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M&G and Baillie Gifford funds secure new AAA ratings from Square Mile

  • Two funds awarded AAA 3D Impact ratings 
  • Three funds awarded AA 3D Impact ratings 
  • Five funds awarded A 3D Impact ratings 
  • One new 3D Fund Certification 

3D Investing, Square Mile’s subsidiary dedicated to providing independent evidence that funds meet their Responsible investment claims, today announces the new Certifications awarded to funds in February.  During the month, 3D Investing certified 11 funds, ten of which qualified for a 3D Impact rating.

3D Fund Certifications are detailed analysis and audit of Responsible investment funds to determine how strictly they adhere to 3D Investing’s governing philosophy of ‘doing good’, ‘avoiding harm’ and ‘leading change’. In addition, all holdings are scrutinised using objective date and critical analysis.  The results of this research are delivered in a high quality, data rich report.

3D Impact ratings recognise certified funds which meet a minimum threshold for positive social and environmental impact based on a detailed analysis of their composition at an individual security level.  Most holdings must demonstrate a significant positive contribution to UN Sustainable Development Goals (UN SDGs) via their core products and/or service while negative contributions must be limited and lead change through investee engagement.

Both 3D Fund Certifications and Impact ratings complement Square Mile’s Responsible ratings which are awarded to funds with a responsible outcome or target incorporated into their objectives or mandate.

New AAA Ratings 

Baillie Gifford Positive Change fund 

Baillie Gifford has a pedigree dating back to 1908 and is a champion of long-term, engaged investing.  Its Positive Change Fund builds on this heritage.  This a high conviction, concentrated portfolio with thoughtful and detailed impact reporting that goes beyond outputs to look at outcomes and impact.  The fund lives up to its name with clear documentation of how it is achieving positive change with reference to the UN Sustainable Development Goals justifying its status as a AAA fund.  (Rating awarded on 18.2.21)

M&G Positive Impact fund 

As its name suggests, this fund seeks to help address the world’s major environmental and social challenges by supporting companies to deliver a clear and demonstrable positive impact on society.  This intentionality is backed up by a significant resource, a proprietary impact assessment methodology and is evidenced by the fund’s holdings.  Transparency is high, with a clear determination to engage with investors and to be an advocate for impact investing. (Rating awarded on 9.2.21)

New AA Ratings 

Impax Environmental Leaders fund 

Impax Asset Management only invests in opportunities arising from the transition to a more sustainable economy.  For over 20 years, Impax has built a well-deserved reputation as a leader in global environmental investing.  This fund seeks to invest in companies which derive more than 20% of their underlying revenue from environmental products or services in the energy efficiency, renewable energy, water, waste and sustainable food and agriculture markets. In practice these revenues are much more than this on average, and the fund has a clear focus on sustainable solutions.  This is accompanied by good impact reporting and engagement. (Rating awarded on 3.2.21)

Impax Global Equity Opportunities fund 

This fund seeks to invest in companies possessing sustainable competitive advantages with a strong focus on the risks arising from the transition to a more sustainable global economy, as well as seeking to harness the opportunities from this transition.  Although the rationale for the fund is based on financial drivers, the fund clearly invests in sustainable solutions, with good impact reporting and engagement. (Rating awarded on 3.2.21)

Impax Asian Environmental Markets fund 

This fund seeks to invest in companies based in Asia which derive more than 20% of their underlying revenue generated by sales of environmental products or services in the energy efficiency, renewable energy, water, waste and sustainable food and agriculture markets.  In practice these revenues are much more than this on average, and the fund has a clear focus on sustainable solutions.  This is accompanied by good impact reporting and engagement. (Rating awarded on 3.2.21)

New A Ratings 

M&G Sustainable Multi Asset Cautious, M&G Sustainable Multi Asset Balanced and M&G Sustainable Multi Asset Growth funds

These multi-asset funds invest up to 35% in equities, 20% to 60% and more than 55% in equities respectively with the balance held in government bonds, corporate bonds, infrastructure and cash.  They embrace a positive ESG tilt whereby securities with higher ESG standards are preferred, with a net exposure to holdings with an improving ESG score.  This is combined with a climate focus that excludes harmful sectors and requires a significantly lower carbon intensity than the peer average.  In addition, 20% – 50% of these portfolios is invested with a positive impact objective resulting in a clear focus on positive solutions. (Ratings awarded on 3.2.21)

Sarasin Responsible Global Equity fund 

This is a large cap fund which combines a thematic approach with ethical exclusions, whilst also considering a number of key policies on ESG issues.  The fund clearly delivers on these objectives and is distinguished by the combination of all three approaches within a large cap fund.  The fund benefits from Sarasin’s strong stewardship and active engagement with investee companies.  The fund qualifies for an impact A rating by virtue of its focus on sustainable solutions and evident engagement. (Rating awarded on 3.2.21)

Sarasin Responsible Corporate Bond fund 

This fund has a clear thematic bias resulting in a high exposure to companies providing solutions to social and environmental challenges relative to other bond funds.  This is combined with an ESG matrix aimed at avoiding controversies and raising the exposure to companies with a relatively good environmental and social performance.  Overall, there is a strong net positive impact, and although the fund falls below our guideline threshold for an impact rating, it qualifies for an A rating by virtue of its leadership amongst fixed interest funds in investing in sustainable solutions.  Although the fund is relatively new, it continues a pre-existing strategy, proven over several years.   (Rating awarded on 3.2.21)

New fund certifications 

Sarasin Sustainable Global Real Estate Equity fund 

This fund is a clear leader amongst real estate funds with ESG factors being very evident in stock selection.  The managers have considerable expertise in assessing ESG issues with a strong conviction that higher standards of ESG lead to superior performance in the real estate sector.  As a result, the fund is largely composed of real estate companies which might be regarded as market leaders in terms of sustainability, notably in terms of energy use, waste recycling and resource efficiency. (Fund certified on 3.2.21)

 

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