Generation IM Asia Fund (sub-fund of Generation IM Fund plc)

Section

Summary

No sustainable investment objective

This Fund promotes environmental or social characteristics, but does not have as its objective sustainable investment.

While the Fund makes no minimum % commitment to making sustainable investments as defined by SFDR, where the Fund does makes SFDR sustainable investments it will seek to ensure through pre-investment due diligence that such investments:

• do not significantly harm any of the other sustainable investment objectives set out under SFDR, including taking into account the Minimum PAI Indicators referred to in section (b) below,

• are appropriately aligned with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, and

• where relevant (for potentially EU taxonomy-aligned investments), do not significantly harm any of the other sustainable investment objectives set out under the relevant EU Taxonomy category.

Environmental or social characteristics of the financial product

The Fund promotes the following environmental or social characteristics:

• progress towards a sustainable world in which prosperity is shared broadly, in a society that achieves wellbeing for all, protects nature and preserves a habitable climate.

• to invest in high‐quality, sustainable businesses run by long‐term orientated management teams.

• to apply the investment process in a manner intended to move away from particular companies where sustainability risks are considered more prevalent.

• to engage with portfolio companies to provide guidance on issues of sustainability where it has insight and expertise and to nurture ambition with the intention of protecting and enhancing the value of portfolio investments.

The definition of these characteristics is a dynamic matter, not binding and has the potential to evolve.

Investment strategy

The Fund’s investment strategy integrates sustainability research within a rigorous fundamental equity analysis framework in a long-only concentrated portfolio of global equity securities. The binding elements of the investment strategy of the Fund are set out in ‘investment policy section’ of the Fund’s prospectus, which provides that every investment is assessed on detailed business quality and management quality criteria which considers, where relevant to a company, amongst other things:

• A fair deal: is the company delivering its products/services in a manner that drives long-term satisfaction of its customers without unfair methods of competition? 

• Environmental impact: is the company delivering products consistent with a sustainable environment?

• People: is the company compensating its people fairly and managing risks around talent?

• Sustainable consumption: is the company offering products and services consistent with sustainable levels of consumption?

• Data risk: is the company protecting sensitive data from attackers and ensuring customers’ privacy is respected?

• Regulatory regime change: does the company face any material risks from a change to the global geo-political or regulatory environment?

• Unsustainable customers: does the company offer a material amount of products to customers which belong to an unsustainable ecosystem?

Proportion of investments

Monitoring of environmental or social characteristics

The key sustainability indicators used to measure the outcome of the actions underlying the attainment of the environmental and social characteristics of the Fund are measured at the portfolio level:

• Carbon intensity, Scopes 1 & 2 (tCO2e/$m)

•  Carbon intensity, Scopes 1–3 (tCO2e/Eur m)

• SBTi target validated (portfolio weight %)

• SBTi committed but target not set (portfolio weight %)

• Implied temperature rise (Scopes 1–3, degrees Celsius)

• Gender – female Board % (weighted average)

• Gender – female executives % (weighted average)

• Independent Board (weighted average)

• Independent Chair or lead non-executive director (simple average)

• Independent compensation committee

These indicators are reviewed by Generation, reported to clients, and, where relevant, inform engagement with companies.

Methodologies for environmental or social characteristics

The social and environmental characteristics promoted by the Fund are broad, in line with Generation’s overarching vision and mission. Generation’s vision is a sustainable world in which prosperity is shared broadly, in a society that achieves wellbeing for all, protects nature and preserves a habitable climate. This is actioned by Generation’s mission, where they seek to pursue their vision with urgency by:

• Delivering long-term, attractive, risk-adjusted
investment returns and positive impact*

Advocating for the adoption of sustainable investing by the wider market.

It’s the firm’s long-term investment perspective fully integrates sustainability research within a rigorous framework of traditional financial analysis. However, the sustainability indicators used to measure the attainment of committed actions underlying the characteristics are a mixture of:

• raw data points (Carbon intensity, Scopes 1 & 2 (tCO2e/$m), Carbon intensity, Scopes 1–3 (tCO2e/Eur m), Gender – female Board % (weighted average), Gender – female executives % (weighted average), Independent Board (weighted average), Independent chair or lead non-executive director (simple average), Independent compensation committee (simple average)).

• forward-looking indicators (SBTi target validated (portfolio weight %), SBTi committed but target not set (portfolio weight %))

• third-party assessments of sustainability performance on discrete sustainability issues (Implied temperature rise (Scopes 1–3, degrees Celsius)).

* Generation seeks to deliver attractive returns and positive impact, but there can be no guarantee this goal will be achieved.

Data sources and processing

The data sources used to measure the attainment of committed actions underlying the environmental and social characteristics promoted by the Fund are currently:

• MSCI: Carbon intensity, Scopes 1 & 2 (tCO2e/$m), Carbon intensity, Scopes 1–3 (tCO2e/Eur m), Implied temperature rise (Scopes 1–3, degrees Celsius),
Independent Board (weighted average), Independent chair or lead non-executive director (simple average), Independent compensation committee (simple average),

• Denominator: Gender – female Board % (weighted average), Gender – female executives % (weighted average), 

• Science Based Targets initiative (SBTi) website: SBTi target validated (portfolio weight %), SBTi committed but target not set (portfolio weight %).

The Fund reserves the right to change data sources if they are considered to be at risk of being inaccurate and substitute them with revised data sources.

Limitations to methodologies and data

The breadth of Generation’s overarching mission makes it hard to quantify the outcomes of all aspects associated with the actions underlying the attainment of the environmental and social characteristics promoted by the Fund. Generation has selected indicators that focus particularly on the transition to net-zero emissions, decent wages, equity, diversity and inclusion, and good corporate governance . There remain significant gaps in corporate sustainability reporting, and a lack of relevant, comparable, reliable and publicly available sustainability data on companies. Sustainability (including PAI indicator) data often relies on the data collection and assessment efforts of third parties and delays in accessing disclosures or inaccuracies in the data supplied will be beyond Generation’s control. Even where data is available, its impact and/or interpretation may be disputed. This is particularly the case for sustainability indicators that draw on third-party assessments.

Due diligence

Due diligence carried out on underlying assets of the Fund and the associated internal and external controls on that due diligence, is set out in Generation’s approach to Sustainability in the Investment Process.

Engagement policies

Designated reference benchmark

We measure the investment performance of the Fund against an index as a reference benchmark. The Asisa Equity strategy’s reference benchmark is MSCI Asia ex-Japan Index.

Generation has not designated an index as a reference benchmark for the purposes of measuring the attainment of the environmental or social characteristics promoted by the Fund.