Going deeper and further
Beyond our ambition, advancing our responsible investment strategy requires us to go deeper and further on all aspects of our responsible investment policy implementation plans.
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Harnessing ESG data & technology
How we consider ESG data governance
When it comes to ESG data, proper data governance becomes even more crucial given the evolving data landscape and inconsistency in methodologies used by data providers. At Anthos, we acknowledge the importance of validating ESG datasets against our own policy and values to ensure informed decision-making and transparent reporting. Our data and technology team works closely with the investment strategy and research, and responsible investment teams to ensure the right datasets are selected for analytics, as well as for reporting to clients and regulators.
Integrating and monitoring ESG datasets
The data and technology team plays a crucial role in integrating ESG datasets, monitoring data quality, and generating dependable analytics for investment decisions and client reporting. This involves following a data governance process for new ESG data, to ensure proper definition by the data owners and assessment of data quality using relevant KPIs. Once approved, the data is integrated into a central platform to ensure a ‘single source of truth.’ Regular reporting on data quality is provided to maintain its integrity. Finally, the data and technology team provides ESG analytics to support informed decision-making.
Creating ESG ‘digital products’ for effective decision-making
The data and technology team utilises various methods to integrate and analyse ESG data. We are broadening our range of (internal) digital offerings within the ESG arena. Our portfolio now includes the ESG and IMP scorecard, a portal for collecting ESG data, exclusions screening, and SFDR reporting. These powerful tools deliver valuable intelligence to our investment teams and clients alike. Our products are at varying stages of maturity, and we continuously enhance their functionality using an agile approach.
- ESG and IMP scorecard uses an automated workflow to capture ESG attributes during the fund selection process. The data is then integrated with additional datasets, quality-checked, and analysed to produce ESG scorecards and other relevant dashboards.
The recently launched ESG data collection portal enables Anthos to enrich fund ESG data directly provided by fund managers.
Anshum Goel
Head of Data & Technology
“We believe ESG data and technology is the foundation of our responsible investment strategy, and so is a critical component of achieving our responsible investment ambition.
Our nimble team is a strong advantage when it comes to the collaboration necessary to innovate and test new ideas.
That’s why the technology team works closely with the research, responsible investment, and investment teams to continually create, learn, assess, and improve how we are harnessing data and technology to achieve our sustainability and investment outcomes.”
Strengthening stewardship
We engage on two levels: directly with underlying managers and indirectly via a third-party engagement specialist called Sustainalytics. Read more about our Stewardship policy on Anthos’ website.
Direct engagement with managers
We’ve always sought to influence our underlying managers by engaging with them and, indirectly, the companies they invest in. Our ESG and IMP scorecard is the main tool for these conversations. The goal is to embed ESG risks in their investment process and strategy, and we want our managers to be as transparent as they can about how they do this. We also aim to reduce the negative impacts in our portfolios, even though we mostly invest in pooled funds, by engaging on topics related to our values. This adds to our own portfolios’ impact and indirectly helps make us a more active asset owner.
Throughout 2022, we embarked on engagement plans for each investment team. All managers were selected for engagement except for: funds from which we were divesting; funds in liquidation and; private equity legacy funds. We completed nearly 100% of the engagement plans for all asset classes (98% for private equity) by year-end.
The table below highlights some examples of how we consider engagement across asset classes.
| Engagement examples | |
Equities | Our investment strategy is to invest in ESG leaders, so the majority of our managers are advanced in their policies and practices. We hold quarterly engagements with all our managers to learn from them and challenge them on portfolio companies and whether the team is fulfilling its sustainability objectives as best as possible which we track in our ESG and IMP scorecards. Moving forward, we hope to leverage our network to maximise our own learnings so we can implement this across Anthos. |
|---|---|
Fixed income | Emerging market debt is a notoriously tricky space to assess in terms of ESG due to a lack of data and the fact that bondholders are not company owners. That’s why we engaged with this manager as it made significant progress in terms of awareness and integration of ESG factors. Our expectations for the future are mostly on reporting the varying ESG risks, ESG potential, and momentum for the countries they invest in. |
Absolute return | For one of the equity market-neutral strategies we invest in, it is challenging to incorporate ESG factors into the investment process. That's because the manager takes buy and sell signals from a large, diverse group of investment analysts who are not employed by the manager but have agreements in place to share details of their research. This means the investment manager does not control the way ESG information is used by the analysts. We first suggested that the manager should create a restricted list of companies in which they will not invest, even if they receive research on them. This has been implemented by the manager in 2022. Our next suggestion is for the manager to purchase ESG data from one of the leading vendors and incorporate the data into their portfolio management tools. This would allow the manager to provide ESG scores for the portfolio and enhance reporting. |
Private equity | Within the private equity markets, those strategies with strong climate incorporation are still quite rare. That’s why we are excited to see one of our longstanding managers take the lead in integrating sustainability and ESG management practices into day-to-day operations within the firm. Our expectations for the future are to engage with the fund to share best practices both at the portfolio and company levels. |
Impact | This fund focuses on bottom-of-the-pyramid businesses in East and southeast Asia. Through our Limited Partner Advisory Committee (LPAC) involvement, we are able to engage in a highly proactive and formalised way. Two ways we engaged in 2022 were to help them formalise their negative impact assessment and to help them create case studies to prove their impact further. |
Real estate | Whilst this fund scores highly on our ESG scorecard, one of their key focus areas is on ESG data and decarbonisation in 2023. By using our scorecard as our key engagement tool, we hope to hold them to account on their plans for decarbonisation and hope to see positive improvement based on science-based and timebound targets. |
Indirect engagement via Sustainalytics
In addition to the engagement by the external managers we select, we aim to influence companies through the engagements provided by Sustainalytics. The three types of engagement align with our values and the ambition to lower the negative and increase the positive impact of our investment portfolios.
These engagements address companies that violate global standards, they aim to improve the risk profile of the companies in the portfolio and engage for a better impact in relevant thematic engagements. Anthos also provides the opportunity for its clients to directly support engagement letters to the non-responsive companies and its portfolio managers address these, where relevant, with the external managers that are invested directly in these companies.
Global Standards commitment
Results
157 companies engaged
71 of those in Anthos portfolios
Of the 71, business ethics, labour rights, human rights and environment were the top themes.
Global Standards commitment
Engagement with companies about the negative impact and possible or actual violations of the UN Global Compact standards and the thematic chapters of the OECD guidelines.
Material risk engagement
Results
359 companies engaged
180 of those in Anthos portfolios
Of those 180, carbon emissions measurement, product governance, ESG risk assessment and disclosure, and waste were the top themes.
Material risk engagement
Targeting high-risk companies on all ESG topics.
Thematic engagement programmes
Results
251 companies engaged
184 of those in Anthos portfolios
Of those 184, biodiversity and natural capital, SDGs, human rights and tomorrow’s board were the top themes.
Thematic engagement programmes
Aimed at improving the impact of companies through engagement and on specific themes. The six themes we focus on: future food supply, sustainable afforestation and financing and climate change, responsible cleantech, modern slavery, improving human rights, and human capital and the future of the labour process.
Share of companies engaged and types of topics
O
Topic
Business ethics
27%
Labour rights
13%
Human rights
51%
Environment
10%
O
Resolution
Resolved
112
Associated
14
Disengage
6
Engage
354
O
Progress
Engage
18%
Commitment to address issue(s)
14%
Strategy established
18%
Early implementation of strategy
30%
Implementation of strategy
16%
Comprehensive implementation
4%
Powered by Morningstar Sustainalytics, 2022.
Partnerships and alliances
Collaborations and partnerships are essential for driving positive social and environmental outcomes.
Anthos prioritises building effective partnerships where activities specifically help us to align our investment activities with our values. Through these partnerships, we conduct our policy engagement and therefore we make sure that this is aligned with our RI policy and values.
In 2022, a selection of those included:
Sustainable Financial Disclosure Regulation (SFDR)
In 2022, Anthos focused heavily on the implementation of SFDR level II requirements and translating our frameworks and processes into the language of the regulation.
The outcomes showed that our proprietary frameworks and processes already included a lot of the elements put forward by the SFDR regulation, but also showed us where the improvement areas are, going forward.
Anthos views this regulation as necessary and welcomes the high standards it puts in place in the financial industry. For fund-of-funds investors, the challenge remains to think about the most relevant and efficient ways to translate this regulation to the kind of investments we do. We believe that the value of the regulation is in improving the processes and improving the data flow from the real economy to investors.
We note that a lot of investment and alignment across teams is needed to make successful reporting to SFDR possible. Streamlining data collection and workstreams is a priority moving forward so that the SFDR does not become too burdensome on teams.
Find out more about the SFDR regulation and how Anthos complies on Anthos’ website.
Claire Dumont
Responsible Investment Officer
“As a fund of funds, we see the importance of transparency as it enables us to make informed decisions.
We recognise the need for collaboration within our industry to ensure the successful implementation of SFDR, even when it means stepping out of our comfort zones.
While guidance on implementing level II requirements hasn't always been readily available for fund-of-funds, we have been all hands on deck to adapt and improve our processes accordingly.
Moving forward, a challenge we anticipate is effectively translating these requirements for external investment funds outside of the EU.
Nonetheless, we remain committed to supporting them throughout this journey and working with them to determine the relevant information to track and report.”
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Our climate and human rights commitment
Sustainability
| Partnership or alliance | Activity and rationale |
| Institutional Investors Group on Climate Change (IIGCC) | IIGCC provides relevant working groups, policy engagement through consultations on the topic of Climate Change. We join these groups as needed to develop our views and contribute to the development of understanding how to implement for a fund of funds. |
|---|---|
| Dutch Climate Agreement | We signed the agreement to show our commitment and start the path towards Paris Agreement alignment. |
| Science Based Targets initiative (SBTi) | We took part in their private equity sector expert advisory group (2021) and started the process to sign up to the SBTi as a company together with our broader company ecosystem. |
| Clean, Renewable and Environmental Opportunities (CREO) Syndicate | In 2022, we took part in their thought leadership seminar to share our insights on how to invest for systemic change. |
| Carbon Disclosure Project (CDP) | We use their datasets, measurement methodologies, and joined their science-based target engagement campaigns. |
| Partnership for Carbon Accounting Financials (PCAF) | We are part of the working group for emerging market sovereign bonds. We also took part in the private equity working group with our sister company Bregal. |
Human dignity
| Partnership or alliance | Activity and rationale |
| United Nations’ Principles for Responsible investment (PRI) | Anthos has been a signatory since 2019. In 2022, we endorsed the human rights engagement initiative ‘Advance’ and joined asset-class specific working groups. |
|---|---|
| SHIFT | We partnered with them throughout 2022 to enhance our human rights approach. |
| Investor Alliance for Human Rights (investorsforhumanrights.org) | We joined this initiative to learn and align with other investors on the same path. We advised them for our human rights statement for example, next to SHIFT. |
Good corporate citizenship
| Partnership or alliance | Activity and rationale |
| SFDR working group organised by the Dutch Fund and Asset Management Association | We actively participate in the SFDR expert sessions and initiated an expert group for SFDR implementation for funds of funds. We also contribute via DUFAS in the industry relevant consultations regarding EU policy developments. |
|---|---|
| Impact Frontiers | Over 2022, we participated in a working group with other funds and fund-of-funds to share best practices in integrating the IMP norms in investing, determining investor contribution, sharing knowledge, etc. |
| Global Impact Investing Network (GIIN) | We took part in their annual conference, speaking about investing for systemic change. We are also members of their investor advisory council. |