Liontrust 20 Years of Sustainable Investing 03.2021 - Flipbook - Page 6
Promoting sustainable companies
In 2001, it was very unusual to ask companies about their environmental impacts, supply
chains, corporate governance or treatment of employees. At this stage, the sustainable
team would typically have a couple of minutes at the end of meetings with company
management to probe these areas and encourage better practice.
Reactions tended to vary: some management teams got it, recognising
these issues were important to the company’s long-term success; others
were patronising or even aggressive. Back then, it was simply not
widely accepted that companies had to report on or improve their
environmental social and governance impacts.
Economics of Climate
Change published and the UN also
launches its Principles for Responsible
Investment (PRI), with the Liontrust
Sustainable Investment team among
Today, the picture is very different with almost all listed companies
reporting on corporate social responsibility or ESG. A landmark
came in 2019 when the usually conservative US Business
Roundtable issued a new statement on the ultimate purpose of
corporations. Since 1978, the Business Roundtable has periodically
sent out Principles of Corporate Governance and each version since
1997 has endorsed shareholder primacy – that businesses exist
6 - Liontrust: 20 Years of Sustainable Investing
principally to serve shareholders. In 2019, the Roundtable moved
away from this and included a commitment to all stakeholders,
not just shareholders but also customers, employees, suppliers and
As one of the CEOs supporting this change of message, Progressive
Corporation head Tricia Griffith said: ‘CEOs work to generate profits
and return value to shareholders, but the best-run companies do more.
They put the customer first and invest in their employees and communities.
In the end, it’s the most promising way to build long-term value.’
This shift of emphasis is welcome but provides a different challenge
for sustainable investors: how to identify genuinely good ESG
performance among all the slick brochures and avoid greenwashing,
where companies talk up their sustainable credentials without the
track record to back it up.
Over the last 20 years, we have also seen awareness raised on
important issues such as sustainable palm oil, peak oil and stranded
assets, plastic pollution and tax avoidance. Through our own efforts
and collaboration with other organisations, we have helped to
shine a light on these areas. Highlights (taken from a press release
detailing the Funds’ debut year at Morley Fund Management) show
how we were pioneers in many areas of sustainability.