Quarterly Client Update: Fourth Quarter 2023

Quarterly Client Update: Fourth Quarter 2023

We provide regular strategy updates including portfolio changes and proxy voting, and links to our investment rationales, latest articles, statements, webcasts and videos which explore our thinking on sustainable investment, including the challenges and issues we grapple with in our search for high-quality companies.

Strategy updates: portfolio changes & proxy voting

Find out the latest updates on the strategies we manage including significant portfolio changes and proxy voting.

You can also build your own report by selecting individual strategies of interest.

News from the quarter

Collaborative engagement update: Tackling conflict mineral content in the semiconductor supply chain

We remain grateful for the continued support of our PRI collaborative engagement: Tackling conflict mineral content in the semiconductor supply chain, an initiative that first began in 2021. We are pleased to inform you of some recent developments and plans.

Recent achievements
  • Strengthened relationship with the Responsible Minerals Initiative (RMI).1
  • Built trust with leading US electronics companies, who are also steering committee members of the RMI.
  • Chaired and hosted a closed-door workshop in October 2023, endorsed by the RMI, with sixteen leading electronic companies.
  • Became the first investor to speak at the RBA2 and RMI’s Annual Conference in Santa Clara, California on the positive role of capital.
  • Engaged with 21 electronic and industrial companies on mineral traceability.
  • Commissioned Kumi Consulting Ltd (Kumi) to deepen our knowledge, contacts and engagements with companies, trade bodies and organisations like the OECD.
  • Developed, with the help of Kumi, engagement guidelines for initiative supporters, and other investors, to improve their interactions with companies.

RMI Membership

Members of the RMI debated, over a number of months, whether they should allow investors to join their trade body. There were some initial reservations, however a number of company representatives and steering committee members of the RMI and RBA Board Liaison have been strong supporters. There is a growing feeling amongst RMI members that investors could bring a new and constructive perspective to help influence improvements along mineral supply chains. Representatives of the companies and other RMI members believe: “there is a big role for investors, they have a different point of leverage”.

We are pleased that the RMI has taken the significant step of allowing investors to become members of their trade body. This is one of the objectives we set last year.

We believe membership will provide initiative supporters and investors with a deeper understanding of mineral supply chains and greater engagement credibility. Membership should enrich engagements and highlight the importance of mineral traceability at the C-suite level (where we know, through our interactions with companies, that knowledge on this topic is weak). With the strength of collective voice, we must encourage CEOs not to cut corners and to invest more resources to achieve an untainted mineral supply chain, thereby minimising human rights abuse.

What more have we learned?
  • The issue is grave. During a meeting, Fairphone3 explained that even they believe they are only 70% free of tainted minerals.
  • Supply chain complexity means that even determined companies, such as Fairphone, can only map four out of the twelve tiers of companies in their supply chain.
  • Accordingly, few CEOs have a deep awareness of the challenges in their mineral supply chain.
  • Supply chain departments are often viewed as “cost drags” and are inadequately resourced.
  • Many supply chain managers are ‘covert NGOs’ who are frustrated by the lack of impact.
  • Upcoming EU regulations will pressurise companies and investors to focus more intently on human rights abuses in their supply chains.
What we plan to do next
  • Join the RMI as an investor member and seek to establish an investor working group.
  • Share details to initiative supporters and other investors to consider joining the RMI investor membership when it becomes available.
  • Encourage more investors to collaborate on this initiative.
  • Consider broadening the scope of the initiative beyond the 3TGs in line with EU regulations to include all minerals.
  • Encourage initiative supporters to engage on this topic when meeting electronic companies.
  • Engage with banks on lending practices to smelters or refiners (SORs) in the Asia Pacific region.
  • Encourage companies to explore upstream certifications (IMRA4) in their supplier requirements.

We recognise that engagement on this topic will be a long journey, over a number of years, but we hope that by building a closer relationship with the RMI and influential companies in the electronics supply chain we are a step closer to effecting change.


1 Responsible Minerals Initiative (RMI), a trade body with over 400 members, https://www.responsiblemineralsinitiative.org/

2 Responsible Business Alliance (RBA), the parent organisation of the RMI, and the world’s largest industry coalition dedicated to corporate social responsibility in global supply chain, https://www.responsiblebusiness.org/

3 Fairphone is a Dutch electronics manufacturer that designs and produces smartphones and headphones. It aims to minimise the ethical and environmental impact of its devices by using recycled, fairtrade and conflict-free materials, maintaining fair labour conditions throughout its workforce and suppliers, and enabling users to easily repair their own devices through modular design and by providing replacement parts.

4 IMRA: The Initiative for Responsible Mining Assurance. https://responsiblemining.net/what-we-do/assessment/

Collaborative engagement update: Investor Initiative on Hazardous Chemicals (supported by ChemSec)

In line with our ongoing research into the risks of PFAS, polluting man-made substances known widely as “forever chemicals”, we became supporters of ChemSec’s Investor Initiative on Hazardous Chemicals (IIHC).

Prevalent in a wide range of consumer products for decades due to their non-stick qualities and ability to repel grease and stains, forever chemicals have proven toxic effects and do not break down in the natural environment, making them a threat to people and planet. We look forward to participating in this initiative, which will see 50+ investors representing over $10 trillion in AUM engage with major chemical producers to raise awareness of and therefore reduce the risk of these hazardous substances.

To learn more about the initiative, please visit the ChemSec website.

Latest insights

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Stewart Investors Quarterly Client Update Q4 2023

1 October - 31 December 2023

Risk factors

This material is a financial promotion for the Stewart Investors Sustainable Funds Group strategies – Asia Pacific and Japan Sustainability, Asia Pacific Leaders Sustainability, Asia Pacific Sustainability, European Sustainability, European (ex UK) Sustainability, Global Emerging Markets Sustainability, Global Emerging Markets Leaders Sustainability, Indian Subcontinent Sustainability, Worldwide Sustainability and Worldwide Leaders Sustainability – and is intended for professional clients only in the UK, Switzerland and EEA and professional clients elsewhere where lawful.

Within the EU/EEA and Switzerland, the European (ex UK) strategy is only available to investors via a segregated mandate account.

Investing involves certain risks including:

  • The value of investments and any income from them may go down as well as up and are not guaranteed. Investors may get back significantly less than the original amount invested.
  • Emerging market risk: Emerging markets tend to be more sensitive to economic and political conditions than developed markets. Other factors include greater liquidity risk, restrictions on investment or transfer of assets, failed/delayed settlement and difficulties valuing securities.
  • Indian Subcontinent risk: although India has seen rapid economic and structural development, investing there may still involve increased risks of political and governmental intervention, potentially limitations on the allocation of the strategy’s capital, and legal, regulatory, economic and other risks including greater liquidity risk, restrictions on investment or transfer of assets, failed/delayed settlement and difficulties valuing securities.
  • Specific region risk: investing in a specific region  may be riskier than investing in a number of different countries or regions. Investing in a larger number of countries or regions helps spread risk.
  • Currency risk: the strategies invest in assets which are denominated in other currencies; changes in exchange rates will affect the value of the strategies and could create losses. Currency control decisions made by governments could affect the value of the strategies’ investments and could cause the strategies to defer or suspend redemptions of shares.
  • Concentration risk: the European Sustainability and Worldwide Leaders Sustainability strategies referred to in this material invest in a relatively small number of companies which may be riskier than a strategy that invests in a large number of companies.
  • Smaller companies risk: investments in smaller companies may be riskier and more difficult to buy and sell than investments in larger companies.

Where featured, specific securities or companies are intended as an illustration of investment strategy only, and should not be construed as investment advice or a recommendation to buy or sell any security.

If you are in any doubt as to the suitability of our strategies for your investment needs, please seek investment advice.

Investment philosophy

  • We are stewards: Our role is to allocate society’s capital to productive uses, in accordance with our Hippocratic Oath
  • We are long term: Our time horizon is measured in years, not weeks, and we value companies accordingly
  • We invest only in companies contributing to a more sustainable future: We engage constructively as owners to help companies on their sustainability journeys
  • We invest only in high-quality companies: We seek out companies with exceptional cultures, strong franchises and resilient financials
  • We believe capital preservation is important for capital growth: We define risk as the possibility of the permanent loss of client capital

Investment objective

To generate attractive long-term, risk-adjusted returns by investing in the shares of high-quality companies that are particularly well positioned to contribute to, and benefit from sustainable development.

Important information

This material is for general information purposes only. It does not constitute investment or financial advice and does not take into account any specific investment objectives, financial situation or needs. This is not an offer to provide asset management services, is not a recommendation or an offer or solicitation to buy, hold or sell any security or to execute any agreement for portfolio management or investment advisory services and this material has not been prepared in connection with any such offer. Before making any investment decision you should conduct your own due diligence and consider your individual investment needs, objectives and financial situation and read the relevant offering documents for details including the risk factors disclosure. Any person who acts upon, or changes their investment position in reliance on, the information contained in these materials does so entirely at their own risk.

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is ultimately owned by Mitsubishi UFJ Financial Group (MUFG). Certain of our investment teams operate under the trading names FSSA Investment Managers, Stewart Investors and Realindex Investments, all of which are part of the First Sentier Investors Group.

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