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ESG at Nutshell
When we started Nutshell we wanted to do things differently by creating a top-tier global equity strategy within an ethical framework.
To achieve this, we analyse the environmental, social and governance (ESG) behaviours of individual companies and put this at the heart of our investment process.
Not only is this the right thing to do, but research shows companies with better ESG considerations tend to have higher profit margins and more stable returns.
Investing in high-scoring ESG companies can therefore make both ethical and financial sense.
How we do it
At the outset, we exclude companies involved in controversial activities and sectors like fossil fuels, weapons and gambling. Then we run our financial analysis to reduce our investible universe down from around 10,000 companies to 300.
We use third-party ESG ratings of companies from independent providers. This helps us rank the companies that we look at in terms of their ESG impact.
Next, our in-depth discretionary analysis of a company includes a further examination of a company’s ESG credentials, which may also result in a discretionary adjustment to its attractiveness.
Finally, we retain the ultimate discretion to exclude a company if we still feel uncomfortable with it. This happened in October 2020 with a UK online retailer, and we did not hesitate to part ways with it until it had improved its practices.
The result is the Nutshell Growth Fund, a high-conviction portfolio of 25-35 outstanding companies – from both a financial and an ethical perspective.
ESG ratings consider:
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A company’s environmental impact through its use of energy, carbon footprint, and impact on wildlife.
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Social criteria, including a company’s treatment of its employees, diversity, and gender equality.
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Companies’ governance – their investment and accounting practices, ownership structures, and management accountability.
Engagement
To achieve positive change, we need to work together.
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We are signatories to the UN’s Principles for Responsible Investment, a commitment to incorporate and promote ESG issues in investment.
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We have joined the Net Zero Asset Managers Race to Zero Initiative, supporting the goal of net zero greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5 degrees Celsius.
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We adhere to the UN’s Sustainable Development Goals, looking to promote a cleaner, fairer and more responsible world
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The Sustainable Finance Development Regulation is a set of rules which aims to make the sustainability profile of funds more easily comparable through defined metrics for assessing the ESG outcomes of the investment process. An Article 8 fund is, “a Fund which promotes, among other characteristics, environmental or social characteristics, or a combination of those characteristics, provided that the companies in which the investments are made follow good governance practices”. Our Fund is an SFDR8 Fund.
Awards
On 31st May 2021 The Nutshell Growth Fund was awarded Five Globes (maximum points) by Morningstar for its sustainability credentials, putting it in the top 1% relative to its peers.