Investing
Responsibly
Responsibly
Brunel aims to deliver strong investment returns over the long term, protecting our clients’ interests through contributing to a more sustainable and resilient financial system, which supports sustainable economic growth and a thriving society.
Investing responsibly is at the heart of everything we do. We take a long-term view of our fiduciary duty, as do our clients, and believe that the integration of environmental, social and governance (ESG) risks, is most likely to deliver successful long-term performance.
Balancing the objective of delivering long-term, sustainable financial returns with more immediate risks, such as inflation and energy security, is not without its challenges. We acknowledge that, while there are many win-win opportunities, as the investment case studies in this report clearly demonstrate, there are also trade-offs in pursuing an investment strategy that seeks to minimise its exposure to human rights abuse, slavery, environmental degradation and misuse (intended or otherwise) of technology, to name but a few of the issues we consider in our day-to-day work.
Our clients, in shaping our approach to managing such risks, have been clear in setting the expectation that will act as responsible stewards of capital. This requires us to be aware of a wide range of impacts, risks and interdependencies. Many of these sit outside the traditional approach of financial analysis but are financially material when properly assessed and understood. However, that is often not reflected in asset pricing, particularly in the short term. This can lead to our portfolios underperforming against benchmarks that mirror the mispricing of such risks, but Brunel is investing for pension fund members’ retirements, and so our clients’ time horizons reflect the long-term interests of our clients and their beneficiaries.
Furthermore, when it comes to climate change, our clients’ priorities are captured in our Climate Change Policy, and we have targets to actively only invest in those companies that themselves are aligning to a Net Zero World.
Investing in a world worth living in underpins our approach to investing, how we engage with our managers and strategic partners, and how we conduct business. Find out more about our approach:
To ensure that we practise what we preach, we have 12 Investment Principles.
The purpose of the principles is to provide a framework for the fund structure, operations, manager selection, monitoring and reporting. The principles are also designed to meet the Department for Communities and Local Government’s Local Government Pension Scheme: Investment Reform Criteria and Guidance and the requirements and expectations of Financial Conduct Authority. They can be applied to all asset classes, although the detail of operation will vary by asset class.
The principles do not impose any restrictions on type, nature of companies or assets held within the Portfolios. The principles do place an expectation that recognised best practice standards in governance, risk management, stewardship and value for money will be delivered. They are designed to ensure the effective and efficient delivery of each fund’s investment strategy and are commensurate with the size of the combined asset pool. It is anticipated that the principles will support each fund in the delivery of their investment strategy statements.
We understand that long term relationships are essential to deliver long term value creation. Developing these relationships is critical to both our and our client’s success. We undertake a rigorous process to select and onboard our asset managers, aligned with our beliefs and ways of working.
As part of our engagement with managers we make clear our expectations in our Asset Managers Accord. The accord details a number of areas, such as:
Offering our clients a broad range of portfolio options allows them the flexibility to meet their own strategic investment needs, whilst equipping us to manage risk and generate sustainable, long-term returns.
A structure of more than 24 portfolios allows clients to fine-tune asset allocation, offer diversification opportunities, and reflect market developments. We offer a suite of portfolios specifically selected to provide a reasonable level of consolidation, while also giving our clients the freedom to choose how they allocate their assets. Each portfolio is outcome-based and intended to offer exposure to a particular asset class or sub-class, theme or approach.