Standard Life Investments

Thematic Articles

The Changing Nature of Employment

European companies – weathering shocks and (finally) growing earnings

At Standard Life Investments, we evaluate investee companies in accordance with the four pillars of the UN Global Compact: human rights, labour relations, bribery & corruption and the environment. We regularly publish and update white papers on these topics. Following the publication of the updated environment white paper last quarter, we have recently published our latest paper on labour issues. It highlights the key...

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PRI Collaborative Engagement on Water Risks in Agricultural Supply Chains

European companies – weathering shocks and (finally) growing earnings

The PRI Secretariat co-ordinates a number of collective engagements, including one on Water Risk in Agricultural Supply Chains, which Standard Life Investments joined in 2015. Population growth, changes in climate conditions and business activities are jeopardising the world’s water resource. Demand for freshwater is increasing while supply is growing scarcer. Agriculture is the biggest user of freshwater, responsible for approximately...

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Principles Based Investing

European companies – weathering shocks and (finally) growing earnings

We may think of principles-based investing as being a recent trend. Not so. Ethical considerations have been evident as far back as 1758 when the Quakers in Philadelphia1 stated that members were prohibited from having an association with the slave trade for ethical reasons. In the UK, the first ethical fund to be made available to retail investors launched in 1984.

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The power of the AGM in stewarding clients’ capital

The visibility of our stewardship work, and that of the investment industry as a whole, is increasingly in the public spotlight. By combining the shareholder right of attending and speaking at annual general meetings (AGMs) with other strategies, such as private engagement or collaboration with other shareholders, we seek to act as active, engaged stewards of our clients’ capital.

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The escalation of opioid misuse in North America

Prescription opioids and illegally obtained opioids, such as heroin, can be highly addictive. The misuse of opioids has been an ongoing issue in the US; however, it has recently started to rapidly escalate. Opioids act upon opioid receptors and provide pain relief to patients. In the US, opioids were largely focused on cancer patients, but their use has spread to primary care and more general pain relief. This move has been...

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Workforce Disclosure Initiative

In our first-quarter 2017 report, we highlighted a roundtable we hosted in collaboration with the civil society group ShareAction. At the event, ShareAction presented the Workforce Disclosure Initiative (WDI) to a group of investors. The WDI is a project to gather comparable and comprehensive data on companies’ workforces to inform investor engagement and, ultimately, improve employment policies and practices.

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ESG and the corporate bond investor

In our view, ESG analysis is fundamental to understanding investment risk. A deep understanding of these risks requires active engagement with companies. The attitude of the board of a company to ESG issues and the actions it takes will ultimately influence the outcome. The scope of analysis needs to understand all of the issues that will ultimately show up in financial results.

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Embracing the UN Sustainable Development Goals

Impact investing is ready to enter the mainstream. According to research by JP Morgan, demand for such strategies could reach $1 trillion by 2020. The United Nation’s (UN’s) Sustainable Development Goals (SDGs) and targets provide widely accepted measures that can be used to unlock impact investing for mainstream investors.

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Climate change – opportunities in active management

The United Nations (UN) Paris Agreement, signed by 195 countries in 2016, committed to limiting the global increase in temperature to 2°C above preindustrial levels, while pursuing efforts to limit it to 1.5°C. The scale of this challenge is unprecedented given recent trends in greenhouse gas emissions; however, ignoring it could mean adaptation costs of up to $500 billion by 20501 . Indeed, recent research has estimated that up to 45% of the value of global investment portfolios are vulnerable to climate-related risks2 .

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US Financial CHOICE Act 2.0

On 4 May 2017, the US House of Representatives Financial Services Committee voted to advance the Financial CHOICE (Creating Hope and Opportunity for Investors, Consumers, and Entrepreneurs) Act 2.0 for consideration and a vote by the full House of Representatives.

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Cobalt mining

The Democratic Republic of the Congo (DRC) has nearly 50% of the world’s cobalt, a metallic element used chiefly in the manufacturing of alloys. It also features predominantly in batteries, laptops and mobile phones. Demand for cobalt is expected to increase substantially – current estimates project 5% year-on-year growth as the use of electric vehicles and electronics continues to increase.

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Taskforce on Climate-related Financial Disclosure

In his famous speech to Lloyd’s on the ‘tragedy of the horizon’, Mark Carney, Governor of the Bank of England and chairman of the Financial Stability Board (FSB), stated that the combination of the weight of scientific evidence and the dynamics of the financial system suggests climate change threatens financial resilience and long-term prosperity.

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UK Corporate Governance Reform green paper

In the aftermath of the UK’s vote to leave the EU, corporate governance reform was a key part of Theresa May’s speech that launched her campaign to become leader of the Conservative Party and prime minister. Key to this was the need to address executive pay and hold management to account.

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OECD public consultation for Responsible Business Conduct

During the quarter, the Organisation for Economic Cooperation and Development (OECD) produced a public consultation on the Due Diligence Guidance for Responsible Business Conduct. The guidance is based on the OECD guidelines for multinational enterprises and seeks to provide practical methods of applying the guidelines. It is not only targeted at multinational enterprises, but also small to medium-sized enterprises operating in countries that have adopted the OECD guidelines.

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