Environmental, Social, Governance

The Fund’s investment managers do not seek to explicitly identify companies with the highest claims to Environmental, Social and Governance rankings and exclude all other companies. They do however value companies that work hard at these issues in the general course of their business operations because it is prudent and often right, and probably the best thing to do  for the interests of the broadest group of stakeholders, including but not exclusive to shareholders.

The Endeavour Fund does not negatively screen for ESG investments based on a sense of historical or subjective ethical judgement, to avoid for example alcoholic drinks companies in the traditions of Victorain temperance societies in the industrialised heartlands of the Victorian Empire, or tobacco, fossil fuel and armaments manufacturers. Rather the starting point for the managers is that companies set their goals and responsibilities prioritising the interests of the widest stakeholder community within both the word and the spirit of the law and, with pragmatism, should set the standard in their sectors for how they go about it.

The managers of the Endeavour World Equity Fund use research support from third party providers such as Morningstar and Sustainalytics for insights into company standards across a broad range of key sustainability metrics. These agencies have rated the Endeavour funds highly ever since inception of their ratings services.

Energy

The managers of Endeavour do invest in the energy sector but we avoid businesses retaining their legacy coal assets. The oil and gas sector is not considered as unethical or uninvestable per se. Far from it, it would in our opinion actually be unethical to withhold capital investment from an industry that is today the mainstay of affordable energy and the basis of 100 years of relief from poverty and improved living standards for billions of people around the world.

However, the energy companies we invest in should also rightly be expected to be progressively shifting their operations towards cleaner fuels and investing in the development of the next generation of sustainable, renewable energy sources and committing to the optimal and credible timelines to do it in the best interests of all stakeholders.

This includes the acknowledgement by the IPCC, the International Panel on Climate Change, that the global economy has an interest in utilising the cleanest fossil fuels for baseload power supply for at least a part of the next generation.

Snacks & Sodas

It is the view of the managers of the Endeavour Fund that it is not all carbonated drink and snack food makers who contribute to the inexorable rise in obesity and diabetes rates globally.

Some businesses are leading the way with healthier ingredients, lower sugar content and replacement products and in educating their customers into new consumption habits.

We prefer to seek out and back the leaders in the Snacks & Sodas business too.

Tobacco

The managers do not invest in the tobacco industry.

While the products are legal to consumers, the managers believe the industry is generally of little utility to society and the companies themselves admit to their products shortening normal life expectancy.

The managers of Endeavour happen to believe this to be not  a very sustainable business model long-term and would go so far as to suggest tobacco products would quite possibly be made illegal if it wasn’t for the aggressive lobbying and tax revenues harvested from the industry by governments all over the world.

Alcohol

Gambling and alcohol may be considered unethical by some, on principally religious grounds, but in moderation the managers of the Endeavour Fund believe they can be a welcome right to enjoy for mature self-determining adults.

They have throughout recorded history typically tended to play a traditional significant role in social cohesion though not without the risks of abuse and as such should always warrant careful regulation and ongoing education.

Armaments

The managers do not invest in defence and military hardware manufacturers. Instead we see the manufacture and provision of armaments as better placed in departments of government. In and of themselves they may not be considered unethical investments as defence capability in our opinion has always played a vital part in the framework of international peace.

That said, some defence companies and some defence products supplied to some countries and regimes may well be considered unethical, in the managers’ opinion, and on ethical grounds alone  may be precluded from mainstream public market investment.

Inclusion informs a broader perspective

Diversity of people and cultures, perspectives and talent is always a good thing for any business and is increasingly to be expected as a base requirement for businesses with their own increasingly diverse markets and customers.

However, setting pejorative quotas for diversity in company leadership may not, in the managers’ opinion, be entirely constructive for companies to answer to, facing as they already do tremendous challenges in the market for talent and recognising the obvious advantages diversity brings to breadth of thinking, innovation and understanding.

Almost needless to say, the managers of the Fund would abhor the thought of any of their investments being involved in modern slavery or pornography.

The managers go to reasonable lengths to ensure the required standards in investee companies, bearing in mind the Fund is relatively concentrated, overwhelmingly large market-capitalised, very well covered by market analysts, and forensically scrutinised by sustainability industry research providers whose analytics and ratings are woven directly into the Endeavour investment process.

A Philosophy of Stewardship

We are fortunate in western democratic countries to have the structures of government, institutions and accountability to trust that what is legal in our societies is broadly and increasingly – and ultimately – ethical.

We believe our investment and corporate engagement process makes a modest but relevant contribution to that evolution, a philosophy of stewardship perhaps more than a policy of purist exclusion.

Endeavour naturally appears to capture a lot of sustainability characteristics: by country and by capitalisation, by dividend and by growth, by conviction and by success, the Endeavour Fund appears to have captured more ESG factors than over 90% of the Morningstar rated fund universe in the years since their rating service was launched in 2015 (source: Morningstar, Tellsons, Sustainalytics).

Probably one of the most naturally sustainable funds available in a much-greenwashed market today, it is rather ESG that seems to have found Endeavour.

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