Sustainability is a sensible part of long-term investing
The strategy of the Sifter Fund is to invest in Quality companies that have several quantitative and qualitative strengths, including competitive advantages and growing cash flow.
Sustainability is not the main reason Sifter Fund invests in any given company, but it helps us manage risks.
The Sifter Fund’s ESG approach is practical and rigorous
Sifter Fund analysts and portfolio managers consider ESG a natural part of the investment process. In practice, this means that we do not analyze or invest in companies with poor ESG results. To streamline the process, we have excluded certain industries altogether.
In the Sifter investment process, we eliminate companies that have
- Tobacco and cannabis
- Adult entertainment
- Significant ESG shortfalls (as identified by, for example, MSCI’s ESG database)
If we identify inconsistencies in the portfolio companies, we examine how the company’s management corrects the shortcomings and monitor their progress.
Sifter Fund ESG metrics today
The Sifter Fund Global (ESG) rating is available on the Morningstar website. Morningstar rates the Sifter fund with a full 5/5 globes (December 31, 2021).
However, we believe that these ESG scores are just one piece of the truth in sustainable investing. Therefore, we have gone further. The Net Impact analysis describes the impact of the company’s products and services on the environment, health, use of information, and society.
The Net Impact of the Sifter Fund on the environment and society
The Net Impact considers a company’s whole value chain and its impact on the environment and society. This approach prevents tunnel vision: For example, a company might use relatively sustainable methods to grow sugar, but if the health impact of its products on the end consumers were not considered, the analysis would be flawed. The Net Impact analysis helps us avoid such pitfalls.
In 2020, we asked Upright Project to carry out a Net Impact Assessment on the Sifter Fund. We were one of the first global equity funds to do so and the outcome was very favourable to us. For example, the net impact of Sifter’s portfolio was far more positive than that of S&P Global 100. See the report below for further details.
Responsibility for the investment process
Our investment processes and fund management processes are in line with the United Nations (UN) Principles for Responsible Investment (PRI).
UN principles for responsibility means committing e.g.
- To incorporate the ESG issues as a part of the investment process
- To act as an active owner and shareholder and incorporate the ESG issues as a part of the ownership policy
- To promote the ESG reporting of the portfolio companies
- To promote responsible investing together with other investors
Sifter Fund and Sifter Capital act responsibly in their business operations and fund management. This means that we, in all our operations, take environmental, social, and corporate governance (ESG) issues into account.