Recapping our recent FCI interest group event
We were delighted to have had our best turnout ever for the Faith-consistent Investing Interest Group quarterly virtual event this past Thursday 9 March. The presentation deck from the event can be found by clicking the button below.
FCI Interest Group Presentation Deck
To recap the event, we explored the portfolio performance and risk implications of using faith-aligned negative screens with Rashed Khan, Director of Portfolio Risk and Analytics at Wespath, the author of recent research on this topic.
A lively conversation and Q&A took place, including these two questions, which were submitted via the chat and which Rashed answers here:
Q. Have you investigated the relative performance of different levels of ESG depending on whether certain names are in or out of your investment universe?
A. I am assuming that by 'different levels' of ESG, you mean different ESG scores. Internally, we have not compared performance of companies with different ESG scores. However, we have partnered with an external manager to create ‘Transition Ready Portfolio’ or TRP, where we identified various pillars that contribute to a TRP score. We then performed back-testing on how companies with higher TRP scores performed vs those with lower TRP scores. The back-testing only confirmed our forward looking thesis that companies with better TRP score are better positioned to outperform in an transitioning economy.
Q. Are fossil fuel companies listed as one of your exclusions?
A. Wespath does not exclude all fossil fuel companies, pursuant to our Ethical Exclusions policy. However, our Management of Excessive Sustainability Risk guideline on Climate change focuses on thermal coal. Under this guideline, we avoid companies that derive meaningful revenue from coal or use coal to generate a significant amount of energy in their operation.
The discussion finished with a great suggestion for a future topic: how to define and implement POSITIVE screens. Stay tuned! We also shared highlights from our latest whitepaper, Faith-consistent Investing and Smaller Organisations, which explores how smaller faith-based asset owners can approach implementing and/or enhancing faith-consistent investment practices in their portfolios. The paper can be downloaded by clicking the button below. Faith-consistent Investing and Smaller Organisations