ESG at TwentyFour – Integration and Engagement
At TwentyFour Asset Management, we believe Environmental, Social and Governance (ESG) factors can have an influence on the value of our investments and the results we achieve for our clients.
As a specialist fixed income investor our first priority is to ensure we are paid coupons and principal, and we see ESG as a risk to this goal like any other. We have now formalised our approach to these risks by integrating a robust ESG framework throughout the firm’s investment process across all strategies, with portfolio managers directly responsible and accountable for the analysis.
We recognise that ESG is, in truth, a complex and evolving subject within asset management. ESG itself remains a term that means different things to different people, and this has resulted in a range of definitions and approaches across the industry. However, at the highest level we feel there should be two main objectives; enhancing investor returns, and playing our part in promoting better societal and environmental outcomes.
To this end, our ESG integration model incorporates more nuanced factors such as controversies, engagement and momentum, which we feel best suits our culture as an active manager. Essentially, this means ESG analysis is now embedded into every stage of our investment process and is carried out directly by the portfolio managers responsible for each of our strategies. There is no reliance on third party analysts or a separate ESG team within the firm; ESG risks are considered alongside all others in TwentyFour’s existing relative value model, which is used daily by our investment teams.
As the industry evolves we have the platform to incorporate information and techniques where it makes sense for our investors, and as such we are happy to openly engage with our clients to discuss their ideas or requirements. What we will not do is engage in virtue signalling, or chasing badges and labels in order to impress with our ‘green’ credentials as we strongly believe that particular trend will reduce competition and at the margin will actually be negative for the advancement of responsible investing.
Our approach to ESG is first and foremost about trying to achieve the best outcomes for our clients, by deploying our ESG analysis to help enhance risk-adjusted returns and our focus on protecting capital at all times.