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'Truly global with ESG at the core of all investments' - one firm takes a stand
20/03/2017 , Polina Hoare

The wealth management universe contains many admirable firms, often very alike, making it harder for an individual to pinpoint the one. Most claim putting clients’ needs first, interests being aligned, good track record and so on. It is difficult to survive in the industry without ticking numerous boxes, which is reassuring; but also makes writing a company profile a rather repetitive task.

Recently, however, thewealthnet spoke to one firm, which has no difficulty in standing out. Jamie Black, partner and head of private clients at Sarasin & Partners, presented two key features, which lift Sarasin from the crowd: the truly global reach, and the meticulous ESG overlay to its whole process.

“Our investment DNA is important, a distinguishing feature from our peers is that we are genuinely global in our outlook, we always have been.”

Guy Monson, who heads the investment process and was recently named as a 2017 PAM Most Influential, has “always followed a global philosophy”. Historically, Sarasin always believed that globalisation, technological and demographic changes, and a more closely integrated global community would become a significant driver of investment returns.

“I think that it is still very different from our peers in the UK. Many of them are much more focused on the domestic UK equity market, whilst in a typical Sarasin private client portfolio you might find around five to fifteen percent of the equity content in the UK, and that has always been the case,” said Mr Black.

Sarasin has one collegiate investment process for all its clients (charities, institutional and private clients) with a different delivery method. Critically, everyone at the firm has a background in investment, so there’s no big gap between client facing staff members and others. There are daily meetings to discuss macroeconomics and stock selection, where everyone is encouraged to contribute. Interaction and continuity are key, with the corporate structure having changed very little for the last twenty-five years.

Crucially, ESG (environmental, social and governance) criteria are omnipresent, underpinning every action.

“We hope we are selecting good quality companies anyway, but what the ESG team has changed in our activity as investors in the last five years or so is the much greater engagement with management in our investee companies on issues that we think are important. We all have a duty to be responsible users of our clients’ capital, and it’s been a very healthy process.”

Sarasin & Partners consider themselves stewards of their clients’ assets. With a long term approach to investment, the firm looks for businesses that will create enduring value; and aims to own - as opposed to trade - these companies. Taking a holistic view of the underlying financial performance of a company and its sustainability, Sarasin looks a decade ahead, and the impact of a company on the environment and society matters in its evaluation of its investment prospects. It also considers very carefully the potential impact of a wide variety of trends ranging from climate change to labour conditions and resource scarcity as an integral part of the thematic investment approach.

Mr Black described the active engagement with companies as fundamental: “Investors in companies have an important shared responsibility in holding the board and company executives to account for the performance of the business.”

Sarasin closely monitors investee companies and engages with management on issues of concern relating to corporate governance, capital structure and strategy, voting on matters put to shareholders.

“Poor governance can adversely affect the returns for investors and – equally – good stewardship can lead to better returns. Even putting ethics aside, if you ignore huge issues like bad corporate governance, you do so at your peril.”

Importantly, the firm’s responsible stewardship does not stop with stock selection and engagement activities. Where it believes it can play a positive role in shaping markets and regulation in a way that contributes to boosting sustainable economic growth, it will engage in policy outreach. Sarasin undertakes much of its policy work in collaboration with other investors, which currently includes a call for a return to prudence in accounting, with accounts delivering a ‘true and fair view’ of underlying company health, including capital and distributable reserves.

The ethical and sustainable approach feeds back positively into communication with clients. There is absolute transparency: clients understand what their exposure is, what they hold, and are safe in the knowledge that they are not locked in, as Sarasin ensures that everything it buys has daily dealings.

Sarasin & Partners is a London-based asset management group that manages £14.4 billion on behalf of charities, institutions, intermediaries, pension funds and private clients, from the UK and around the world.‎
 

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