Fisher Investments (“FI”), as the investment manager of the sub-funds of the Fisher Investments Institutional Funds plc (the “Company”), generally evaluates and integrates Sustainability Risks and environmental, social and governance (“ESG”) factors at multiple stages throughout the investment process. “Sustainability Risk” is defined by the Sustainable Finance Disclosure Regulation (Regulation EU/2019/2088), as amended, 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.
Sustainability Risks and ESG factors are among the many drivers considered by FI when developing country, sector and thematic preferences. Environmental regulation, social policy, economic and market reforms, labour, and human rights are among the ESG factors considered when determining country and sector/industry allocations and shaping an initial prospect list of portfolio positions.
The materiality of the ESG considerations is determined 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.
FI performs 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 all 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 issues: (i) present an inordinate risk to a company’s operational or financial performance or (ii) appear to present undue headline risk to share price performance.
In respect of each sub-fund of the Company, FI’s investment approach and decision-making processes are based on clearly defined investment objectives, investment policies, investment strategy, investment restrictions and risk management parameters, as contained in the Prospectus. For more details, please refer to the investment strategy of the relevant sub-fund as set out in the Prospectus, the relevant sub-fund Supplement and/or associated investor materials.
Please see FI’s website for more details: https://institutional.fisherinvestments.com/en- us/process/esg.
Fisher Investments (“FI”), as the investment manager of the sub-funds of Fisher Investments Institutional Funds plc (the “Company”), 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.
The present statement is the consolidated principal adverse sustainability impacts statement of the Company as required by Article 4 of the Sustainable Finance Disclosure Regulation (Regulation EU/2019/2088) (“SFDR”).
FI considers many indicators when assessing adverse sustainability impacts within the investment decision-making process. FI’s Investment Policy Committee (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 environmental, social and governance (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 all 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) present an inordinate risk to a company’s operational or financial performance or (ii) appear to present undue headline risk to share price performance.
Specific to FI’s Article 8 (Light Green) and Article 9 (Dark Green) sub-funds, 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.
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).
In compliance with the requirements of the Shareholder Rights Directive II (EU/2017/828) (as transposed into Irish law), FI has put in place a policy describing how it, as the investment manager, integrates shareholder engagement into the investment strategies employed by the sub-funds of the Company.
FI is an active investment manager 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 sub-fund investors. 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 FI’s SRD II Shareholder Engagement Policy, which can be found here: https://institutional.fisherinvestments.com/en-us/process/esg.
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.
The Investment Manager makes available certain Funds that promote one or more environmental or social characteristics (“ESG Orientated Funds”), as well as Funds that have Sustainable Investments as the objective ("Sustainable Investment Funds"). Further information about such Funds can be found in the following links.
The Company’s Annual Report and Audited Financial Statements (found on this webpage) includes a description of the extent to which environmental or social characteristics were met in the ESG Orientated Funds and the overall sustainability-related impact of the Sustainable Investment Funds for the time period covered in such report.
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 the Company to provide transparency on how the ESG Orientated Funds and Sustainable Investment Funds contribute to environmentally sustainable economic activities.
The Taxonomy Regulation disclosures for the ESG Orientated Funds and Sustainable Investment Funds can be found in the links above. For all other sub-funds of the Company that are not ESG Orientated Funds and Sustainable Investment Funds, the investments included in such sub-funds do not take into account the EU criteria for environmentally sustainable economic activities.
Should any changes be made to this disclosure in the future, a clear explanation of such changes will be published here.
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. It is noted that 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 RTS on the basis of a high-level, principles-based approach. Once the RTS becomes effective, the Investment Manager will continue to update this statement to comply with the RTS.
In January 2022, this disclosure was updated to:
For further information on the Investment Manager's approach to ESG, please visit this website: https://institutional.fisherinvestments.com/en-us/process/esg.