30 de septiembre de 2024
Capital Group Future Generations Global Balanced Fund (LUX)
Invertir donde la sostenibilidad se fusiona con la oportunidad
Últimas notificaciones a los accionistas
30 de septiembre de 2024
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Results
La información relativa al índice se proporciona únicamente a título ilustrativo y de contexto. El fondo se gestiona de manera activa. Su gestión no está vinculada a un índice de referencia.
Los resultados históricos no son indicativos de los resultados futuros.
Precio y dividendos
Portfolio
Consideraciones de riesgo
Factores de riesgo que han de tenerse en cuenta antes de invertir:
- El presente documento no pretende ofrecer un consejo de inversión y no debe ser considerado como una recomendación.
- El valor de las inversiones y sus respectivos dividendos puede subir o bajar y es posible que los inversores no recuperen los importes invertidos inicialmente.
- Los resultados históricos no son indicativos de los resultados futuros.
- Si la divisa en la que invierte se fortalece frente a la divisa en la que se realizan las inversiones subyacentes del fondo, el valor de su inversión disminuirá. La cobertura de divisas trata de limitar esto, pero no hay garantía de que dicha cobertura sea completamente eficaz.
- El Folleto, junto con toda la documentación de oferta exigida a nivel local, expone los riegos, que, en función del fondo, pueden incluir aquellos asociados a la inversión en renta fija, derivados, mercados emergentes y/o valores de alto rendimiento; los mercados emergentes son volátiles y pueden sufrir problemas de liquidez.
- Algunos fondos pueden invertir en instrumentos financieros derivados con fines de inversión, cobertura y/o gestión eficaz de la cartera.
Resources
Divulgación de información relativa a la sostenibilidad
Resumen
Sin objetivo de inversión sostenible
Este Fondo promueve características medioambientales o sociales, pero no tiene un objetivo de inversión sostenible. No obstante, CRMC (el «Asesor de inversiones») se compromete a mantener al menos el 40% de las inversiones del Fondo en empresas que, en opinión del Asesor de inversiones, aborden desafíos sociales y/o medioambientales por medio de sus productos y/o servicios actuales o futuros.
Características medioambientales o sociales del producto financiero
El Fondo promueve características medioambientales y sociales a través del proceso de inversión del Asesor de inversiones, que aplica una evaluación de admisibilidad y una Política de selección negativa.
Estrategia de inversión
El Fondo invierte en empresas cuyos productos y servicios están mayoritariamente ajustados, o en transición hacia un mayor ajuste positivo, a cualquier tema de inversión sostenible, único o combinado, centrado en los retos sociales y medioambientales globales identificados por el Asesor de inversiones. Estos temas se corresponden con los Objetivos de Desarrollo Sostenible de las Naciones Unidas («ODS»). Para identificar a las empresas admisibles, el Asesor de inversiones realiza una evaluación que se basa en un análisis bottom-up propio llevado a cabo por los equipos de inversión y ASG del Asesor de inversiones. Esta evaluación de admisibilidad se sustenta en las «Características» sectoriales del Asesor de inversiones (que evalúan si los productos y servicios contribuyen a los ODS) y los «Estándares» (que examinan la gestión de los riesgos ASG materiales y la buena gobernanza). El Fondo invierte en empresas «ajustadas» que actualmente tienen al menos la mitad de su negocio ajustado, así como en empresas «en transición» que el Asesor de inversiones considera que están realizando una transición activa de su negocio hacia un mayor ajuste positivo a los temas de inversión sostenible identificados por el Asesor de inversiones y a los ODS, con la expectativa de un cambio material a corto y medio plazo. Además, el Asesor de inversiones aplica exclusiones ASG y basadas en normas para aplicar una Política de selección negativa a las inversiones del Fondo en el momento de la compra. Para los emisores soberanos, el Asesor de inversiones realiza una evaluación de admisibilidad aprovechando su propio marco soberano ASG, que comprende varios indicadores ASG para evaluar lo bien que un país gestiona su riesgo ASG. El Asesor de inversiones emplea su propio marco ASG soberano para evaluar la puntuación ASG y de Gobernanza de un emisor soberano con respecto a unos umbrales predeterminados. Además, los emisores soberanos que no cumplan determinados criterios de derechos humanos quedarán excluidos del universo admisible del Fondo. Capital Group ha desarrollado un conjunto de criterios para evaluar si una empresa causa un perjuicio significativo y determinar si la inversión constituye una inversión sostenible. El Fondo tiene en cuenta las PIA obligatorias establecidas en el Cuadro 1 del Anexo I del Reglamento Delegado (UE) 2022/1288 de la Comisión para las inversiones empresariales, así como otros riesgos y controversias ASG que el Asesor de inversiones considere potencialmente importantes según se indica en las normas sectoriales descritas anteriormente, como la privacidad de los datos o las cuestiones de censura. Al evaluar las prácticas de buena gobernanza, el Asesor de inversiones tendrá en cuenta, como mínimo, las cuestiones que considere pertinentes para los cuatro pilares prescritos de la buena gobernanza (es decir, las estructuras de buena gestión, las relaciones con los trabajadores, la remuneración del personal y el cumplimiento de las obligaciones fiscales).
Proporción de inversiones
Al menos el 90% de las inversiones del Fondo se utilizan para la consecución de las características medioambientales o sociales que promueve el Fondo (n.° 1 Ajustadas a características medioambientales o sociales). El Fondo tendrá una proporción mínima del 40% en la subcategoría «n.° 1A Sostenibles» y un máximo del 60% estará en la categoría «n.° 1B Otras características medioambientales o sociales». Un máximo del 10% de las inversiones del Fondo, incluidas las inversiones no ajustadas a las características medioambientales o sociales promovidas y/o derivadas se encuentran en la categoría «n.° 2 Otras».
El efectivo y los equivalentes a efectivo no se incluyen en el porcentaje de activos estipulado anteriormente. Pueden mantenerse con fines de liquidez.
Seguimiento de las características medioambientales o sociales
Los indicadores de sostenibilidad utilizados por este Fondo para medir la consecución de cada una de las características medioambientales o sociales que promueve son los siguientes:
- la adhesión de los emisores corporativos a los criterios establecidos en la Política de selección negativa;
- el porcentaje de emisores soberanos que entran en el proceso del Asesor de inversiones para evaluar a los emisores soberanos;
- el porcentaje de inversiones que tienen al menos el 50% de sus ingresos ajustados a los ODS; y
- el porcentaje de inversiones en empresas consideradas en «Transición».
Métodos
El Fondo aplica dos criterios vinculantes en materia ASG: selecciones basadas en sectores y en normas mediante exclusiones, y un compromiso de realizar inversiones sostenibles.
Fuentes y tratamiento de datos
El Fondo utiliza varias fuentes de datos incluidas, entre otras, MSCI ESG Business Involvement Screening Research («MSCI ESG») y los infractores del MSCI United Nations Global Compact. Sin embargo, estos datos podrían no reflejar todo el universo de actividades de un emisor, cambiar repentinamente, presentar fallos, ser inexactos, incompletos o estar obsoletos, lo que resultaría en la exclusión de la inversión de un Fondo en un emisor que podría esperar un inversor. Capital Group realiza una diligencia debida continua sobre las fuentes de datos de proveedores externos y se esfuerza por asegurarse de que los datos de proveedores externos sean fiables. En caso de que el Asesor de inversiones considere que los datos y/o la evaluación son incompletos o inexactos, se reserva el derecho de señalar las actividades de implicación empresarial relevantes mediante su propia evaluación.
Limitaciones de los métodos y los datos
La metodología y las fuentes relativas a las exclusiones y al enfoque de integración ASG en su conjunto tienen ciertas limitaciones. Con el fin de identificar todas las empresas cotizadas en bolsa en todo el mundo que participan en actividades como la producción de productos controvertidos y los ingresos derivados de actividades incompatibles con las selecciones ASG y basadas en normas, el Fondo emplea criterios ASG y exclusiones que se identifican principalmente a través de proveedores externos.
Diligencia debida
Los miembros del personal de cumplimiento normativo, gestión de riesgos y auditoría interna de Capital Group realizan evaluaciones periódicas sobre el diseño y la eficacia operativa de las actividades y los controles clave de la empresa. Esto incluye el cumplimiento de los procesos y procedimientos internos, así como del marco normativo de las jurisdicciones en las que opera la empresa.
Políticas de implicación
Entablar un diálogo con las empresas forma parte integrante del servicio de gestión de inversiones que el Asesor de inversiones presta a sus clientes. Cuando los equipos de inversión de Capital Group detecten una cuestión importante para el valor a largo plazo de una empresa participada o les preocupe el rendimiento relativo en materia ASG, los profesionales de la inversión y los equipos de gobernanza de Capital Group se implicarán con la dirección.
Índice de referencia designado
El Fondo no ha designado un índice de referencia que responda a las características medioambientales y/o sociales que promueve.
The sustainability-related disclosures are meant to be revised as necessary from time to time to capture any changes or reviews. The capitalized terms are used in accordance with the definitions and references outlined in Capital International Fund Prospectus.
Capital International Fund - Capital Group Future Generations Global Balanced Fund (LUX) (the “Fund”)
LEI: 549300QTCEF0GTIIHN03
The below section “Summary” was prepared in English and is being translated to other official languages of the European Economic Area. In case of any inconsistency(ies) or conflict(s) between the different versions of this section “Summary”, the English language version shall prevail.
Summary
No sustainable investment objective
This Fund promotes environmental or social characteristics, but does not have as its objective sustainable investment. However, CRMC (the “Investment Adviser”) commits to maintain at least 40% of the Fund’s investments in companies that, in the Investment Adviser’s opinion, are addressing social and/or environmental challenges through their current or future products and/or services.
Environmental or social characteristics of the financial products
The Fund promotes environmental and social characteristics through the Investment Adviser’s investment process, which applies an eligibility assessment and a Negative Screening Policy.
Investment strategy
The Fund invests in companies whose products and services are majority-aligned, or transitioning towards higher positive alignment, with any single or combination of sustainable investment themes focused on global social and environmental challenges as identified by the Investment Adviser. These themes map to the United Nations Sustainable Development Goals (“SDGs”). To identify eligible companies, the Investment Adviser performs an assessment that relies on bottom-up proprietary research conducted by the Investment Adviser’s investment and ESG teams. This eligibility assessment is underpinned by the Investment Adviser’s sector-level “Characteristics” (which assess whether products and services contribute to the SDGs) and “Standards” (which examine management of material ESG risks and good governance). The Fund invests in ‘Aligned’ companies that currently have at least half of their business aligned, as well as ‘Transitioning’ companies that the Investment Adviser believes are actively transitioning their business to higher positive alignment with sustainable investment themes as identified by the Investment Adviser and with the SDGs, with material near-to-medium term change expected. In addition, the Investment Adviser applies ESG and norms-based exclusions to implement a Negative Screening Policy to the Fund’s investments at the time of purchase. For sovereign issuers, the Investment Adviser conducts an eligibility assessment leveraging its proprietary sovereign ESG framework, which covers a range of ESG indicators to evaluate how well a country manages its ESG risk. The Investment Adviser uses its proprietary sovereign ESG framework to assesses the ESG and Governance score of a sovereign issuer against predetermined thresholds. In addition, sovereigns that fail certain human rights criteria will be excluded from the eligible universe of the Fund. Capital Group has developed a set of criteria to assess whether a company does significant harm to determine whether the investment constitutes a sustainable investment. The Fund considers the mandatory PAIs as set out in Table 1 of Annex I of Commission Delegated Regulation (EU) 2022/1288 for corporate investments, as well as other ESG risks and controversies that the Investment Adviser considers potentially material as outlined in the sector-level Standards described above, such as data privacy or censorship issues. When assessing good governance practices, the Investment Adviser will, as a minimum, have regard to matters it sees relevant to the four prescribed pillars of good governance (i.e., sound management structures, employee relations, remuneration of staff and tax compliance).
Proportion of investments
At least 90% of the Fund's investments are used to attain the environmental or social characteristics promoted by the Fund (#1 Aligned with E/S characteristics). The Fund will have a minimum proportion of 40% in the sub-category “#1A Sustainable”, and a maximum of 60% will be in category “#1B Other E/S characteristics”. A maximum of 10% of the Fund’s investments, including investments non-aligned with the E/S characteristics promoted and/or derivatives are in category “#2 Other”.
Cash and cash-equivalents are not included in the % of assets set out above. They may be held for liquidity purposes.
Monitoring of environmental or social characteristics
The sustainability indicators used by this Fund to measure the attainment of each of the environmental or social characteristics it promotes are the following:
Adherence of corporate issuers to the criteria set forth in the Negative Screening Policy,
Percentage of sovereign issuers falling under the Investment Adviser’s process for assessing sovereigns,
Percentage of investments having at least 50% of their revenue aligned with the SDGs, and
Percentage of investments in companies considered as “Transitioning”.
Methodologies
The Fund implements two binding ESG-related criteria: sector- and norms-based screens in the form of exclusions and a commitment to make sustainable investments.
Data sources and processing
The Fund uses several data sources including, but not limited to, MSCI ESG Business Involvement Screening Research (“MSCI ESG”) and MSCI United Nations Global Compact violators. However, such data might not capture the full universe of activities of an issuer, change suddenly, be flawed, inaccurate, incomplete or outdated, resulting in a Fund’s investment in an issuer which an investor may expect to be excluded. Capital Group performs ongoing due diligence on third-party data sources and endeavours to ensure that third-party data is reliable. In the event that the Investment Adviser believes that data and/or assessment is incomplete or inaccurate, the Investment Adviser reserves the right to identify relevant business involvement activities through its own assessment.
Limitations to methodologies and data
The methodology and sources relating to the exclusions and the ESG integration approach as a whole have certain limitations. In order to identify all publicly traded companies globally which are involved in activities such as the production of controversial products and revenue derived from activities that are inconsistent with the ESG and norms-based screens, the Fund uses ESG criteria and exclusions that are primarily identified through third-party providers.
Due diligence
Members of Capital Group's compliance, risk management and internal audit staff conduct periodic assessments on the design and operating effectiveness of the firm’s activities and key controls. This includes compliance with internal processes and procedures as well as with the regulatory landscape in the jurisdictions in which the company operates.
Engagement policies
Establishing dialogue with companies is an integral part of the Investment Adviser’s investment management service to clients. Where Capital Group's investment teams identify an issue material to the long-term value of an investee company or they are concerned about relative ESG performance, Capital Group's investment professionals and governance teams will engage with management.
Designated reference benchmark
The Fund has not designated a reference benchmark to meet the environmental and/or social characteristics it promotes.
No sustainable investment objective
This Fund promotes environmental or social characteristics but does not have as its objective sustainable investment. The Investment Adviser commits to maintain at least 40% of the Fund’s investments in companies that, in the Investment Adviser’s opinion, are addressing social and/or environmental challenges through their current or future products and/or services. This 40% minimum qualifies as “sustainable investments” under Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector.
How have the indicators for adverse impacts on sustainability factors been taken into account?
As mentioned above, the Investment Adviser considers all mandatory PAIs.
The Investment Adviser considers several PAIs within its Negative Screening Policy. In particular, the Negative Screening Policy addresses PAI 4 on exposure to companies active in the fossil fuel sector, PAI 10 on United Nations Global Compact violators and PAI 14 on controversial weapons.
Beyond the negative screening process, with respect to the remaining mandatory PAIs:
where the Investment Adviser considers sufficient and reliable quantitative data is available across the investment universe (for PAIs 1, 2, 3, 6, and 13), the Investment Adviser uses third-party data and prescribed thresholds to determine whether the adverse impact associated with the company’s activities is potentially significant based on the company’s relative ranking (on the specific adverse impact) to the overall investment universe and/or peer group; or
where data availability or quality is not sufficient across the investment universe to enable a quantitative analysis (for PAIs 5, 7, 8, 9, 10, 11, and 12), the Investment Adviser assesses significant harm on a qualitative basis, for example using proxies. The Investment Adviser’s assessment will also include an overall qualitative assessment of how ESG risks are being managed.
Where third party data or the Investment Adviser’s qualitative assessment indicates that a company is potentially doing significant harm based on a PAI threshold, the Investment Adviser will do additional due diligence to better understand and assess negative impacts indicated by third party or proprietary data. If the Investment Adviser concludes that the company is not causing significant harm based on its analysis, it may proceed with the investment and the rationale for that decision will then be documented. For example, the Investment Adviser may conclude a company is not causing significant harm if (i) the Investment Adviser has reason to believe that third-party data is inaccurate and the Investment Adviser’s own research demonstrates that the company is not causing significant harm; or (ii) the company is taking steps to mitigate or remediate that harm through the adoption of timebound targets and there are meaningful signs of improvement and positive change.
How are the sustainable investments aligned with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights? Details:
The sustainable investments are aligned with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights as follows: the Investment Adviser reviews companies involved in significant ESG controversies, with a focus on those that may conflict with existing global standards, including guidelines from the United Nations Global Compact. In accordance with the Negative Screening Policy applied to the Fund, the Investment Adviser will exclude companies violating the UN Global Compact principles. Although other incidents will not automatically result in exclusion from the Fund, the Investment Adviser ensures that appropriate action to remediate the concerns are taken.
Environmental or social characteristics of the financial product
The Fund promotes environmental and/or social characteristics through the Investment Adviser’s investment process, which applies an eligibility assessment and a Negative Screening Policy.
The Fund invests in companies whose products and services are majority-aligned, or transitioning towards higher positive alignment, with any single or combination of sustainable investment themes focused on global social and environmental challenges as identified by the Investment Adviser. These themes map to the United Nations Sustainable Development Goals (“SDGs”).
To identify eligible companies, the Investment Adviser performs an assessment that relies on bottom-up proprietary research conducted by the Investment Adviser’s investment and ESG teams. This eligibility assessment is underpinned by the Investment Adviser’s sector-level “Characteristics” (which assess whether products and services contribute to the SDGs) and “Standards” (which examine management of ESG risks and good governance). The Fund invests in ‘Aligned’ companies that currently have at least half of their business aligned, as well as ‘Transitioning’ companies that the Investment Adviser believes are actively transitioning their business to higher positive alignment, with material near-to-medium term change expected. In addition, the Investment Adviser applies ESG and norms-based exclusions to implement a Negative Screening Policy to the Fund’s investments at the time of purchase.
For sovereign issuers, the Investment Adviser conducts an eligibility assessment leveraging its proprietary sovereign ESG framework, which covers a range of ESG indicators to evaluate how well a country manages its ESG risk. The Investment Adviser uses its proprietary sovereign ESG framework to assesses the ESG and Governance score of a sovereign issuer against predetermined thresholds. In addition, sovereigns that fail certain human rights criteria will be excluded from the eligible universe of the Fund.
There is no reference benchmark designated for the purpose of attaining the environmental or social characteristics promoted by the Fund.
Investment strategy
The Investment Adviser applies the following investment strategy to attain the environmental and/or social characteristics promoted and the sustainable investment objective as follows:
The Fund invests in companies whose products and services are majority-aligned, or transitioning towards higher positive alignment, with any single or combination of sustainable investment themes focused on global social and environmental challenges as identified by the Investment Adviser. These themes map to the United Nations Sustainable Development Goals (“SDGs”).The themes map to the following key United Nations Sustainable Development Goals (“SDGs”):
| Themes | Key Associated UN SDGs |
|---|---|
| Health & Well-Being |
|
| Energy Transition |
|
| Sustainable Cities & Communities |
|
| Responsible Consumption |
|
| Education & Information Access |
|
| Financial Inclusion |
|
| Clean Water & Sanitation |
|
To identify such companies, the Investment Adviser performs an eligibility assessment that relies on bottom-up proprietary research conducted by the Investment Adviser’s investment and ESG teams. This eligibility assessment is underpinned by the Investment Adviser’s sector-level “Characteristics” and “Standards”:
Characteristics: focus on whether products and services contribute to the SDGs; and
Standards: focus on management of material ESG risks and good governance.
The Fund invests in ‘Aligned’ companies that currently have at least half of their business aligned, as well as ‘Transitioning’ companies that the Investment Adviser believes are actively transitioning their business to higher positive alignment with material near-to-medium term change expected. If a company is determined to be aligned or transitioning and purchased in the Fund, but fails to meet the aligned or transitioning requirements thereafter, such company would no longer be considered a sustainable investment anymore and would generally be sold within six months from the date of such determination, subject to the best interests of investors in the Fund.
In addition, the Investment Adviser applies ESG and norms-based exclusions to implement a Negative Screening Policy to the Fund’s investments at the time of purchase.
This is supported by ongoing monitoring of the portfolio, performed by the Investment Adviser, against criteria set out in the Negative Screening Policy to identify any holdings that would be precluded. Any such company would no longer be considered a sustainable investment anymore and would generally be sold within six months from the date of such determination, subject to the best interests of investors in the Fund.
The activities and thresholds, from the Negative Screening Policy, applied to determine the list of companies to be excluded from the Funds’ investment universe consist of the following:
| Activities | Threshold |
|---|---|
| United Nations Global Compact (UNGC) | Companies that, in the Investment Adviser’s opinion, are violating the UNGC should be excluded. |
| Tobacco | Companies generating >5% of their revenue from the manufacture of tobacco products should be excluded. |
| Controversial Weapons | Companies with any ties to controversial weapons (cluster munitions, landmines, biological/chemical weapons, depleted uranium weapons, blinding laser weapons, incendiary weapons, and/or non-detectable fragments) should be excluded. |
| Nuclear Weapons | Companies generating any revenue from the production of nuclear weapons should be excluded. |
| Weapons | Companies generating >10% of their revenue from weapon systems, components and support systems and services should be excluded. |
| Oil & Gas Upstream Producers | Companies engaging in, or generating any revenue from, the exploration & production of oil and gas should be excluded. |
| Thermal Coal | Companies generating >10% of their revenue from the production and/or distribution of thermal coal should be excluded. |
When assessing potential investee companies, the Investment Adviser relies on third-party providers who identify a company’s participation in or the revenue which they derive from activities that are inconsistent with these screens. In the event that exclusions cannot be verified through third-party providers or if the Investment Adviser believes that data and/or assessment is incomplete or inaccurate, the Investment Adviser reserves the right to identify business involvement activities through its own assessment (including by using other third-party data sources).
Companies that fail both the eligibility process and the Negative Screening Policy are considered not to contribute to the Fund’s environmental and/or social characteristics.
For sovereign issuers, the Investment Adviser conducts an eligibility assessment leveraging its proprietary sovereign ESG framework, which covers a range of ESG indicators to evaluate how well a country manages its ESG risk. To be eligible for investment, sovereigns must fulfil the following criteria: (i) score above pre-determined thresholds for their proprietary ESG score on both an absolute and GNI-adjusted basis; and (ii) score above pre-determined thresholds on the governance indicator input of their proprietary ESG score on both an absolute and GNI-adjusted basis. In addition, sovereigns that fail certain human rights criteria will be excluded from the eligible universe of the Fund. If the Investment Adviser believes that the third-party data and/or assessment is incomplete or inaccurate, the Investment Adviser reserves the right to identify exclusions for sovereign issuers through its own assessment. The Investment Adviser also periodically reviews sovereign issuers and if a previously eligible sovereign issuer held in the Fund becomes ineligible, the sovereign issuer will not contribute towards the environmental and/or social characteristics of the Fund and the sovereign issuer will generally be sold within six months from the date of such determination, subject to the best interests of investors in the Fund (save that if the Investment Adviser believes that a score is below a pre-defined threshold for a temporary or a transitory reason, the Investment Adviser may, from time to time, exercise its discretion to keep holding or purchase securities issued by the sovereign issuer).
What is the policy to assess good governance practices of the investee companies?
When assessing good governance practices, the Investment Adviser will, as a minimum, have regard to matters it sees relevant to the four prescribed pillars of good governance (i.e., sound management structures, employee relations, remuneration of staff and tax compliance).
The Investment Adviser assesses the quality of corporate governance practices of companies as part of its eligibility assessment when examining ESG risks, and as part of its ESG integration process more broadly. The Investment Adviser’s fundamental analysis covers a range of governance metrics including among others, audit practices, board composition, tax paid, controversies and executive compensation. The Investment Adviser engages in regular dialogue with companies on corporate governance issues and exercises its proxy voting rights for the entities in which the Fund invests.
As described above, the Investment Adviser applies a Negative Screening Policy to the Fund. As part of this, the Investment Adviser excludes companies violating the United Nations Global Compact (UNGC) principles as well as those violating principle 10 on anti-corruption and principle 3 on employee relations.
Capital Group's ESG Policy Statement provides additional detail on the Investment Adviser's ESG integration approach and processes, including proxy voting procedures and principles, as well as views on specific ESG issues, including ethical conduct, disclosures and corporate governance. Information on the Investment Adviser’s corporate governance principles can be found in its Proxy Voting Procedures and Principles.
Further details can be found in the ESG Policy Statement on:
https://www.capitalgroup.com/content/dam/cgc/tenants/eacg/esg/files/esg-policy-statement(en).pdf
Proportion of investments
At least 90% of the Fund's investments are used to attain the environmental or social characteristics promoted by the Fund (#1 Aligned with E/S characteristics). The Fund will have a minimum proportion of 40% in the sub-category “#1A Sustainable”, and a maximum of 60% will be in category “#1B Other E/S characteristics”.
A maximum of 10% of the Fund’s investments, including investments non-aligned with the E/S characteristics promoted and/or derivatives are in category “#2 Other”.
Cash and cash-equivalents are not included in the % of assets set out above. They may be held for liquidity purposes.
Monitoring of environmental or social characteristics
The sustainability indicators used by this Fund to measure the attainment of each of the environmental or social characteristics it promotes are the following:
Percentage of corporate issuers falling under the sectors defined as part of the Negative Screening Policy,
Percentage of sovereign issuers falling under the Investment Adviser’s process for assessing sovereigns,
Percentage of investments having at least 50% of their revenue aligned with the SDGs, and
Percentage of investments in companies considered as “Transitioning”.
Methodologies
The methodologies used to measure how the environmental and/or social characteristics are met are as follows:
Eligibility process: the Investment Adviser seeks to invest in companies whose products and services are majority-aligned, or transitioning towards higher positive alignment, with any single or combination of sustainable investment themes focused on global social and environmental challenges as identified by the Investment Adviser. These themes map to the United Nations Sustainable Development Goals (“SDGs”). ‘Aligned’ companies currently have at least half of their business aligned and ‘Transitioning’ are companies that the Investment Adviser believes are actively transitioning their business to higher positive alignment with sustainable investment themes as identified by the Investment Adviser and with the SDGs, with material near-to-medium term change expected. The Investment Advisor typically uses revenue to assess business alignment, however in some instances other metrics may be more relevant, for example, energy production mix for utilities. The business alignment is accompanied by a qualitative assessment of the company’s product and service contribution to the SDGs, as well as risk of misalignment. It will also consider how material ESG risks and opportunities are being addressed and managed by the company, such as the quality of corporate governance practices and any adverse environmental or social impacts. For Transitioning companies in particular, company development pathway and timeline to reach intended impact is also considered.
Relevant KPIs and targets, as well as topics for engagement, are also identified at the time of eligibility and tracked over time. For Transitioning companies in particular, KPIs may include aligned revenue, as well as other transition metrics. Progress against these KPIs and targets is assessed periodically.
Research is conducted by the Investment Advisor’s ESG analysts and investment analysts. Eligibility decisions are voted on by the strategy’s Principal Investment Officers, Portfolio Managers, and ESG leadership.
Negative Screening Policy: the Investment Adviser applies ESG and norms-based exclusions to implement a Negative Screening Policy to the Fund’s investments at the time of purchase. The Investment Adviser relies on third-party providers who identify a company’s participation in or the revenue which they derive from activities that are inconsistent with these screens. In the event that exclusions cannot be verified through third-party providers or if the Investment Adviser believes that data and/or assessment is incomplete or inaccurate, the Investment Adviser reserves the right to identify business involvement activities through its own assessment (including by using other third-party data sources).
For sovereign issuers, to be eligible for investment, sovereigns must fulfil the following criteria: (i) score above pre-determined thresholds for their proprietary ESG score on both an absolute and GNI-adjusted basis; and (ii) score above pre-determined thresholds on the governance indicator input of their proprietary ESG score on both an absolute and GNI-adjusted basis. In addition, sovereigns that fail certain human rights criteria will be excluded from the eligible universe of the Fund. If the Investment Advisor believes that the third-party data and/or assessment is incomplete or inaccurate, the Investment Adviser reserves the right to identify exclusions for sovereign issuers through its own assessment.
Engagement: Engagements are conducted by the ESG team in collaboration with our investment professionals. We engage management teams on topics that are informed by our research, ESG investment frameworks, voting and monitoring process.
Proxy Voting: We have investment professional-led proxy voting, with our in-house Global Stewardship & Engagement (GSE)/Proxy team conducting analysis. Final proxy outcomes are decided by members of our investment units.
Data sources and processing
Data sources
The Fund uses several data sources as part of the investment process.
In relation to the SDGs alignment, the Investment Adviser typically uses revenue to assess business alignment, but will leverage other metrics if there are more sector-relevant financial metrics for a company and its industry.
The data sources used as part of the Negative Screening Policy are as follows:
| Activities | Datasource |
|---|---|
| United Nations Global Compact (UNGC) | Companies are identified through MSCI’s UNGC violators. |
| Tobacco | Companies are identified through MSCI’s Tobacco Producer – Maximum Percentage of Revenue factor name. |
| Controversial Weapons | Companies are identified through MSCI’s Controversial Weapons – Any Tie factor name. |
| Nuclear Weapons | Companies are identified through MSCI’s Weapons – Nuclear Maximum Percentage of Revenue factor name. |
| Weapons | Companies are identified through MSCI’s Weapons – Maximum Percentage of Revenue factor name. |
| Oil & Gas Upstream Producers | Equity: Companies are identified through Global Industry Classification Standard (GICS) “Integrated Oil & Gas” and “Oil & Gas Exploration & Production” sub-sector classifications. Fixed Income: Companies are identified through Barclays Global Sector Classification (BCLASS) “Independent” and “Integrated” sectors. |
| Thermal Coal | Companies are identified through MSCI’s Thermal Coal – Maximum Percentage of Revenue factor name. |
In the event that exclusions cannot be verified through third-party data or if the Investment Adviser believes that third-party data and/or assessment is incomplete or inaccurate, the Investment Adviser reserves the right to identify business involvement activities through its own assessment (including by using other third-party data sources).
Exclusions for sovereign issuers are identified through the Investment Adviser’s proprietary research. The Investment Adviser leverages data from third-party institutions such as the United Nations and the World Bank to calculate ESG scores across the sovereign universe. Sovereign issuers are evaluated on: (1) a gross national income-adjusted basis to better understand how well a country manages ESG risk relative to its wealth and available resources, as well as (2) on an absolute basis. If the Investment Advisor believes that the third-party data and/or assessment is incomplete or inaccurate, the Investment Adviser reserves the right to identify exclusions for sovereign issuers through its own assessment.
Data quality and processing
Capital Group periodically reviews the performance quality of provider organizations and conducts ongoing monitoring and due diligence activities commensurate with the significance of the services provided.
Data are regularly updated in Capital Group’s internal platforms and made available to relevant teams. When issues are identified in third-party data, they are reported back to the provider(s). The Investment Adviser also applies systematic data quality checks to catch discrepancies and validate with the provider when issues arise.
Proportion of data that is estimated
Third-party providers may estimate data. While reported data are prioritized, Capital Group uses estimated data when reported data are unavailable. The proportion of estimated data varies depending on the data point due to inconsistencies in reporting by investee companies.
Limitations to methodologies and data
The Investment Adviser may be reliant on third-party data or a combination of third-party data and Capital Group’s proprietary research and analysis. However, such data might not capture the full universe of activities of an issuer, change suddenly, be flawed, inaccurate, incomplete or outdated, resulting in a Fund’s investment in an issuer which an investor may expect to be excluded from the portfolio. Capital Group performs ongoing due diligence on third-party data sources and endeavours to ensure that third-party data is reliable.
In addition, in the event that data cannot be obtained through third-party providers or if the Investment Adviser believes that third-party data and/or assessment is incomplete or inaccurate, the Investment Adviser reserves the right to identify business involvement activities through its own assessment (including by using other third-party data sources).
Due diligence
Members of Capital Group's compliance, risk management and internal audit staff conduct periodic assessments on the design and operating effectiveness of the firm’s activities and key controls. This includes compliance with internal processes and procedures as well as with the regulatory landscape in the jurisdictions in which the company operates. Capital Group meets regularly with the third-party data providers to review the quality of the services provided.
Pre-trade and post-trade checks are also in place as further explained in section “Monitoring of environmental or social characteristics” above.
Engagement policies
Establishing dialogue with companies is an integral part of the Investment Adviser’s investment management service to clients. Capital Group’s investment teams meet on a regular basis with company management, including executive and non-executive directors, chairs and finance directors. This enables the company to engage and generate dialogue on any issues that could affect the company’s long-term prospects, including exposures to sustainability issues.
Where Capital Group's investment teams identify an issue material to the long-term value of a company or they are concerned about relative ESG performance, Capital Group's investment professionals and governance teams will engage with management. Management’s response and the steps they take to minimise any associated risks, forms an important part of Capital Group's assessment of management quality, which itself is a key factor in the stock selection decisions.
Designated reference benchmark
The Fund has not designated a reference benchmark to meet the environmental and/or social characteristics it promotes.
Where can more product-specific information be found?
https://docs.publifund.com/1_PROSP/LU1577354035/en_LU
More product-specific information can be found in the periodic reports: