Sustainability Disclosure Policy

Evelyn Partners Group Limited (Evelyn Partners) has adopted the approach to sustainability-related disclosures mandated by the EU in the Sustainable Finance Disclosure Regulation (EU 2019/2088) (the Regulation).  The Regulation includes provisions requiring relevant businesses to disclose to potential investors how sustainability risks are integrated into their investment processes and the due diligence performed on the principal adverse impacts (PAIs) of their investment decisions and investment advice on sustainability factors (as set out below)¹.

The Regulation defines:

• sustainability risk as an environmental, social or governance (ESG) event or condition which, if it occurs, could cause a material negative impact on the value of an investment.
• sustainability factors as environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery matters.

This approach applies to the  Evelyn Partners discretionary investment management and advisory businesses.

Direct Equity Investments

Evelyn Partners receives ESG data from MSCI on all securities in the MSCI ACWI and the MSCI UK IMI indices covering 31 risk factors:

Environmental: Climate Change Vulnerability, Biodiversity & Land Use, Carbon Emissions, Electronic Waste, Financing Environmental Impact, Packaging Materials & Waste, Product Carbon Footprint, Raw Material Sourcing, Toxic Emissions & Waste, Water Stress, Opportunities in Clean Tech, Opportunities in Green Building, and Opportunities in Renewable Energy.

Social: Chemical Safety, Controversial Sourcing, Consumer Financial Protection, Health & Safety, Human Capital Development, Labour Management, Privacy & Data Security, Product Safety & Quality, Supply-Chain Labour Standards, Responsible Investment, Community Relations, Insuring Health & Demographic Risk, Access to Communications, Access to Finance, Access to Health Care and Opportunities in Nutrition & Health.

Governance: Corporate Governance (including Ownership & Control, Board, Pay and Accounting) and Corporate Behaviour (including Business Ethics and Tax Transparency).

MSCI provides an ESG score for all securities. For monitored securities, Evelyn Partners’ sector specialists, responsible for assessing monitored companies (Sector Specialists), may seek to override the MSCI ESG scores where there is a significant divergence between the MSCI score and their own assessment. This ESG perspective is supplemented by our own fundamental research and analysis, and also that from third-party providers, to arrive at an overall qualitative assessment or security recommendation.

 This analysis incorporates an assessment of the likely impact of sustainability risks on the returns of these securities. In general, where a sustainability risk occurs in respect of these securities, there may be a negative impact on its value. Sustainability risk can either represent a risk on its own, or impact and contribute significantly to other risks, such as market risks, operational risks, liquidity risks or counterparty risks.

The ESG risk factors affecting all companies within each industrial sector within the MSCI ACWI and the MSCI IMI are then assessed.  The top material ESG factors, three to five in total, for each industrial sector represent the key ESG issues for Sector Specialists to consider.

Evelyn Partners assumes that the principal adverse impact on sustainability factors are equal to the top material ESG risks for each sector.  This is based on our current interpretation of the Regulation and the availability and quality of ESG risk data.  We will continue to adapt our policy and related disclosures as industry best practice evolves.

The PAIs per sector are reported to the Stewardship & Responsible Investment Group (SRIG) on a quarterly basis for consideration in the firm’s investment process (overseen by Evelyn Partners’ Investment Process Committee).

Collective Investment Schemes (collectives)

Evelyn Partners monitors a selection of funds which then can be used to construct and maintain suitable portfolios.  Sector Specialists divide up the population of monitored funds into three types: Responsible/Sustainable, Green Tick and Others.

Due diligence is undertaken on each fund under the following headings:

Responsible/Sustainable eligible funds have specific responsible strategies/mandates in place which mean that they should not sit alongside mainstream funds on the wider collectives list.  Their resulting investment universe is heavily altered or restricted compared to the conventional peer group.  They consist of three categories:

Green Tick funds can be found in the wider collective list but have stringent enough ESG integration or positive inclusion policies that mean they may be eligible for clients with an ESG mandate, but are still suitable to sit along-side mainstream funds.

Others: not all funds will have stringent enough ESG integration or positive inclusion processes in place to earn a Green Tick but will nevertheless be subject to ESG-related due diligence.

The above analyses incorporate an assessment of the likely impact of sustainability risks on the returns of these securities. In general, where a sustainability risk occurs in respect of these securities, there may be a negative impact on its value. Sustainability risk can either represent a risk on its own, or impact and contribute significantly to other risks, such as market risks, operational risks, liquidity risks or counterparty risks.

For collectives, it is more difficult and sometimes not possible to obtain their underlying investments and therefore consider the PAIs.  As part of the due diligence process, Sector Specialists consider each investment firm’s/company’s approach to sustainability risks and factors, as well as their consideration of PAIs.  As such, Evelyn Partners is not able to directly consider the PAIs of investing in collectives.  However, all collectives are subject to the due diligence process and ESG-related considerations as noted above.  Evelyn Partners will continue to adapt and refine its approach to considering PAIs for collectives as best practice evolves.

Other Securities

 Evelyn Partners does not currently consider the sustainability risks or PAIs of government debt, corporate debt, derivatives, and structured products.  Evelyn Partners will review its approach to these instruments as data quality and best practice evolve.

Legal Entities

 This policy applies to the following Evelyn Partners Group Limited legal entities:

Evelyn Partners Asset Management Limited Evelyn Partners Discretionary Investment Management Limited

Tilney Discretionary Portfolio Management Limited

Evelyn Partners Securities

Evelyn Partners Investment Management Services Limited Evelyn Partners International Limited

Smith & Williamson Investment Funds Public Limited

Evelyn Partners Investment Management LLP Evelyn Partners Investment Management (Europe) Limited

Smith & Williamson Investment Management (Ireland) Ltd

Evelyn Partners Investment Services Limited

Evelyn Partners Pensioneer Trustee Limited

Ownership

This policy is the responsibility of SRIG and should be read in conjunction with Evelyn Partners’ responsible investment policies and related disclosures.

Effective date:  10 March 2021

Capital at risk. The value of investments and the income from them can fall as well as rise and the investor may not receive back the original amount invested.

Issued by the Evelyn Partners group of companies  which comprises Evelyn Partners Group Limited and any subsidiary of Evelyn Partners Group Limited from time to time. Further details about are available at www.evelyn.com.

¹At the time of writing, March 2021, only the Level 1 text of the Regulation has become law with some Level 2 regulations in draft.  Evelyn Partners’ approach to sustainability risks and sustainability factors has been guided by its interpretation of the Level 1 text and the current quality of available data.  This interpretation may not accord with the final text of the Regulation when, and if, it is published in its entirety.