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. As a baseline minimum, the ESG integrated holdings within the HL Growth Fund will – subject to meeting certain conditions – exclude investments in 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 no more than 20% of their revenue from thermal coal mining, extraction or power generation.
- Derive no more 5% of their revenue from the extraction of oil sands
- Except in the case of exposure to smaller companies, generate more than 10% of their revenue from the manufacture of Tobacco products.
The HL Growth Fund invests in two main asset types: shares and bonds. The conditions and full list of exclusions for each asset class can be seen by clicking on the icons below:
Click the icons below to discover the exclusions
Share exclusions
Bond 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 September 2024, the 10 largest increases and decreases to the HL Growth Fund compared to investing without ESG integration were: