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Responsible Investment
We are a signatory of, and are committed to, implementing the six principles of the United Nations Principles for Responsible Investing (“PRI”) in our investment management activities.
As a fundamental part of our services and fiduciary duty, we integrate consideration of ESG factors into our investment processes and active ownership practices. ESG integration is the explicit and systematic inclusion of ESG issues into investment analysis and decision making. We believe that, by incorporating an assessment of ESG risk and opportunities, we have a more holistic understanding of investment risk, which can help lead to informed decision making and improved client outcomes. Active ownership means we monitor for ESG risks throughout the life of a buylist investment, exercise ownership rights, and engage with companies and fund managers on matters that can have a material impact on our clientsʼ investments. We are committed to continuously refining our approach, making iterative enhancements to our processes and tailoring them to the unique characteristics of each asset class. These improvements are guided by evolving best practices, industry standards and the availability of high-quality data. Our active participation in industry groups and initiatives – such as the UK Wealth Managers on Climate Group, the PRI Wealth Managers Group and City Hive – supports us in understanding the evolving nature and materiality of ESG risks for investors and provides a forum for valuable discussion of best practice. We also participate in engaged discussions with data providers to understand the strengths, limitations and future direction of ESG data.
In this financial year, we have made significant updates to the qualitative and quantitative ESG inputs used in fund manager selection and monitoring, leveraging an enhanced proprietary responsible investment questionnaire and ESG data from Morningstar. Asset managers are assessed at a firm and fund level, and are scored across a number of indicators to enable the monitoring of progress. Due diligence inputs are tailored by asset class. For more details, visit our Responsible Investment (“RI”) policy on our website. Where we invest directly in equities, we undertake our own research to assess ESG risks and opportunities, in conjunction with consulting Morningstar ESG data. This quantitative information is considered alongside supporting qualitative information provided by Sustainalytics, a review of the Group reporting and a governance assessment provided by our proxy voting service provider, Institutional Shareholder Services (“ISS”). Our stewardship activities As a discretionary investment manager, clients entrust us with making investment decisions on their behalf, including exercising voting rights. We vote on all non-collective buy list assets and employ ISS, a leading proxy voting service, to provide research and voting recommendations. Whilst we use ISS voting recommendations, we retain complete discretion to vote against either ISS or management. See the Voting Policy Statement on our website for further information on the ESG principles and guidelines that shape our voting approach.
We publish our voting activities on a quarterly basis on our website, as well as details of significant votes on an annual basis. To maximise effectiveness of any activity, we take a risk-based approach to engagement activity, prioritising our efforts according to the magnitude of risk and the size of the holding. Where we invest in externally managed third- party funds, the responsibility for engagement and voting on the underlying holdings lies with the third-party fund manager. As part of our due diligence process, we consider and assess their stewardship policies, principles, transparency, consistency and resourcing. At the time of writing, we have not divested from a third-party fund due to their voting and engagement practices. In this financial year, our engagement efforts with asset managers have primarily focused on their approach to climate risks and opportunities. We initiated a centrally co-ordinated climate engagement programme with a prioritised set of third-party fund managers, led by the RI team. The RI team wrote to asset managers and, in some cases, scheduled follow-up meetings, to better understand their approach and rationale behind it. These engagements served a dual purpose: first, to scope and clarify information; and second, to share our perspective on best practice. We are committed to evolving our approach as we continue to learn from these dialogues.
As part of our collaborative stewardship efforts, we participate in the UK Wealth Managers on Climate Group, which aims to unite the UK wealth management industry in encouraging asset managers to raise their climate ambitions. Through this forum, we have contributed to shaping key expectations around target setting and helped develop a standardised set of climate-related due diligence questions. This initiative is designed to foster a more consistent industry approach whilst reducing the reporting burden on asset managers. For more details on our climate strategy and broader approach to managing climate-related risks and opportunities, including stewardship efforts, see our latest TCFD report , available on our website. In addition to our climate-focused initiatives, we have contributed to broader industry discussions on how to assess asset managers’ workplace culture and its influence on investment outcomes. Our RI lead is a member of the ACT Stewardship Council, which guides the development and implementation of the ACT Standard – a structured framework for corporate culture disclosure. We have encouraged asset managers to adopt this framework and are working closely with the ACT Stewardship Council to extract practical insights on how best to integrate its outputs into our fund manager research and evaluation processes.
Brooks Macdonald Group plc Annual Report and Accounts 2025
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