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RESPONSIBLE INVESTING


We believe that companies with strong governance Alignment with the UN Responsibleproducts and whose Sustainable Development Investing services Overview enhance social orGoals (SDGs) environmental goals should Investing in meaningfully outperform. Integrating Solutions Providers

02 04

ESG within the Investment Process

Contents

08 10

Active Ownership: Voting and Engagement Responsible Investing Team

12 14


Contents 02

Responsible Investing Overview

04

Investing in Solutions Providers

08

Alignment with the UN Sustainable Development Goals (SDGs)

10

Integrating ESG within the Investment Process

12

Active Ownership: Voting and Engagement

14

Responsible Investing Team

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Responsible Investing Overview KBIGI has a long-standing commitment to Responsible Investing going back to the early 1980s, when we started working with our clients to construct portfolios that exclude companies engaged in certain controversial activities.

We engage constructively with the management of companies through direct conversations, collaborative initiatives with other investors and industry groups where it is merited as well as active use of our proxy voting.

Over time, we have strengthened and deepened our approach to Responsible Investing to the extent that consideration of Environmental, Social and Governance (ESG) criteria is now a key factor in stock selection and fully integrated into all our investment decisions.

We are committed to sharing with our clients our insights on responsible investing and (importantly) to report to them on the ESG Impact of their investments. Sean Hawkshaw, CEO

We strongly believe that this leads to better long-term investment outcomes for our clients.

2009

2000

Launched our Water & Clean Energy Sustainable Equity strategies

1980s-90s Managing SRI portfolios on behalf of faith-based clients

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2007

Became a signatory to the United Nations Principles of Responsible Investing

2003

Launched our Global Equity strategies

Launched our Global Resource Solutions strategy

2008

Launched our Global Agribusiness strategy

2018

2016

Achieved A+ rating from the PRI for our ESG Equity methodology & governance

2014

Responsible Investing Committee

2017

Quantified portfolios’ contribution to the achievement of the UN’s Sustainable Development Goals (SDGs)

Launched our Sustainable Infrastructure strategy


Long-standing, firm-wide commitment to Responsible Investing

• 30 years’ experience with responsible institutional investors across Europe, Asia and North America. • Responsible Investing Committee and dedicated investment professionals ensure corporate commitment. • Stringent governance established through policy and procedures. • Exclude investments in companies engaged in the manufacture of controversial weapons.

Attaining Industry Leader status, through active industry collaboration

UK Stewardship Code

Active member since 2015.

Member of the Water Hub and Low Carbon/Clean Energy committees.

Member of this European-based group for investors active on climate change issues.

KBIGI funds awarded Eurosif SRI Transparency Code mark since 2017.

Active part including lead role on an engagement programme and member of the Ireland Steering Group.

A signatory for over 10 years. The PRI awarded KBI an A+ rating (the highest possible) for our approach to Responsible Investing for Equities. Member of the PRI’s Macroeconomic Risk Advisory Committee.

We are signatories to the UK Stewardship Code and were awarded “Tier 1” status by the Financial Reporting Council in the UK.

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Investing in Solutions Providers

For almost two decades we have recognised the significant problems associated with the exploding demand for food, water and clean energy driven primarily by population growth. And with a further two billion people expected on the planet by 2050, failure to act is not an option.1

We identify and invest in businesses tackling and solving these issues, companies which we term ‘solution providers’.

Increase Supply & Access

Improve & Assure Quality Decrease Demand & Waste

Build & Repair Infrastructure

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Water The Issue Water scarcity threatens economic development, political stability and public health. While the world’s capacity to respond is in doubt, our companies are at the forefront in providing solutions. Globally, over 45 million m3 of water are lost through leakage every day, which the World Bank estimates costs utilities around $14bn per annum.4

Every 90 seconds a child dies from a water-related disease.2

The Solutions Water Treatment & Reuse

Leak Detection

Our companies’ innovations provide significant environmental, social and economic benefits through treating and reusing wastewater. And despite the fact that it requires 10 times less energy than desalination, today only 2% of all water comes from a reused source.5

One innovation has already saved over 440bn litres of treated water by preventing an estimated 4,000 ‘leak events’. This leak detection system has covered 26,000kms of water infrastructure, reducing costs by a factor of 10 and delivering huge savings to municipalities and governments.6

Reduces Water Stress

Safe & Efficient Technology

Water demand to increase 40% by 20303

Reliable Water Supply

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Clean Energy The Issue Combatting global warming and air pollution has resulted in a huge increase in the demand for clean energy worldwide. However, our existing energy networks are old, increasingly unreliable and often unsuited to the variable nature of renewable energy supply. Creating a clean energy economy will require updating the world’s electrical grids and building the infrastructure to connect renewable energy facilities to areas of high power demand.

A record 157 gigawatts of renewable power was commissioned in 2017, far outstripping the net 70 gigawatts of fossil fuel generating capacity.7

The Solutions

<50%

In 41 countries, less than half the population has access to electricity8

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Grid Integration

Energy Storage

Our companies create the high voltage equipment and systems that enable network integration and the rollout of smart grid applications. One is already transmitting up to 6,400 MW of clean, renewable hydropower (thatâ&#x20AC;&#x2122;s more than enough electricity to supply all of Ireland) across 7000 km of grid with 93 percent efficiency.9

Surplus energy (such as that produced by wind turbines at night, when demand is low) can be stored and used at a later stage to level out peaks in energy demand. An Italian utility company is investing in energy storage capacity which offers offer great benefits in terms of grid balancing and reliability. That company is putting in place capacity storage agreements for a large California utility, with a capacity of 85MW, enough power to supply close to 50,000 homes.10


Agribusiness The Issue According to the UN Food and Agriculture Organization, one in nine of the global population (795m people) were suffering from chronic undernourishment in 2014-2016.11 This will be compounded going forward as we expect a 70% increase in demand for food by 2030.

98% of the worldâ&#x20AC;&#x2122;s hungry live in developing regions. Most of them live in Asia.12

The Solutions Professional Farming Farmland asset owners are leasing

the management of their farms to high-quality professional farmers, who through the usage of precision agriculture, modern technology and other farming techniques are delivering significantly enhanced production yields.

Food Transportation & Food Storage With up to 50% of produce wasted between farm and fork, efficient logistics are not only crucial to reducing post-harvest losses but also necessary for regions, countries and businesses to participate in the global economy, boost growth and improve livelihoods. We invest in owners and operators of such facilities and services.

50% Up to 50% of harvest wasted between farm and fork13

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Alignment with UN’s Sustainable Development Goals (SDGs)

What is “Impact”and why is it Important to Measure it? Impact is the measurable, beneficial social or environmental effect an investment generates alongside its financial return. However, one issue with beneficial impacts is that they are often hard to measure. For example, investing in food safety has a clear beneficial impact (preventing illness), but how material is the impact relative to the size of the investment, and/or to the size of the investment portfolio?

How We Measure Impact 8,673mwhr

total electricity is generated from a €10m investment in the KBIGI Energy Solutions strategy.14

17.8 billion cubic metres of wastewater per year treated by the companies we invest in.15 8

Our Natural Resources Strategies invest in companies addressing global shortages in clean and safe food, water and energy. So, it’s clear these strategies have social and environmental benefits, it is obviously “Impact” investing.

Challenges However, for investors ‘impact’ can be difficult to quantify. We simply can’t add the benefits of clean water to reduced carbon emissions or add safer food to increased food production.

Customised Methodology* Instead, we look at the total revenue of companies in our portfolios and allocate it to various business activities. We then calculate whether each activity makes a positive, neutral or negative contribution to achieving the UN SDGs.

Results Through weighting, we can then calculate what percentage of a portfolio’s revenue is positively or negatively contributing to achieving those goals. The results are displayed opposite, showing an astonishing 78.5% of revenue supporting SDG achievement.**

*Calculations are based on KBIGI’s own methodology and are not independently verified. **Global Resource Solutions strategy, as of December 2017.


What are the SDGs? In 2015, the UN adopted 17 Sustainable Development Goals (SDGs), a measurable set of social and economic targets to be achieved by 2030. They cover a range of issues like poverty, hunger, health, education, climate change, gender equality, water, energy, sanitation, environment and social justice.

Global Resource Solutions Strategy and SDGs Results

Negative Neutral

78.5%

Positive Revenue supporting SDG achievement Positive

20% 15% 10% 5% 0 -5%

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ESG Integration Natural Resources Our Natural Resources strategies use a proprietary, four-factor valuation model, two of which are ESG factors: Environmental and Social: Does the company enhance society’s environmental and/or social/sustainable goals?

Governance: Do management sufficiently represent the interests of shareholders, particularly minority shareholders? If not, can this be changed?

Each of these factors is given a score, which feeds into the investment process, directly influencing whether or not a company will be included in the portfolio, and if so, what size of investment we make.

“The ESG performance of companies is a key factor in our investment process”.

Global Equity Our Global Equity strategies have a strong emphasis on the Social and Governance elements of sustainable investing, both of which we believe to be long-term sources of alpha and are embedded into our investment thesis. Our research also shows that high quality companies, with high payout commitments, demonstrate a higher level of corporate governance. Simply put, we believe that shareholder (rather than management) interests are given a higher priority when compared to low or non-dividend payers. More broadly, we explicitly incorporate ESG scores within the investment process.

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During portfolio construction, we target superior ESG scores versus the benchmark. ESG is one of the key factors that we use to rank the attractiveness of a company alongside our other favoured metrics. This is consistent across all our Global Equity strategies. The graphic opposite shows the ESG characteristics that result from this investment process. In the bar chart, for each item the ESG score of our Global Equity portfolio is compared to that of the benchmark, using the methodology of Style Research. As a general rule of thumb, a value of more than +1.0 is “significant” while a value of more than 2.0 is “very significant”.


Company Commitment to ESG

Company Sustainability Disclosure & Reporting

Climate Change

Company Location & Operations

Financial System & Accouting

Key Issues17

Environmental Opportunites

Board, Ownership & Pay

Governance Corruption & Instability

Raw Material Sourcing

Natural Capital

Environmental Business Ethics

Social Water Stress & Land use

Social Opportunities

Product Safety & Quality

Pollution & Waste

Controversial Sourcing

Access to Water, Energy & Food

Health & Safety

Labour Management & Supply Chain Standards

ESG Scores Global Equity ESG Strategy 6 5 4 3 2 1 0 ESG Overall

ESG Social

ESG Human Capital

ESG Natural Capital

ESG Pollution & Waste

ESG Envir

ESG Climate Change

ESG Corp Behaviour

ESG Governance

-1

ESG Characteristics Source: KBI Global Investors (using representative strategy data) Style Research, MSCI World, 31st March 2018, in EUR.

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Active Ownership Voting and Engagement We take a stewardship role on behalf of our clients

Engagement Type

Engagement We engage with companies for a variety of reasons, but we particularly focus on those who do not publish adequate environmental information and those who are ‘laggards’ with regard to addressing climate change issues, as well as companies where we have strong concerns about ESG performance. In 2017, we engaged directly with 18 companies, as well as collaborated with various industry bodies on 9 issues.

33%

19%

Example of Direct Corporate Engagement We engaged with Tyson foods, a multinational US food company on the use of antibiotics in farm animals. While they aim to stop using antibiotics for their own production, we further engaged with them to extend the policy to their suppliers. We also voted ‘for’ the shareholder proposal for the company to ‘implement a water quality stewardship policy’ in order to address issues like runoff and water quality.

Example of Collaborative Engagement In 2017, our collaborative engagement efforts were mainly, though not exclusively, focused on climate change issues. One example was working with the CERES Investor Network and the IIGCC, where in 2017 we pre-declared our intention to vote against Exxon Mobil management on a climate change resolution at their 2017 AGM, resulting in a milestone win for Investors.

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Governance

Social

Environmental

48%


Proxy Voting

Our policy is to vote all securities that we are entitled to vote on, on behalf of our client portfolios. In 2017, we voted at 1029 meetings worldwide for all our strategies, voting against management in 7.9% of all proposals, and on 32% of all shareholder proposals.

4452

3759

Europe

North America

478

Middle East & Africa

350

2778 Asia

213 Pacific

Latin America

47

Countries

1029 Meetings

12030 Proposals / Voting items

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Responsible Investing Team

Jeanne Collins ESG Analyst

Eoin Fahy Head of Responsible Investing

We have established a high-level Responsible Investing Committee, co-chaired by two of the firm’s executive directors (Chief Investment Officer, Noel O’Halloran and Head of Business Development & Client Services, Geoff Blake). Other members include our Head of Responsible Investing, our Head of Compliance and various senior product specialists responsible for differing aspects of Responsible Investing.

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Experience (years)

In firm (years)

Chief Investment Officer

30

26

Eoin Fahy

Head of Responsible Investing

29

29

Geoff Blake

Head of Business Development

23

23

Derval Murray

Head of Compliance & Risk

19

17

Michael Gray

Head of Middle Office

27

27

Niall Murphy

Senior Vice President – Business Development & Client Services, Europe

26

26

William Boardman

Senior Vice President – Business Development & Client Services, North America

24

04

Peter Fox

Senior Vice President – Business Development & Client Services, North America

19

19

Jeanne Collins

ESG Analyst

17

03

James Collery

Senior Portfolio Manager – ESG Strategies

17

17

Key Staff

Title

Noel O’Halloran

23

average years of industry experience


At KBI Global Investors we have a broad range of products available to investors seeking solutions incorporating ESG, Sustainability or Impact. We are currently working with some of the largest asset owners in the world, delivering solutions to their specific investment needs.

Our Range of equity strategies: KBI Global Water KBI Global Resource Solutions KBI Global Sustainable Infrastructure KBI Global Agribusiness

Many global institutional consultants have also positively rated our products, providing a strong endorsement of our investment expertise for our clients.

KBI Global Energy Solutions

If you are looking for a broad global equity strategy, one that fully integrates ESG, or a concentrated equity strategy, delivering measurable impact investments, then why not get in touch with KBIGI, a firm committed to active engagement and with responsible investing at its core. You can reach us at info@kbigi.com

KBI North America

KBI Global Developed KBI Emerging Market KBI Pan European KBI Global Small Cap KBI Global Climate Change

Investing in the Community We invest in the local community and are committed to a number of socially motivated endeavours in and around the IFSC in Dublin. Whilst we can and do offer our chosen charities financial support, we have always believed active participation with these organisations to be more important than simply ‘writing a cheque’. We run an ‘Employee Volunteering Programme’ whereby staff members may commit a portion of their work hours to volunteer with local charities. We have always invested in young people, and in addition to our Employee Volunteering Programme, every year we offer work experience and internship opportunities to those interested in an investment-orientated career.

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Disclaimers KBI Global Investors Ltd is regulated by the Central Bank of Ireland and subject to limited regulation by the Financial Conduct Authority in the UK. Details about the extent of our regulation by the Financial Conduct Authority are available from us on request. KBI Global Investors (North America) Ltd is a registered investment adviser with the SEC and regulated by the Central Bank of Ireland. KBI Global Investors (North America) Ltd is a wholly-owned subsidiary of KBI Global Investors Ltd. ‘KBI Global Investors’ or ‘KBIGI’ refer to KBI Global Investors Ltd and KBI Global Investors (North America) Ltd. IMPORTANT RISK DISCLOSURE STATEMENT: Under MiFID II this is deemed marketing material and should not be regarded as investment research. This material is provided for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to purchase any security, product or service including any group trust or fund managed by KBI Global Investors. The information contained herein does not set forth all of the risks associated with this strategy, and is qualified in its entirety by, and subject to, the information contained in other applicable disclosure documents relating to such a strategy. KBI Global Investors’ investment products, like all investments, involve the risk of loss and may not be suitable for all investors, especially those who are unable to sustain a loss of their investment. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS This introductory material may not be reproduced or distributed, in whole or in part, without the express prior written consent of KBI Global Investors. The information contained in this introductory material has not been filed with, reviewed by or approved by any regulatory authority or self-regulatory authority and recipients are advised to consult with their own independent advisors, including tax advisors, regarding the products and services described therein. The views expressed are those of KBI Global Investors and should not be construed as investment advice. We do not represent that this information is accurate or complete and it should not be relied upon as such. Opinions expressed herein are subject to change without notice. The products mentioned in this Document may not be eligible for sale in some states or countries, nor suitable for all types of investors. Past performance may not be a reliable guide to future performance and the value of investments may fall as well as

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rise. Investments denominated in foreign currencies are subject to changes in exchange rates that may have an adverse effect on the value, price or income of the product. Income generated from an investment may fluctuate in accordance with market conditions and taxation arrangements. In some tables and charts, due to rounding, the sum of the individual components may not appear to be equal to the stated total(s). Additional information will be provided upon request. USA/CANADA SPECIFIC: Information about indices is provided to allow for comparison of the performance of the Adviser to that of certain well-known and widely recognized indices. There is no representation that such index is an appropriate benchmark for such comparison. You cannot invest directly in an index, which also does not take into account trading commissions and costs. The volatility of the indices may be materially different from that of the strategy. In addition, the strategy’s holdings may differ substantially from the securities that comprise the indices shown. All MSCI data is provided “as is”. In no event shall MSCI, its affiliates, or any MSCI data provider have any liability of any kind in connection with the MSCI data. No further distribution or dissemination of the MSCI data is permitted without MSCI’s prior express written consent. MSCI World: The MSCI World index covers more than 1,600 securities across large and mid-cap size segments and across style and sector segments in 23 developed markets. Stocks mentioned in this document may or may not be held in this strategy at this time. Any projections, market outlooks or estimates in this document are forward-looking statements and are based upon certain assumptions. Other events which were not taken into account may occur and may significantly affect the returns or performance of the strategy. Any projections, outlooks or assumptions should not be construed to be indicative of the actual events which will occur. Discussions of market conditions, market high/lows, objectives, strategies, styles, positions, and similar information set forth herein is specifically subject to change if market conditions change, or if KBIGI believes, in its discretion, that investors returns can better be achieved by such changes and/or modification. Style descriptions, market movements over time and similar items are meant to be illustrative, and may not represent all market information over the period discussed. Form ADV Part 1 and Part 2 are available on request.


AUSTRALIA SPECIFIC: KBI Global Investors (North America) Ltd is exempt from the requirement to hold an Australian Financial Services licence in respect of the financial services it provides to wholesale investors in Australia and is regulated by both the Central Bank of Ireland and the Securities and Exchange Commission of the US under US laws which differ from Australian laws. Any services provided in Australia by KBI Global Investors Ltd or other affiliates will be provided by the relevant entity as representative of KBI Global Investors (North America) Ltd. This material and any offer of investments is intended for and can only be provided and made to persons who are regarded as wholesale clients for the purposes of the Corporations Act of Australia and must not be made available or passed on to persons who are regarded as retail investors. It may not be reproduced or distributed, in whole or in part, without the express prior written consent of KBI Global Investors (North America) Ltd. The information contained in this introductory material has not been filed with, reviewed by or approved by any Australian or United States regulatory authority or self-regulatory authority and recipients are advised to consult with their own independent advisors, including tax advisors, regarding the products and services described therein. PRINCIPLES FOR RESPONSIBLE INVESTING 2017 ASSESSMENT: Signatories of the PRI are assessed against a range of Responsible Investing indicators within each module. KBI Global Investors was awarded an A+ rating for all modules relevant to equity investors, i.e. Strategy and Governance, Listed Equity – Incorporation, and Listed Equity – Active Ownership. KBIGI’s Transparency Report, reporting the data on which the Assessment was made, is published at this link: https://reporting.unpri.org/ surveys/PRI-Reporting-Framework-2016/4940910f-b725-433e84ca-573cb8533111/79894dbc337a40828d895f9402aa63de/ html/2/?lang=&a=1 The methodology of assessment is detailed at this link: https://www.unpri.org/download_report/19935. The full Assessment Report is available to clients on request. EUROPEAN SRI TRANSPARENCY LOGO: The European SRI Transparency logo signifies that KBI Global Investors commits to provide accurate, adequate and timely information to enable stakeholders, in particular consumers, to understand the Sustainable Responsible Investment (SRI) policies and practices relating to the strategy. Detailed information about the European

SRI Transparency Code can be found on www.eurosif.org, and information of the SRI policies and practices of the KBI Water Strategy can be found at www.kbiglobalinvestors.com. The Transparency Code are managed by Eurosif, an independent organisation. The European SRI Transparency Logo reflects the fund manager’s commitment as detailed above and should not be taken as an endorsement of any particular company, organisation or individual. UN Sustainable Development Goals (SDGs).KBI Global Investors supports the SDGs. The use of this image is for illustrative purposes only and is not intended to promote KBIGI products or services.

Sources

1. http://www.un.org/sustainabledevelopment/blog/2017/06/ world-population-projected-to-reach-9-8-billion-in-2050-and11-2-billion-in-2100-says-un/ 2. https://water.org/our-impact/water-crisis/ 3. McKinsey Global Institute. November 2011 4. http://www.waterintelligence.co.uk/water-facts/ 5. https://waterstories.nestle-waters.com/environment/ how-to-better-reuse-wastewater/ 6. Pure Technologies November 2016 Investor Presentation. 7. http://fs-unep-centre.org/publications/global-trends-renewable-energy-investment-report-2018 8. https://data.worldbank.org/indicator/EG.ELC.ACCS.ZS 9. http://www04.abb.com/global/CNABB/CNABB050.NSF!OpenDatabase&db=/global/cnabb/cnabb054.nsf&v=BF6&e=us&url=/global/seitp/seitp202.nsf/0/88EFE068393C8F0A4825782200361E1A!OpenDocument 10. https://en.wikipedia.org/wiki/Domestic_energy_consumption https://www.enel.com/media/press/d/2017/12/enel-signs-85mw-of-capacity-storage-agreements-in-us-with-pacific-gasand-electric 11. http://www.fao.org/3/a-i4646e.pdf 12. https://www.mercycorps.org/articles/quick-facts-what-youneed-know-about-global-hunger 13. http://blogs.worldbank.org/transport/comment/reply/672 14. KBI Global Investors. Calculations are based on KBIGI’s own methodology and are not independently verified. 15. KBI Global Investors. Calculations are based on KBIGI’s own methodology and are not independently verified.

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