Image: The Caribbean Sea and Curacao RESPONSIBLE INVESTING ACTIVELY DESIGNING SOLUTIONS FOR THE FUTURE
OUR APPROACH NOT ALL RESPONSIBLE INVESTMENT SOLUTIONS ARE CREATED EQUAL Different organisations define responsible investment in different ways, creating considerable confusion in the market. Whether you are targeting responsible investment to align with stakeholder values, mitigating risk or complying with regulation, you want to choose a solution with real integrity and impact. At Russell Investments, we consider true responsible investing as a long-term approach that accounts for a wide range of complex environmental, social and governance factors. We believe that responsible investing and performance can be complementary. Our responsible investment opportunities aim to capture the right exposure without jeopardising return. OUR RESPONSIBLE INVESTING SOLUTIONS WILL HELP YOU TO: Ensure your investments are not unknowingly exposed to companies contrary to your organisation s values, such as those involved in the production or manufacture of cluster ammunitions, nuclear weapons and/or tobacco. Proactively invest in companies with good governance, transparency and a focus on sustainability. Generate consistent returns through an investment portfolio designed with your organisation s risk profile in mind. Provide key stakeholders (including shareholders, customers, unions, lobby groups, and funding bodies) with clear and comprehensive reports, demonstrating where your investments have resulted in positive sustainable practices and solutions. 1 Russell Investments Image: Farm machines harvesting corn for feed or ethanol. Russell Investments 2
OUR DIFFERENCE FULLY INTEGRATED SEARCHING BEYOND THE STANDARD ACTIVELY LOOKING TO THE FUTURE We believe responsible investing is intelligent investing. As a result, we have embedded responsible investment practices and ESG beliefs within our investment approach. This ensures that all our investment professionals are accountable for considering ESG factors within our funds and investment processes. To support our responsible investment efforts we have a virtual team of ESG specialists who are situated in offices across the globe. They are dedicated to championing the integration of ESG characteristics, evaluating the latest trends, performing research, and updating the business on changing client needs as the industry grapples with the complexity of this continually evolving area. WE BRING YOU A CAREFULLY CONSIDERED AND ROBUST APPROACH ALIGNED WITH YOUR NEEDS When designing responsible investment solutions, we go beyond standard exclusions to identify asset characteristics that are most relevant to you. Our solutions focus on exposures that are sustainable as well as material to your organisation s investment goals. This allows clients to both remove unwanted characteristics but also proactively support organisations positive contribution to research, innovation and leading best practices. Our approach captures a broad universe of measures to help protect our clients from unintended consequences. For example, within our decarbonisation strategy, we don t just remove all oil and gas companies based on their carbon footprint, but look deeper to understand how these companies support renewable energy. Only then, by understanding the complete picture, do we determine the value of the investment in our low carbon funds. As the focus of sustainability best practice shifts over time, we stay committed to adapting our funds to suit the changing global landscape. You can be sure your capital remains invested in the latest sustainability strategies, without continuously changing funds. OUR CURRENT RESEARCH AGENDA INCLUDES INVESTIGATING: Water intensity metrics in a broader definition of resource efficiency. The impact of transport-related greenhouse gas emissions on the carbon emission supply chain. We are also developing proprietary ESG scores, informed by the financially material sustainability metrics identified by the Sustainability Accounting Standards Board (SASB), and the subcomponents of ESG associated with the UN Sustainable Development Goals. Image: Solar panels in a farm in Abruzzo, Italy 3 Russell Investments Russell Investments 4
RUSSELL INVESTMENTS ACHIEVES A+ IN PRI 2017 ASSESSMENT. Russell Investments has received the highest possible grade of A+ in an annual assessment Image: Garden allotment in the UK RESPONSIBLE INVESTING IS INTELLIGENT INVESTING At Russell Investments we believe that a sound awareness of ESG OUR BELIEFS report from the United Nations-supported Principles for Responsible Investing (PRI) organization for each of the eight categories on which the firm reports data. This across-theboard glowing assessment covered the firm s factors and a robust process can help to deliver strong investment returns and meet objectives over the long-term. To reflect this, we have developed a set of four beliefs upon which our responsible investing practice is founded. These beliefs are as follows. focus on strategy & governance, direct active management, manager selection, manager appointment and manager monitoring. Launched in April 2006, the PRI is an investor initiative developed in partnership with the United Nations Environment Program Finance Initiative and the United Nations Global Compact. They are global best practices that challenge investors to acknowledge environmental, social, and corporate governance (ESG) issues. 1 ESG factors impact security prices. These factors can vary by company, industry, and region and their importance can vary through time. 2 A deep understanding of how ESG factors impact security prices is value-adding to a skillful investment process. 3 4 Embedding ESG considerations into a firm s culture and processes improves the likelihood of prolonged and successful investing. Active ownership of securities is an effective tool for improving investment outcomes. 5 Russell Investments Russell Investments 6
OUR CAPABILITIES RESPONSIBLE INVESTING PRACTICES EMBEDDED WITHIN ALL FUNDS Image: Crude oil tanker under cargo operations on Thailand shore station. Oil & Gas companies are amongst the highest contributors to renewable energy research. OUR RESPONSIBLE INVESTMENT APPROACH We earned our A+ rating from PRI by consistently applying our integrated investment approach: PORTFOLIO MANAGEMENT PROCESS INSIGHTS & RESEARCH ACTIVE OWNERSHIP & ENGAGEMENT INDUSTRY COLLABORATION We research and rank thousands of investment products on their ability to add value to portfolios, and we integrate an ESG score into the manager ranks. As such, all manager reviews include an assessment of how ESG is implemented within the investment managers policy, process, awareness and offering. We also regularly survey managers and calculate our funds ESG and carbon metrics for use by our analysts and portfolio managers. Our research actively looks towards the future. To understand how best to add long-value for clients, we evaluate manager products both on an individual basis and an industry basis. We advocate for best practices in specialised products such as lowcarbon portfolios, governance-driven strategies, greenbonds and impact investing. This helps to continually improve our own product offerings in these areas and offer best-in-class strategies. Russell Investments believe voting is a part of a share s value-creation process. We aim to improve the long-term investment outcomes of assets through our active stewardship and voting policy by promoting four core principles: transparency, accountability, independence and long-term value. As stewards, we monitor the effectiveness of company management on an ongoing basis. As share owners, we aim to exert influence on corporate governance, social and environmental practices We provide education throughout the year and are involved with advising governments and industry bodies across the world. As part of this we are signatories to the United Nationsbacked Principles for Responsible Investment and members of numerous industry associations (refer to Industry Commitments on back page). through our votes. 1 2 3 4 7 Russell Investments Russell Investments 8
INDUSTRY COMMITMENTS FIND OUT MORE A+ RATING IN ALL 8 MODULES PRI: Russell Investments became a signatory of the Principles for Responsible Investment (PRI) back in 2009. A+ rating in all eight modules that we were assessed against by the PRI in 2017. Access the full assessment at https://russellinvestments.com/-/media/files/emea/legal/2017- assessment-report-for-russell-investments.pdf For more information: Call Russell Investments on +44 (0)20 7024 6000 or visit russellinvestments.com CDP Climate Change: Russell Investments became a signatory of the Carbon Disclosure Project s (CDP) climate change program back in 2010. Institutional Investors Group on Climate Change (IIGCC): In 2010, Russell Investments, presented a carbon footprint methodology for an IIGCC-specified portfolio, with two other ESG data providers. IMPORTANT INFORMATION For Professional Clients Only. This material does not constitute an offer or invitation to anyone in any jurisdiction to invest in any Russell product or use any Russell services where such offer or invitation is not lawful, or in which the person making such offer or invitation is not qualified to do so, nor has it been prepared in connection with any such offer or invitation. Unless otherwise specified, Russell Investments is the source of all data. All information contained in this material is current at the time of issue and, to the best of our knowledge, accurate. Any opinion expressed is that of Russell Investments, is not a statement of fact, is subject to change and does not constitute advice. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested. Any past performance figures are not necessarily a guide to future performance. Issued by Russell Investments Limited. Company No. 02086230 and Russell Implementation Services Limited Company No. 3049880. Registered in England and Wales with registered office at: Rex House, 10 Regent Street, London SW1Y 4PE. Telephone +44 (0)20 7024 6000. Authorised and regulated by the Financial Conduct Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS. AMST-00388. First used: January 2018. Updated: December 2017 Expires: December 2018 9 Russell Investments