threat of climate change on our investments. ESG is embedded in our investment process both for new investments and in monitoring and managing our existing book. We screen all new asset purchases for ESG issues as a supplement to traditional fundamental credit analysis. An ESG database forms part of the periodic scoring of the portfolio. ESG considerations also inform decision making on participation in new asset classes and the alignment of potential business partners. On climate change, we have completed a stress test of our public rated bonds and the results were encouraging as the physical and transition risk impacts were limited. We are evaluating different potential data providers specifically focused on climate change that will help us manage investments at risk from climate change e.g. physical risks such as wildfires, flooding, heatwaves, transition risks and carbon emissions. We have a responsibility to our clients and the community to take ESG issues seriously by proactively taking concrete measures and improving our framework. We believe that ESG represents an important risk framework that will help avoid the medium and long-term problems which can come from backing companies or sectors that fail to adapt to a fast-changing environment.
We are delighted our efforts have been recognised by satisfying the requirements to become a constituent of the FTSE4Good Index Series. The index is designed to measure the performance of companies demonstrating strong ESG practices. Finally, the Board and the Group’s leadership team are exploring how we may continue to enhance the positive impact we make on society through our sustainable investments and through the decisions we take as a business in how we organise and manage our wider supply chains. Long-term institutional investors face a multiplicity of complex and rapidly changing factors. Having a sustainable investment framework in place complements traditional fundamental credit analysis. Whilst accepting that investment decisions are based on incomplete information and judgement, the sustainable investment framework supports risk management and is in keeping with the Just ethos.
gareth collard Chief Investment Officer, Just Group
1 Excludes LTM. 2 The capability to actively monitor ESG considerations/scores in our portfolio of public corporate bonds. 3 The value is subject to some bonds amortising during their lifetime. Note all figures are market values as at 31 December and as such might fluctuate from year to year.
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