Page 7 - DIY Investor Magazine | Issue 39
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The Trust has had a sustainable investment approach since 2021, but we are always looking at ways to improve and evolve. The parameters of sustainable investing shift over time – regulations change, assessment frameworks become more sophisticated and more information becomes available.
Recently, for example, we have been in discussions with the UK regulator over the Sustainability Disclosure Requirements, the UK’s flagship policy to drive corporate disclosure on sustainability metrics. Our approach is to screen out the companies facing the highest ESG risks identified based on their business practices, ESG performance and controversies, but to also look for companies that are sustainability leaders and improvers – the leaders of tomorrow.
Again, these change all the time, as companies improve
their reporting and disclosure, increase their receptiveness to engagement, or change their business models. At abrdn, we aim to increase our understanding of the various environmental, social and governance risks and opportunities all the time, with new tools and approaches to assess company performance. We have seen particular progress on net zero commitments, with a wealth of companies developing their initiatives.
More companies are certifying their progress against the independent Science-Based Targets Initiative (which defines and promotes best practice in science-based target setting). There are now a number of leading companies setting the standard.
Our role is to hold these companies to account on those targets. We have been developing a framework to assess the credibility of their targets and take a view on the probability that a company is able to decarbonise as it says. Our framework will look at the ambition of the original targets, their performance against them, and the strength of their strategy.
We aim to select the leaders and exclude those facing the highest risks.
Dunedin Income Growth Investment Trust has always held a small percentage of its assets in non-UK listed companies, believing it gives us more flexibility in our investment strategy. It can help open up new sectors, draw in new sources of growth and help diversify the portfolio. Overall, it enables us to create a richer and more diverse set of assets.
We recently increased the percentage we can invest in overseas companies by 5%. We have operated at the upper end of the Trust’s limits for some time and decided that having
an extra 5% would be useful. For the time being, we haven’t increased the amount we invest, but want to be able to consider a broader range of assets, particularly as we move into the dividend season.
In the Trust’s history, its overseas exposure has made a material difference to overall returns, contributing both income and capital growth. For us, it is about continuing to look where around the margins we can continue to make the trust better in a marketplace that is ever changing.
Companies selected for illustrative purposes only to demonstrate the investment management style described herein and not as an investment recommendation or indication of future performance.
Nov 2023
DIY Investor Magazine ·

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