Equities

The ethos which drives the strategy and what we look for in underlying managers is: good performance, at reasonable costs, with strong ESG credentials. All the managers and strategies within the equities strategy follow this ethos. All managers are PRI signatories, all score as either ‘Professional’ or ‘Leader’ using our ESG and IMP scorecard, and several funds are generating measurable and positive impact on society and the world.

One of the best ways to demonstrate this is with the carbon emissions footprint of the strategy, which is consistently lower than the benchmark with 2022 as no exception. When measured against Anthos’ net-zero ambition pathway, the team’s climate-conscious decisions mean that, so far, we are cautiously on track to achieve our ambition for net-zero emissions by 2040. These results show how the equity portfolios align with our value of sustainability.

For our value of human dignity, we made strides in 2022 by collaborating with underlying managers we consider leaders in human rights to help us develop our understanding and approach at Anthos. Being able to ask for guidance and bringing that expertise into our ecosystem is one of the advantages we think of selecting and backing the best managers globally when it comes to ESG.

2022 was a year that saw energy prices soar, and this impacted our portfolios which have a strong ESG tilt and are typically underweight fossil fuel companies (as shown with our emissions). It was also a year where value outperformed growth, and managers with strong ESG credentials typically have a strong quality growth tilt as we did in 2022.

To address this, we took the following actions: we sought to add diversification by adding a quantitative value manager to counteract the growth tilt, we sought and selected a new manager with exposure to listed real estate to counteract inflation pressures and provide decent yields, and we engaged with our existing managers regularly to challenge their tactical decisions and risk mitigation in order to protect capital during this difficult environment.

Whilst we try not to assess either financial of ESG performance in short periods, we recognise 2022 as a challenging year for our portfolios and the broader sustainable movement. Despite that, we strongly believe our investment philosophy is future proof and reflective of the structural and sustainable trajectory the world is on. From the bottom-up, we will continue to seek out the leaders of that trajectory and from the top-down we continue to take comfort in the forces driving sustainability across all parts of the economic system.