F&C Investment Trust PLC – Responsible Investing

What is Responsible Investing?

At F&C Investment Trust, we believe in responsible investing. We know this term doesn’t mean the same for everyone, so what does it mean to us? As a shareholder in a wide array of businesses, we take seriously the pressing challenge of climate change and have made a commitment to having a portfolio that is net-zero in carbon emissions by 2050 at the latest. We will move more quickly if we can.

Being responsible also means working hard on sustainability. We consider and report on our exposure based on the framework of the UN’s 17 Sustainable Development Goals (SDGs) to give us clear aspirations and measurable targets. We will continue to seek investment opportunities that are both contributing positively to sustainability, and also delivering strong financial returns.

For us, that involves actively engaging with our portfolio businesses to help them improve their performance in environmental, social and governance (ESG) best practices. Our Net Zero ambition, and the Sustainable Development Goals framework, are important drivers of this engagement, as we seek to encourage companies to make sustainability a core part of their business strategy.

We know the task is not easy, so we commit not to overpromise but to do our best to deliver on what we pledge.

Our Approach

At F&C Investment Trust, we are fully committed to being responsible investors. We have a manager that has been at the forefront in developing and applying the highest standards of Environmental, Social and Governance (“ESG”) practice in managing the investments on behalf of our shareholders for many years. We ensure ESG opportunities and threats are considered in our investment decisions to reduce risk and deliver sustainable growth over the longer term. We engage with companies to drive improvement and to bring them in line with our standards. We believe in the power of engaged, long-term ownership as a force for positive change. For us, responsibility isn’t an ‘added extra’; it’s how we invest every day.

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Our climate change commitment

The issue of climate change is the defining challenge of modern times. We have committed to transition our portfolio to net-zero carbon emissions by 2050 at the latest. We will closely monitor and report to you on our progress and move forward more quickly if we can.

The roadmap towards the transition of our portfolio to net-zero carbon will incorporate shorter-term metrics to ensure that, over the medium term, we make measurable and realistic progress towards our objective. These will be reported in future annual reports.

Our Perspective on Sustainability

The Sustainable Development Goals (“SDGs”) provide an ambitious roadmap for creating a more sustainable global economy and society by 2030 – from ending poverty to tackling climate change – and provide a useful framework for assessing the sustainability impact of our portfolio. We measure companies against the SDGs to see if they are positively, neutrally, or even negatively aligned. Many of our investee companies are already engaged in activities that are positively aligned to the SDGs and we are engaging with laggards to deliver better outcomes.

F&C Investment Trust's alignment to SDGs

The 17 SDGs are a framework for the future development of the planet in a sustainable way. By giving clear goals and measurable targets, they help investors like us make more informed, responsible decisions.

The SDG Alignment chart below shows how the listed companies we hold support the achievement of the SDGs through their products and services. This has been analysed by looking at the revenues that companies generate from their different product lines and assessing how these relate to the 169 individual SDG targets that underlie the goals. We also show negative links where some of the activities of our investee companies potentially conflict with the SDGs.

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Our analysis identified a 55% positive mapping and a 10% negative mapping. The goal most represented is SDG 8 – Decent Work and Economic Growth. This reflects holdings in technology companies, which support Target 8.2 calling for boosting economic productivity through technological upgrading and innovation; and in financial companies providing access to financial services. SDG 3 – Good Health and Well-being also has a significant weight. Our holdings in this area include pharmaceutical firms and pharmacy stores. The negative mapping represents business activities that could be detrimental to sustainable development. These mostly relate to climate change (SDG 7 on clean energy and SDG 13 on climate change) and health (SDG 3).

How we vote

Voting against management on key resolutions sends a clear signal to companies on the importance of improving their business practices. Through our manager, we regularly engage companies before and after voting to explain our expectations, invite comments and explain the reasons for any votes against management. In respect of the year to 31 December 2020, F&C Investment Trust voted at 401 meetings of investee companies held in the portfolio.
How we vote​

Core Exclusions

We do not invest in companies involved in the production of tobacco or controversial weapons, or those involved in coal mining or power generation over certain revenue thresholds.