Why is sustainable investing important?

We believe that sustainable investment factors can have a material impact on investment outcomes and should be integrated throughout the investment process. We also think good stewardship can create and preserve value for companies and markets. This is becoming increasingly important as investors are becoming more aware of how their investments and savings can impact the environment and wider society.

Our approach to sustainable investing​

Consistent with the overarching aim of IMX, we take an approach to sustainable investing that helps advisers align their clients' financial plans with their life goals.

To achieve this, we employ a range of sustainable investment approaches that are factored into the design of all our portfolios.​

See our sustainable investing framework for how we apply these approaches across our investment process. 

Why does stewardship matter?

One of the common criticisms levied at low-cost index investing is that funds will hold undesirable stocks or bonds from an ESG perspective.

We believe that through effective stewardship, fund managers can positively impact the direction of a company. This is especially true in equities where through owning a proportion of a company, our fund managers can engage with companies and express approval or disapproval on ESG issues through proxy voting.​

We currently allocate to a number of Legal & General Investment Management (LGIM) funds across our portfolios which demonstrates our approach.​

This selection was influenced by LGIM's strong track record in stewardship, where they have effectively engaged with companies they invest in to deliver positive change. For example, in a report by InfluenceMap*, LGIM are in the highest rated band of the world's 30 largest asset manager groups for engagement with companies on climate.​

An example of LGIM’s engagement is where they influenced BP to announce a strategy consistent with the Paris Agreement on climate change. We’ve included two of LGIM’s future world funds in our portfolios which enable us to access desired investment factor exposure while also investing in companies that are less carbon-intensive or earn green revenues.

*Source: InfluenceMap report, "Asset Managers and Climate Change 2021".

How do we monitor and adapt our ESG approach?

As with IMX as a whole, our sustainable investing approach is overseen by our investment committee. In addition, our investment consultant Hymans Robertson provides manager selection advice and monitoring inline with our sustainable investing framework. This includes sustainability metrics (such as a fund’s weighted average carbon intensity) for funds in our portfolios, monitoring of fund manager voting records and engagement with the companies they invest in.​

We're also aware that sustainable investing is a rapidly evolving sector and we'll be active in updating our portfolio holdings and approach as the products and demands of the sector evolve.

Measuring sustainability​

In summary…

Past performance is not a reliable guide to future performance. The value of an investment can go down as well as up and may be less than the amount(s) paid in.