Fisher Investments believes ESG investors are best served by an investment process that considers both top-down and bottom-up factors. Integrating ESG analysis at the country, sector and stock levels consistent with clients’ investment goals and ESG policies maximises the likelihood of achieving desired performance and improving environmental and social conditions worldwide.
Fisher Investments (FI) considers environmental, social and governance (ESG) factors throughout the investment process. Additionally, FI regularly screens and tailors the investment approach for separately managed accounts depending on the particular guidelines mandated by the client.
FI’s Securities Analysts perform fundamental research on prospective investments to identify securities with strategic attributes consistent with the firm’s top-down views and competitive advantages relative to their defined peer group. The fundamental research process involves reviewing and evaluating a comprehensive set of qualitative and quantitative data, including ESG factors, prior to purchasing a security. Factors considered in portfolios include, but are not limited to: shareholder concentration, corporate stewardship, environmental opportunities & liabilities, and human or labour rights controversies. Generally, FI would choose not to invest in companies when, in its opinion, security level issues: (i) violate a client mandated ESG policy or (ii) present an inordinate risk to a company’s operational or financial performance or (iii) appear to present undue headline risk to share price performance.
Please see FI’s ESG Policy Statement for additional information.
As of 31/03/2022 we had over $19 billion USD in our ESG/SRI asset under management.
In accordance with Fisher Investments Ireland Limited’s (FII) shareholder engagement policy, please review the proxy voting reports provided on this page for the annual disclosure on how such policy has been implemented for the previous year. As noted in such policy, the proxy voting reports only include data for FII’s clients who have authorized and directed FII to vote proxies. Only certain Fisher Investments Institutional Group clients have given FII such authorization and direction. Therefore, there is no proxy voting report (and therefore no annual disclosure under FII’s shareholder engagement policy) for non-institutional clients of FII.
To comply with the Sustainable Finance Disclosure Regulation (Regulation EU/2019/2088) as amended (“SFDR”), Fisher Investments Ireland Limited (“FII”) has provided the below disclosure describing various policies related to sustainability and environmental, social and governance (“ESG”) factors, as well as information on ESG oriented strategies FII has available to institutional clients. Because FII delegates its portfolio management services to its parent company, Fisher Asset Management, LLC, doing business as Fisher Investments (“FI”), subject to FII’s oversight, such policies and strategies are implemented by FI, but apply to FII’s services provided to FII’s institutional clients.
If you are a high net worth private client of FII, please go to the following website to find FII’s SFDR disclosure relevant to you: https://www.fisherinvestments.com/en-ie/shareholder-engagement-and-sfdr-disclosures.
FI generally evaluates and integrates Sustainability Risks and ESG factors at multiple stages throughout the investment process. “Sustainability Risk” is defined by SFDR as an environmental, social or governance event or condition that, if it occurs, could cause a negative material impact on the value of the investment.
Top-Down Investment Process
Sustainability Risks and ESG factors are among the many drivers considered by FI’s Capital Markets Analysts and FI’s Investment Policy Committee (“IPC”) when developing country, sector and thematic preferences. Environmental regulation, social policy, economic and market reforms, labour, and human rights are among the ESG factors assessed when determining country and sector/industry allocations and shaping an initial prospect list of portfolio positions.
FI’s IPC, with the assistance of FI’s Securities and Capital Markets Analysts, determines the materiality of the ESG considerations based on the exposure among publicly-traded companies in these categories. Higher materiality could imply larger ESG-related risks or opportunities, and may influence sector and country weight preferences as well as individual stock selection. The investment strategy and positioning reflects FI’s outlook over a 12-18 month horizon.
Bottom-Up Investment Process
FI’s Securities Analysts perform fundamental research on prospective investments to identify securities with strategic attributes consistent with FI’s top-down views and competitive advantages relative to their defined peer group. The fundamental research process involves reviewing and evaluating a comprehensive set of qualitative and quantitative data, including ESG factors, prior to purchasing a security. Factors considered in portfolios include, but are not limited to: shareholder concentration, corporate stewardship, environmental opportunities & liabilities, and human or labour rights controversies. FI would choose not to invest in companies when, in its opinion, security level ESG issues: (i) violate a client mandated ESG policy, (ii) present an inordinate risk to a company’s operational or financial performance or (iii) appear to present undue headline risk to share price performance.
FI considers principal adverse impacts of its investment decisions on Sustainability Factors. “Sustainability Factors” as defined by SFDR means environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery matters.
Description of Principal Adverse Sustainability Impacts
FI considers many indicators when assessing adverse sustainability impacts within the investment decision-making process. FI’s IPC, with the assistance of FI’s Securities and Capital Markets Analysts, determines the materiality of adverse sustainability impacts when developing country, sector and security preferences. FI’s investment strategy and positioning reflects FI’s outlook over the next 12-18 months. Determinations on the materiality of ESG factors by FI’s IPC are generally assessed over this same timeframe.
Further, this fundamental research process involves reviewing and evaluating qualitative and quantitative sustainability-impact data prior to purchasing a security. Factors considered in portfolios include, but are not limited to: shareholder concentration, corporate stewardship, environmental opportunities & liabilities, and human or labour rights controversies. FI would choose not to invest in companies when, in its opinion, security level ESG issues: (i) violate a client mandated ESG policy, (ii) present an inordinate risk to a company’s operational or financial performance or (iii) appear to present undue headline risk to share price performance.
Specific to FII’s strategies that promote environmental or social characteristics (such as FII’s ESG-oriented strategies), which for SFDR purposes are considered to be an Article 8 “financial product” (“Light Green Strategies”), and FII’s strategies that include one or more sustainable investment objectives (“Dark Green Strategies”), additional adverse sustainability indicators are used as screens to increase minimum ESG standards, ensure compliance with global norms, and to ensure investments do no significant harm.
Description of Policies to Identify and Prioritise Principal Adverse Sustainability Impacts
FI’s IPC is responsible for adherence to FI’s sustainability-related policies and activities to identify and prioritise principle adverse sustainability impacts. FI uses various databases and information vendors to aid and augment its proprietary internal ESG research and to identify and measure principle adverse sustainability indicators. These sources include MSCI ESG Research (including ESG Ratings, Business Involvement Screening, Controversies & Global Norms, Sustainable Impact Metrics, and Carbon Metrics), Morningstar/Sustainalytics ESG Risk Ratings, Morningstar Sustainability Fund Ratings, Bloomberg, ISS, and FactSet. Prioritisation of principal adverse sustainability impacts is made by FI’s IPC, with the assistance of FI’s Securities and Capital Markets Analysts, based on an assessment of the materiality of adverse sustainability impacts over FI’s outlook period (next 12-18 months).
FI is an active investment manager on behalf of its and its affiliates’ clients that engages with companies as part of its fundamental analysis and to clarify or express concerns over potential ESG issues at the firm or industry level.
FI holds meetings with company management as necessary to discuss pertinent issues FI feels are critical to analysing the company or better understanding peers or relevant industry factors. Information uncovered during engagement as part of FI’s fundamental analysis can influence its investment decisions and stock determinations. Depending on the issue, FI may engage in additional meetings with company management, intervene in concert with other institutions on the issue or meet with appropriate members of a company’s board. FI commonly engages with company management on proxy voting issues, particularly when Institutional Shareholder Services, Inc. (“ISS”) is in disagreement with company management. To encourage a real-time, active engagement dialogue, FI prefers either a phone call or in-person meeting with the company.
FI has dedicated staff that works to identify ESG risks and opportunities and conducts engagement with companies. FI utilises a combination of qualitative and quantitative information to generate a focus list of potential ESG engagement opportunities. The list is further refined based on bottom up company research. FI may also conduct shareholder engagement upon request of FII’s institutional clients. As part of the engagement process, FI reviews a wide range of materials, which may include: analysis from FI’s ESG research providers, company financial and sustainability disclosures, research from responsible investment network partners and relevant NGO reports.
A more complete description of these activities can be found in FII’s SRD II Shareholder Engagement Policy, which can be found here: https://www.fisherinvestments.com/en-ie/shareholder-engagement-and-sfdr-disclosures.
References to International Standards
FI became a signatory to the PRI (Principles for Responsible Investment) in 2014. FI provided a response to the UK Financial Reporting Council Stewardship Code in 2018, and the same year Fisher Investments Japan, a wholly-owned subsidiary of FI, became a signatory of the Japanese Stewardship Code. FI also participates in the UN Global Compact and is a signatory to the Climate Action 100+, the Task Force on Climate-related Financial Disclosures (TCFD) and the CDP.
FII makes available to its institutional clients Light Green Strategies and Dark Green Strategies. Further information about these strategies can be found in the links below.
As part of FII’s offered services, an institutional client may place one or more guideline restrictions on its portfolio that may promote an environmental or social characteristic (“ESG restrictions”) in order to tailor the portfolio to its ESG preferences. In such circumstances, even though such institutional client may not have a Light Green Strategy or Dark Green Strategy implemented in its portfolio, the application of ESG restrictions will treat its portfolio as a “financial product” that promotes an environmental or social characteristic.
Unfortunately, because restrictions applied to each institutional client’s portfolio are unique to an institutional client’s preferences, FII is unable to provide SFDR Article 10 disclosure on each institutional client’s portfolio that includes ESG restrictions. However, if an institutional client has placed ESG restrictions on its portfolio, FI will utilize internal resources or external data providers (such as MSCI ESG Research) to identify securities that meet the client’s restriction preferences. After a client makes a specific request in writing, restrictions are placed and monitored on a best efforts basis to ensure restricted securities are not purchased in client portfolios.
Unless an institutional client has a Light Green Strategy or Dark Green Strategy implemented in its portfolio, (i) the only environmental or social characteristic promoted in its portfolio will be the guideline restriction requested by the institutional client and (ii) the benchmark index by which such strategy’s performance is measured against will not be consistent with an institutional client’s ESG restrictions. However, such institutional client will receive information in regarding the benchmark index and information on where to find the methodology for such benchmark index in its investment management agreement with FII.
Beginning in 2022, FII’s institutional clients with portfolios that implement a Light Green Strategy will receive in periodic reporting delivered to them a description for how any environmental or social characteristics promoted in the ESG Strategies were met. For FII’s institutional clients which portfolios that implement a Dark Green Strategy, such reporting will include disclosure comparing the overall sustainability-related impact of such Dark Green Strategy with the impacts of the benchmark index and a broad market index using applicable sustainability indicators. Such description will also be made available on this webpage.
The EU’s Regulation on the Establishment of a Framework to Facilitate Sustainable Investment (Regulation EU/2020/852) (the “Taxonomy Regulation”) establishes a framework to facilitate sustainable investment and sets out harmonised criteria for determining whether an economic activity qualifies as environmentally sustainable. An investment would be considered as environmentally sustainable where its economic activity (i) contributes significantly to one or more of the environmental objectives included in the Taxonomy Regulation (which includes (a) climate change mitigation, (b) climate change adaptation, (c) the sustainable use and protection of water and marine resources, (d) the transition to a circular economy, (e) pollution prevention and control and (f) the protection and restoration of biodiversity and ecosystems), (ii) does not significantly harm any of the environmental objectives included in the Taxonomy Regulation, (iii) is carried out in compliance with minimum safeguards (as prescribed in the Taxonomy Regulation) and (iv) complies with technical screening criteria established by the European Commission. The Taxonomy Regulation requires FII to provide transparency on how the Light Green Strategies and Dark Green Strategies contribute to environmentally sustainable economic activities.
The Taxonomy Regulation disclosures for the Light Green Strategies and Dark Green Strategies can be found in the links above. For all other strategies that FII offers that are not Light Green Strategies or Dark Green Strategies, the investments included in such strategies do not take into account the EU criteria for environmentally sustainable economic activities.
It is noted that the regulatory technical standards (“RTS”) to specify the details of the content and presentation of the information to be disclosed under SFDR is not expected to be effective until January 2023. The European Commission has recommended that from the effective date of SFDR, firms are recommended to comply with the specific disclosure obligations in SFDR that are reliant on the RTS on the basis of a high-level, principles-based approach. FII therefore seeks to comply on a best efforts basis with the relevant disclosure obligations and provides this disclosure as a means of achieving this objective. Once the RTS becomes effective, FII will update this disclosure to comply with the RTS.
Should any changes be made to this disclosure in the future (e.g., once the RTS is effective or in light of additional guidance from regulators), a clear explanation of such changes will be published here.
In January 2022, this disclosure was updated to: