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 the environmental and social factors which can shape those prospects, such as:

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

Newton invests based on the conviction that 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 aid idea generation and risk management. In seeking to identify the drivers of long-term, structural change in the world, the investment team at Newton 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 concern, and focuses on the key areas of net zero, 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

Companies which are run for the long-term, actively managing risks while also balancing the interests of varied stakeholders can arguably produce more resilient returns for shareholders. As such, Newton aims to support positive changes in companies through voting and engagement.

Newton’s engagement activities are not limited to the companies in which it invests. As a provider of investment solutions, Newton has an inherent responsibility to do what is right on behalf of clients as well as wider asset owners and stakeholders in the financial system. As such, it has been active participant in the debate around enhancements to financial systems; its executives and investment professionals donate their time to work on furthering best practices and regulations in the industry.

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'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 means 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 responsible investment team has veto powers. The team can object to an investment in a particular security if it believes a company or government is beyond redemption and cannot improve. These red lines:

  • seek to ensure that any investments do not violate the UN Global Compact’s ten 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
    Commitment
    in practice
    Experience
    Solution
    focus
    Logo icon
    1circle-filled-01

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

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

Expertise
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, 2020e

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 Real Return Fund

Fund Manager: Suzanne Hutchins

BNY Mellon Sustainable Global Equity Fund

Fund Managers: Paul Markham, Yuko Takano & Charles French

BNY Mellon Sustainable Global Dynamic Bond Fund

Fund Manager: Team approach

BNY Mellon Sustainable Global Equity Income Fund

Fund Managers: Ilga Haubelt, Robert Hay, Paul Flood and Jon Bell

BNY Mellon Sustainable Sterling Bond Fund

Fund Managers: Howard Cunningham & Scott Freedman

Meet the team

Newton’s dedicated responsible investment team is fully integrated in their investment process, working alongside their conventional financial analysts to inform their investment decisions.

curt-custard
Curt Custard

Interim Head of Sustainable Investment

Burger-Ian image
Ian Burger
Head of Responsible Investment
law-jennifer
Jennifer Law

Head of Stewardship

McAllister-Lloyd
Lloyd McAllister

Head of ESG Research

Alexander Parkinson image
Alexander Parkinson

Co-Head of Responsible Investment Data Integration

brennen-niall
Niall Brennan

Co-Head of Responsible Investment Data Integration

White-Rebecca
Rebecca White
Responsible Investment Analyst
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
(BNY Mellon India, outsourced service provider to Newton Investment Management)

parag-saxena
Parag Saxena

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

Resources

Is the bond bear market here to stay?

Is the bond bear market here to stay?

Investment managers and analysts must take account of a range of potential threats and opportunities facing global markets in 2022. Here Paul Brain, head of fixed income at Newton Investment Management outlines his thoughts on the prospects facing global fixed income markets in the year ahead.
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.
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.
Could environmental spending hold unintended consequences?

Could environmental spending hold unintended consequences?

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

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

Important information

The BNY Mellon Sustainable Sterling Bond Fund and BNY Mellon Sustainable Real Return Fund can invest more than 35% of net assets in different Transferable Securities and Money Market Instruments issued or guaranteed by any EEA State, its local authorities, a third country or public international bodies of which one or more EEA States are members.

 

BNY Mellon Sustainable Global Dynamic Bond Fund

Risks associated with this Fund

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

Performance Aim Risk: The performance aim is not a guarantee, may not be achieved and a capital loss may occur. Funds which have a higher performance aim generally take more risk to achieve this and so have a greater potential for returns to vary significantly.

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.

Charges to Capital:The Fund takes its charges from the capital ofthe Fund. Investors should be aware that this has the effect of lowering the capital value of your investment and limiting the potential for future capital growth. On redemption, you may not receive back the full amount you initially invested.

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.

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

A complete description of risk factors is set out in the Prospectus in the section entitled “Risk Factors”.

BNY Mellon Sustainable Global Equity Fund

Risks associated with this 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.

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.

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

Charges to Capital: The Fund takes its charges from the capital ofthe Fund. Investors should be aware that this has the effect of lowering the capital value of your investment and limiting the potential for future capital growth. On redemption, you may not receive back the full amount you initially invested.

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.

A complete description of risk factors is set out in the Prospectus in the section entitled “Risk Factors”.

BNY Mellon Sustainable Global Equity Income Fund

Risks associated with this 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.

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.

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

Concentration Risk: A fall in the value of a single investment may have a significant impact on the value of the Fund because it typically invests in a limited number of investments.

Charges to Capital: The Fund takes its charges from the capital of the Fund. Investors should be aware that this has the effect of lowering the capital value of your investment and limiting the potential for future capital growth. On redemption, you may not receive back the full amount you initially invested.

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.

Investment in Infrastructure Companies Risk: The value of investments in Infrastructure Companies may be negatively impacted by changes in the regulatory, economic or political environment in which they operate.

High Yield companies risk: Companies with high-dividend rates are at a greater risk of not being able to meet these payments and are more sensitive to interest rate risk. 

A complete description of risk factors is set out in the Prospectus in the section entitled “Risk Factors”.

BNY Mellon Sustainable Real Return Fund

Risks associated with this Fund

Performance Aim Risk: The performance aim is not a guarantee, may not be achieved and a capital loss may occur. Funds which have a higher performance aim generally take more risk to achieve this and so have a greater potential for returns to vary significantly.

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.

Charges to Capital: The Fund takes its charges from the capital ofthe Fund. Investors should be aware that this has the effect of lowering the capital value of your investment and limiting the potential for future capital growth. On redemption, you may not receive back the full amount you initially invested.

Shanghai-Hong Kong Stock Connect and/or the Shenzhen-Hong Kong Stock Connect (“Stock Connect”) risk: The Fund may invest in China A shares through Stock Connect programmes. These may be subject to regulatory changes and quota limitations. An operational constraint such as a suspension in trading could negatively affect the Fund’s ability to achieve its investment objective.

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.

Investment in Infrastructure Companies Risk: The value of investments in Infrastructure Companies may be negatively impacted by changes in the regulatory, economic or political environment in which they operate.

A complete description of risk factors is set out in the Prospectus in the section entitled “Risk Factors”.

BNY Mellon Sustainable Sterling Bond Fund

Risks associated with this 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.

Geographic Concentration Risk: Where the Fund invests significantly in a single market, this may have a material impact on 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.

Charges to Capital:The Fund takes its charges from the capital ofthe Fund. Investors should be aware that this has the effect of lowering the capital value of your investment and limiting the potential for future capital growth. On redemption, you may not receive back the full amount you initially invested.

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.

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.

A complete description of risk factors is set out in the Prospectus in the section entitled “Risk Factors”.

572371 Exp: 08 April 2022