HOW WE INTEGRATE ESG INTO THE HL GROWTH FUND
Within the ESG integrated sections of the HL Growth Fund, we filter out investments in some companies on the basis of the significant social or environmental harm they may cause. Where possible, the fund will exclude companies which:
- Violate the United Nations Global Compact (UNGC) – a set of ten internationally endorsed standards on human rights, labour, the environment, and corruption. They were developed to inspire companies all over the world to embrace socially and ecologically conscious practices.
- Are involved in the manufacture and/or supply of controversial weapons.
- Derive a material portion of revenue from activities relating to the extraction and/or supply of thermal coal and oil sands.
- Have significant exposure to tobacco products (for example, tobacco companies are excluded, but supermarkets are not)
The HL Growth Fund invests in two main asset types: shares and bonds. Depending on the type of investment, our approach to filtering out investments differs.
Click the icons below to discover the exclusions
ESG Tilting
Read the video transcript. The HL Growth Fund invests in tracker funds, which aim to copy the performance of a stock market index. Normally they do this by investing into every company on the stock market index, copying each company’s size on the index within the fund.
ESG is integrated into tracker funds by adjusting how much money is invested in each company on the index, depending on its ESG credentials. This is known as “tilting”. For example, think of a stock market which contains just three companies: A, B and C. If company A has a good ESG score, company B a poor score and Company C has a reasonably good score, tilting might increase our investment in company A and C, but decrease our exposure to company B:
Our investment partner - Legal & General Investment Management (LGIM) - consider a wide range of ESG factors as part of the tilting process. They consider issues such as company diversity, climate impact, impact on biodiversity, corporate governance policies and procedures and lots more. In fact, there are over 34 metrics taken into consideration!
As of 30 June 2023, the 10 largest changes to the HL Growth Fund (both increased and reduced investments) compared to investing without ESG integration were: