Discover responsible investing

Sustainable
investing at Newton Investment Management

What does Sustainable investing mean for Newton Investment Management?

Newton understands the investments it makes can have far-reaching influence – not just on its clients’ financial prospects, but on environmental and social factors shaping those prospects, such as:

  • Climate change
  • Human rights in supply chains
  • Diversity and fairness across workforces.

Newton believes the interests of investors, and of society more widely, can be mutually supportive. Reflecting this belief, Newton is an active and engaged owner of financial assets, investing in a manner it believes meets its responsibilities to clients and society as a whole.

Across the portfolios it manages, Newton uses a thematic framework, in the belief themes provide necessary perspective and support idea generation and risk management. In seeking to identify the drivers of long-term, structural change in the world, Newton’s investment team has currently identified nine influential themes.

In Newton’s sustainable strategies, a particularly influential theme is Earth matters. This theme considers a wide scope of environmental concerns and focuses on the key areas of net zero (achieving a balance between the amount of greenhouse gas emissions produced and the amount removed from the atmosphere), electrification and the circular economy.

Other themes, many of which also include elements conducive to sustainable investing, include:

According to Newton, the impact of structural change will manifest across traditional economic sectors and will be significant in magnitude and long-term in duration.

Invest with purpose

Investing with purpose video image

Active engagement at Newton Investment Management

Newton aims to support positive change through voting and engagement with companies in the belief companies which run their businesses for the long-term, actively managing their risks, can produce more resilient returns for shareholders and better balance the interests of all stakeholders.

Newton’s engagement activities are not limited to companies. The group also plays an active role in the development of best practices, standards and regulations. In doing so, it aims to achieve a better understanding, have greater influence and enhance the rights of investors and wider stakeholder groups.

Newton's engagement in action - highlights from Q3 2021:

  • Voted at 55 Annual General Meetings and 29 Extraordinary General Meetings on behalf of clients.

  • Engaged with 48 companies with the primary purpose of raising ESG concerns.

What's Newton Investment Management's sustainable investment process?

Newton’s focus is on companies run for the long term, those that effectively balance the interests of stakeholders while also actively managing material risks for their industry (or economy). Newton believes such companies can deliver resilient returns for investors.

Active ownership

The integration of ESG inputs into investment research is reinforced by active engagement and voting.

Deep insights

Rigorous investment research and forensic accounting conducted by sector analysts and Newton's dedicated responsible investment team provides global perspectives.

Collaborative approach

Building partnerships with clients, Newton recognises the power of external alliances to leverage change on scale.

Bold decisions

A Conviction-led approach to investing stepping away from indices and ensuring engagement is done for the benefit of the portfolio.

ESG reporting

Providing detailed reports on environmental and social footprint of portfolios as well as stewardship activities carried out on clients’ behalf.

Newton aims to optimise performance for its clients by investing in what it believes to be well-managed, sustainable companies and governments. Its sustainable strategies seek to support – invest in – entities that are:

Solutions providers

Companies that feature structural growth opportunities, such as those providing solutions to environmental or social challenges.

Balanced

Entities which can manage social and environmental factors well enough, while still capable of generating gains for shareholders.

In transition

Recognise issues and are, or can, adapt their business models to reverse potentially harmful actions.

Not involved in market failures

Avoid or omit companies involved in areas of high social cost, environmental degradation, or which are violators of the UN Global Compact Principles.

Sustainable ‘red lines’

Newton’s principles-based ‘red lines’ give the responsible investment team veto powers against investing in a particular security if they believe a company or government is beyond redemption and cannot improve. These red lines:

  • seek to ensure investments do not violate the UN Global Compact’s 10 principles that promote responsible corporate citizenship (relating to areas such as corruption, labour standards, human rights and the environment).
  • help Newton avoid companies with characteristics incompatible with the aim of limiting global warming to 2°C; incorporate a tobacco exclusion as Newton does not view tobacco business as compatible with its commitment to sustainable improvement.
Why Newton Investment Management?

Brought to you by Newton Investment Management

    Scale
    Expertise recognised
    Commitment
    in practice
    Experience
    Solution
    focus
    Logo icon
    1circle-filled-01

* Source: Newton Investment Management as at 30.09.2021
1 Source: UN PRI, 2020

Solution focus

Newton's suite of sustainable strategies seek both positive investment returns and positive societal outcomes.

Solution focus
Newton’s suite of sustainable strategies seek both positive investment returns and positive societal outcomes.
Scale*

£3.8bn (as of 30 September 2021) in sustainable investments across:
Equity
Fixed Income
Equity opportunities
Equity income
Multi-asset
Real Return

Expertise recognised
Newton’s responsible investment credentials are reflected in the UN Principles for Responsible Investment’s (PRI) annual assessment for 2020, in which it has been awarded the highest rating possible (A+) for overall strategy and governance. Newton was also rated A+ in the five other areas assessed, including both equities and fixed income. Only 29% of global asset managers received an overall A+ rating in 20201.
Commitment in practice
Newton has taken various steps to reduce its carbon footprint, such as buying renewable energy and reducing its consumption of single-use plastics. It also places sustainability, education and diversity at the core of the projects it sponsors within the wider community.
Experience
Newton’s commitment to Responsible Investment is embedded deep in its heritage. It has been proxy voting since the 1970s and has had responsible investment analysts since the 1990s – long before it became mainstream to do so.

* Source: Newton Investment Management as at 30.09.2021
1Source: UN PRI, 2020

Associations and Partnerships

Part of the 100 Black Interns programme, which offers a range of investment internships to black graduates.

Newton has signed up to the international Net Zero Asset Managers initiative to support the goal of net zero greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5 degrees Celsius; and to support investing aligned with net zero emissions by 2050 or sooner.

Newton's Sustainable Fund range

BNY Mellon Sustainable Global Real Return Fund (EUR)

Fund Managers: Philip Shucksmith, Matthew Brown

BNY Mellon Sustainable Global Dynamic Bond Fund

Fund Managers: Team approach

BNY Mellon Future Earth Fund

 

Fund Managers: Charles French, Yuko Takano

Meet the team

Newton’s dedicated responsible investment team is fully integrated across its investment process, working alongside the group’s conventional financial analysts to inform investment decisions.
curt-custard
Curt Custard

Interim Head of Sustainable Investment

Burger-Ian image
Ian Burger
Head of Responsible Investment
McAllister-Lloyd
Lloyd McAllister

Head of ESG Research

law-jennifer
Jennifer Law

Head of Stewardship

White-Rebecca
Rebecca White
Responsible Investment Analyst
Alexander Parkinson image
Alexander Parkinson

Co-Head of Responsible Investment Data Integration

brennen-niall
Niall Brennan

Co-Head of Responsible Investment Data Integration

Sakshi Bahl Image
Sakshi Bahl
Responsible Investment Analyst (BNY Mellon India, outsourced service provider to Newton Investment Management)
carolyn-hewitt
Carolyn Hewitt

Responsible investment product advocate

ragi-khimasia
Ragi Khimasia

Responsible Investment Analyst

tanushree-chandhok
Tanushree Chandhok

Responsible investment stewardship analyst<br>(BNY Mellon India, outsourced service provider to Newton Investment Management)

parag-saxena
Parag Saxena

Responsible investment analyst<br>(BNY Mellon India, outsourced service provider to Newton Investment Management)

Resources

Making up for lost time on climate policy

Making up for lost time on climate policy

Can the US cut greenhouse gas emissions by half by 2030? Newton multi-asset portfolio manager Paul Flood explores the challenge ahead.

Environmental Protection,Green Spending,Responsible Investment,Sustainability,utilities
Investment implications of a food revolution

Investment implications of a food revolution

The confluence of climate change and a rising world population will require new approaches to food production write the Newton future food investment team.

Food Production,Responsible Investment,Sustainability
Could environmental spending threaten stability?

Could environmental spending threaten stability?

Is there an economic downside to environmental spending initiatives? Newton Real Return global strategist Brendan Mulhern considers some potential consequences.

Environmental Protection,Green Spending,Responsible Investment,Sustainability

The value of investments can fall. Investors may not get back the amount invested.

Investment Managers are appointed by BNY Mellon Investment Management EMEA Limited (BNYMIM EMEA), BNY Mellon Fund Managers Limited (BNYMFM), BNY Mellon Fund Management (Luxembourg) S.A. (BNY MFML) or affiliated fund operating companies to undertake portfolio management activities in relation to contracts for products and services entered into by clients with BNYMIM EMEA, BNY MFML or the BNY Mellon funds.

Important information

AUM managed by Newton Investment Management Limited (Newton) may include assets of wrap fee account(s) for which Newton provides sub-advisory services to the primary manager of the wrap program.

Risks associated with BNY Mellon Sustainable Global Dynamic Bond Fund

Objective/Performance Risk: There is no guarantee that the Fund will achieve its objectives.

Currency Risk: This Fund invests in international markets which means it is exposed to changes in currency rates which could affect the value of the Fund.

Currency Risk: This Fund invests in international markets which means it is exposed to changes in currency rates which could affect the value of the Fund.

Derivatives Risk: Derivatives are highly sensitive to changes in the value of the asset from which their value is derived. A small movement in the value of the underlying asset can cause a large movement in the value of the derivative. This can increase the sizes of losses and gains, causing the value of your investment to fluctuate. When using derivatives, the Fund
can lose significantly more than the amount it has invested in derivatives.

Changes in Interest Rates & Inflation Risk: Investments in bonds/money market securities are affected by interest rates and inflation trends which may negatively affect the value of the Fund.

Credit Ratings and Unrated Securities Risk: Bonds with a low credit rating or unrated bonds have a greater risk of default. These investments may negatively affect the value of the Fund.

Credit Risk:The issuer of a security held by the Fund may not pay income or repay capital to the Fund when due.

Emerging Markets Risk:Emerging Markets have additional risks due to less-developed market practices.

Sustainable Funds Risk: The Fund follows a sustainable investment approach, which may cause it to perform differently than funds that have a similar objective but which do not integrate sustainable investment criteria when selecting securities. The Fund will not engage in stock lending activities and, therefore, may forego any additional returns that may be produced through such activities.

CoCo’s Risk: Contingent Convertible Securities (CoCo’s) convert from debt to equity when the issuer’s capital drops below a pre-defined level. This may result in the security converting into equities at a discounted share price, the value of the security being written down, temporarily or permanently, and/or coupon payments ceasing or being deferred.

Counterparty Risk: The insolvency of any institutions providing services such as custody of assets or acting as a counterparty to derivatives or other contractual arrangements, may expose the Fund to financial loss.

Risks associated with BNY Mellon Sustainable Global Real Return Fund (EUR)

Objective/Performance Risk: There is no guarantee that the Fund will achieve its objectives.

Currency Risk: This Fund invests in international markets which means it is exposed to changes in currency rates which could affect the value of the Fund.

Derivatives Risk: Derivatives are highly sensitive to changes in the value of the asset from which their value is derived. A small movement in the value of the underlying asset can cause a large movement in the value of the derivative. This can increase the sizes of losses and gains, causing the value of your investment to fluctuate. When using derivatives, the Fund can lose significantly more than the amount it has invested in derivatives.

Changes in Interest Rates & Inflation Risk: Investments in bonds/money market securities are affected by interest rates and inflation trends which may negatively affect the value of the Fund.

Credit Ratings and Unrated Securities Risk: Bonds with a low credit rating or unrated bonds have a greater risk of default. These investments may negatively affect the value of the Fund.

Credit Risk: The issuer of a security held by the Fund may not pay income or repay capital to the Fund when due.

Emerging Markets Risk: Emerging Markets have additional risks due to less-developed market practices.

Sustainable Funds Risk: The Fund follows a sustainable investment approach, which may cause it to perform differently than funds that have a similar objective but which do not integrate sustainable investment criteria when selecting securities. The Fund will not engage in stock lending activities and, therefore, may forego any additional returns that may be produced through such activities.

Counterparty Risk: The insolvency of any institutions providing services such as custody of assets or acting as a counterparty to derivatives or other contractual arrangements, may expose the Fund to financial loss.

Risks associated with BNY Mellon Future Earth Fund

Currency Risk: This Fund invests in international markets which means it is exposed to changes in currency rates which could affect the value of the Fund.

Emerging Markets Risk: Emerging Markets have additional risks due to less-developed market practices.

Environmental, Social and Governance (ESG) Investment Approach Risk: This Fund can be considered to follow an ESG investment approach or incorporate elements of an ESG investment approach, which may cause it to perform differently than other funds that have a similar objective but which do not integrate an ESG investment approach (or elements thereof) when selecting securities. In addition, in following an ESG investment approach, the Fund is dependent upon information and data from third parties (which may include providers for research reports, screenings, ratings and/or analysis such as index providers and consultants). Such information or data may be incomplete, inaccurate or inconsistent.

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