Cazenove Capital, the wealth management arm of Schroders, has been awarded a combined £33.5m (€36.6m) investment mandate from three charities that earlier this year held what they billed as the “ESG investing Olympics”.
The competition was a first-of-its-kind open tender, with the charities telling would-be investment managers to “impress us” on social and environmental integration and impact.
With Cazenove emerging as the winner, Friends Provident Foundation, the Joffe Charitable Trust, and the Blagrave Trust will become cornerstone investors in a new best-in-class multi-asset sustainability fund to be launched in December.
Sixty proposals were received from a wide range of managers, with five invited to present to an auditorium of mission-led investors in March.
In a statement, Friends Provident Foundation said the proposals were assessed for intentional social and environmental impact, high standards of ESG integration covering exclusion, engagement and its escalation, voting record, in-house expertise, and impact reporting.
“Our trustees were torn between choosing an ‘evolving incumbent’ or a ‘new disruptor’ and decided on the former,” said Colin Baines, investment engagement manager at the foundation.
“We were impressed with Cazenove’s proposal, which meets our new, challenging, investment policies, was well received by attendees in March, and offers the potential to achieve scale and influence the wider market.”
Kate Rogers, co-head of charities at Cazenove, said: “The ESG ’investing olympics’ set an amazing example of collaboration and transparency, breaking new ground in sustainable investing.
“We look forward to continuing in this spirit, working with the charities to use their investments for good and developing best practice in impact investing.”
She said the upcoming new fund had a clear intention to generate both a competitive financial return and a positive impact on “people and the planet”.
One of the reasons why the charities took the approach to manager selection they did was to “send a market signal regarding asset owner demand for investment with purpose and expectations for ESG integration and impact”.
According to Friends Provident’s statement, the runner-up was EQ Investors. It said the charities also recognising its strengths and commended “their ‘best in class’ credentials as a boutique impact manager and ‘new disruptor’”.
The foundation said that analysing the 60 proposals showed that fossil fuel divestment was becoming commonplace, integration of ‘S’ issues in stock selection as comparatively less developed, and policy and practice on shareholder engagement escalation were weak.
The foundation will cover these trends and market gaps in more depth in a report scheduled for the autumn.