Global investment manager Schroders announced the completion of its process to integrate ESG factors into the decision-making across all investments that the firm manages, meaning that Schroders fund managers and analysts systematically consider ESG factors as part of their investment analysis. The company stated that having fully integrated ESG into the financial analysis of its clients’ investments, Schroders will next be looking to understand the impact of its investments and the risks they face as a result.

The announcement marks the completion of a goal set by Schroders in November 2019 to integrate ESG factors across all investments by the end of 2020. The firm utilized the Schroders’ Sustainability Accreditation, spanning ‘Screened’, ‘Integrated’, ‘Sustainable’ and ‘Impact’ categories, to enable clients to distinguish how ESG factors are considered across its products.

Stephanie Chang, Head of ESG Integration, Schroders said:

“At its heart, ESG integration means applying an additional lens to help us identify material opportunities and risks when investing. Understanding those economic impacts is increasingly vital to effective investment decisions in order to deliver long-term performance for our clients.

“That is why in 2019 we publicly committed to ensuring ESG factors were appropriately integrated into investment processes across all of the assets we manage and we are delighted to confirm we have achieved that milestone.

“Full ESG integration is a step on the journey we are taking with our clients. The challenges companies face from social and environmental pressures, and the opportunities these challenges create, are becoming more and more important as we consider the investment decisions we make on behalf of our clients.

“In the next phase, we will be looking to understand the impact of our clients’ investments and the financial risks and opportunities those impacts create, building on the platform we have developed within Schroders and expanding our sustainable product ranges.”

In order to reach its new impact goal, Schroders has developed a platform called impactIQ, encompassing the firm’s proprietary tools SustainEx, Carbon Value at Risk (VAR) and ThemeX. The platform aims to enables investors to understand the direct impact their investments are having on society and the environment.

Andy Howard, Global Head of Sustainable Investment, Schroders said:

“The evidence is consistently growing that sustainable investment and robust returns are not mutually exclusive; indeed the two are increasingly entwined.

“Companies that build businesses able to adapt to the intensifying social and environmental pressures they face can increase returns or reduce risks compared to those that don’t. Sustainability analysis, when integrated with more traditional methods of measuring a company’s prospects, can improve judgment and enhance performance.”