RESPONSIBLE INVESTING
At Coutts, we invest with purpose and integrity, and with a keen focus on sustainability. The asset classes and funds we select on your behalf are scrutinised to ensure the companies involved act in a way that protects the environment and the people they work with, without negatively impacting returns.
WHAT IS RESPONSIBLE INVESTING?
Responsible investors essentially take responsibility for the impact that the companies they invest in have on the world. This covers three categories of company behaviour, known as ESG:
- Environmental – the impact a company has on the environment.
- Social - the impact a company has on society.
- Governance - the impact a company has on the business environment.
At Coutts, we expect the companies we invest in to have strategies in place to deal with these issues.
FIGHTING CLIMATE CHANGE
At Coutts we believe climate change poses as much of a risk to the global financial system as it does to the environment. And dealing with it is urgent. With that in mind, we carefully consider climate change risks at every step of our investment process as we aim to help preserve our clients’ portfolios and funds, and aid the move towards a zero-carbon economy.
Our aim is to invest in companies or funds that are resilient in the face of environmental risks and, where possible, contribute to a lower-carbon economy.
WHAT IS RESPONSIBLE INVESTING?
Responsible investors essentially take responsibility for the impact that the companies they invest in have on the world. This covers three categories of company behaviour, known as ESG:
- Environmental – the impact a company has on the environment.
- Social - the impact a company has on society.
- Governance - the impact a company has on the business environment.
At Coutts, we expect the companies we invest in to have strategies in place to deal with these issues.
FIGHTING CLIMATE CHANGE
At Coutts we believe climate change poses as much of a risk to the global financial system as it does to the environment. And dealing with it is urgent. With that in mind, we carefully consider climate change risks at every step of our investment process as we aim to help preserve our clients’ portfolios and funds, and aid the move towards a zero-carbon economy.
Our aim is to invest in companies or funds that are resilient in the face of environmental risks and, where possible, contribute to a lower-carbon economy.
REASONS TO BE A RESPONSIBLE INVESTOR
We all know having a sustainable approach to investing is important because it can build a better, more resilient world – and who doesn’t want that? But here are five more specific reasons why investing with Coutts matters.
1. You can help disrupt industries for the better
Companies across the globe are making very real, positive changes because of investor engagement.
2. You can support investment in responsible companies
Any major change in society can lead to opportunities for investors. At Coutts, we’re always looking for cases where positive environmental, social and governance (ESG) characteristics form part of a company’s investment case.
3. We can adapt quickly when the rules change
With these issues discussed everywhere from Westminster to the World Economic Forum, it’s only a matter of time before regulators start formalising rules to ensure businesses do what’s required. At Coutts, we believe we'll be well-placed if the authorities harden their stance.
4. It helps you preserve your wealth long term
Numerous studies show a strong link between responsible investing and investment performance. This makes sense because businesses that take ESG matters seriously can reduce risk and maximise opportunities by creating new ways to operate.
5. You know your bank cares about the future
At Coutts we know that preserving and growing our clients’ wealth is not enough – we need to help create a better future for them to enjoy that wealth in.
When investing, the value of your investments, and the income you receive from them, can go down as well as up and you may not get back as much as you invested.
What we're doing to help
Three key ways we make a difference
While our portfolios and funds don’t directly emit carbon, the companies we invest in on our clients’ behalf do. It’s up to us to manage this as effectively as possible and help our clients reduce their carbon footprint.
Against that backdrop, we’ve set two targets to reduce our carbon emissions in our discretionary portfolios and online funds:
- 25% reduction on equity holdings by end 2021
- 50% reduction on all holdings by end 2030, aligned with the Paris Agreement
We’ve already reduced the carbon intensity in our Personal Portfolio Funds by 20-30% through shifting allocations to funds with a low carbon designation, while minimising the impact on risk and return.
We measure carbon emissions as ‘carbon intensity’, which covers the amount of CO2 a company emits per million dollars of sales.
We’ve decided to exclude certain types of company from our investments based on the harm they cause to the environment. We won't invest in any company that exceeds our criteria on the amount of revenue it derives from:
- Thermal coal extraction for coal mining and exploration
- Thermal coal generation, including utilities that own or operate coal-fired power plants
- Involvement in tar sands–a mixture of clay, sand, water and bitumen that are mined and refined into oil
- Arctic oil and gas exploration–this is evaluated based on whether a company holds at least one licence or permit for drilling or exploring the Arctic offshore region
In addition to the activity described above, we also actively use the voting rights we have as shareholders and engage with the companies we invest in with support from EOS at Federated Hermes.
We believe voting and engagement is an effective way for shareholders to bring about positive change in a business and enhance long-term financial performance. We identify which areas to focus on in our own voting and engagement through a detailed review of our holdings. These reviews adopt a risk-based approach, including looking at the relative risk and size of our holding in a company, so that we can prioritise. This is done privately with support from EOS at Federated Hermes, as we believe it’s more effective than public engagement.
While our portfolios and funds don’t directly emit carbon, the companies we invest in on our clients’ behalf do. It’s up to us to manage this as effectively as possible and help our clients reduce their carbon footprint.
Against that backdrop, we’ve set two targets to reduce our carbon emissions in our discretionary portfolios and online funds:
- 25% reduction on equity holdings by end 2021
- 50% reduction on all holdings by end 2030, aligned with the Paris Agreement
We’ve already reduced the carbon intensity in our Personal Portfolio Funds by 20-30% through shifting allocations to funds with a low carbon designation, while minimising the impact on risk and return.
We measure carbon emissions as ‘carbon intensity’, which covers the amount of CO2 a company emits per million dollars of sales.
We’ve decided to exclude certain types of company from our investments based on the harm they cause to the environment. We will not invest in any company that exceeds our criteria on the amount of revenue it derives from:
- Thermal coal extraction for coal mining and exploration
- Thermal coal generation, including utilities that own or operate coal-fired power plants
- Involvement in tar sands–a mixture of clay, sand, water and bitumen that are mined and refined into oil
- Arctic oil and gas exploration–this is evaluated based on whether a company holds at least one licence or permit for drilling or exploring the Arctic offshore region
In addition to the activity described above, we also actively use the voting rights we have as shareholders and engage with the companies we invest in with support from EOS at Federated Hermes.
We believe voting and engagement is an effective way for shareholders to bring about positive change in a business and enhance long-term financial performance. We identify which areas to focus on in our own voting and engagement through a detailed review of our holdings. These reviews adopt a risk-based approach, including looking at the relative risk and size of our holding in a company, so that we can prioritise. This is done privately with support from EOS at Federated Hermes, as we believe it’s more effective than public engagement.
OUR VOTING & ENGAGEMENT ACTIVITY
News & Insights
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Coutts Investment Outlook 2021 | Coutts Private Bank
15 Jan 2021
The coronavirus pandemic has accelerated trends that were emerging slowly before the outbreak and the UK has begun a new relationship with Europe. We’re positioning our clients’ investments for a recovery, but anyone expecting a simplistic ‘back to normal’ in 2021 could be caught flatfooted.
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Being Responsible on Purpose
27 Nov 2020
Our latest quarterly report on responsible investing highlights something that’s become vital for businesses to define – their purpose.
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Cutting our carbon footprint for clients
15 Oct 2020
We’ve made good progress reducing CO2 emissions from our client funds and portfolios
