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 News from the quarter

News from the quarter

A round-up of news from the quarterly reports.

Q3: 1 July - 30 September 2022

Stewart Investors website update 

Following First Sentier Investors’ decision to wind-down and close the St Andrews Partners investment team - which concluded at the end of the quarter - the Sustainable Funds Group will now operate as Stewart Investors. We have realigned the Stewart Investors website to reflect this change.

Q2: 1 April - 30 June 2022

Our Climate Report: The race to zero

Climate change is a critical social, environmental and economic issue. During the quarter, we published our inaugural climate report which contains our climate targets, exposure to climate solutions, and approach to engagement and voting. 

For more information on the largest emitters and contributors to carbon emissions, information on company-level climate change targets, and contributions to climate solutions for the individual strategies we manage.

European SRI Transparency Code Compliance (Eurosif)

We are committed to transparency and believe that we are as transparent as possible given the regulatory and competitive environments that exist in the countries in which we operate. We meet the full recommendations of the European SRI Transparency Code, and for our clients in the UK and Europe we have updated our statement of commitment for the period to 31 December 2022.

Towards Sustainability label

During the quarter, our Irish-domiciled funds within the Asia Pacific Leaders, European, Global Emerging Markets and Worldwide Sustainability strategies were awarded the Towards Sustainability label, measured by the Towards Sustainability Quality Standard. The label aims to instil trust and reassure clients and potential investors that the awarded financial products are managed with sustainability in mind and are not exposed to unsustainable practices. More information on the label is available on the Towards Sustainability site.

Investor Support for Deforestation-free legislation

We have supported a bill put forward by the Fostering Overseas Rule of Law and Environmentally Sound Trade (FOREST) Act, which would provide investors with important information on material financial and climate-related risks to companies potentially linked to deforestation. This bill would help investors mitigate material risks facing portfolios and the companies in which they invest.

We believe it will effectively contribute to curbing global deforestation, thereby helping reduce climate risk and protecting investments in vulnerable sectors. Moreover, the procurement piece of this bill would help investors identify companies that are adequately mitigating climate and forest risk by fulfilling their commitments to net-zero emissions and zero deforestation.

Team changes

Mohan Gundu is retiring from the financial services industry and will be leaving Stewart Investors on 24 July 2022.

Mohan has had a long, successful career that began in the late 80s with roles at various brokerage firms such as Jefferies and CLSA, following his Bachelor of Technology in Civil Engineering and MBA from the Indian Institute of Management. Mohan joined Stewart Investors, Sustainable Funds Group in December 2016 as a senior analyst, and now plans to spend his retirement with his family and pursuing his planned book on the history of capital markets within India. 

Given Mohan’s decision to retire, we have undertaken an internal search for some additional research capabilities. With the First Sentier Investors decision to terminate St Andrews Partners in March 2022, we had the opportunity to interview the outgoing investment team prior to their departure. We are pleased to communicate that we have offered existing St Andrews Partners’ analyst, Tyler Thomas, a permanent role with Stewart Investors. Tyler commenced this role on the 27 June 2022.

Tyler was a graduate investment analyst with the St Andrews Partners team at Stewart Investors. He joined the team in September 2021. Tyler graduated with First Class Honours in Economics from the University of Durham in 2021. Prior to joining the team, Tyler gained internship experience with the St Andrews Partners team in Edinburgh.

Q1: 1 January - 31 March 2022

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

“As a shareholder you should want us to care about conflict minerals … to address it”.

Brian Krzanich, CEO of Intel, 2014.

We were overwhelmed with the support this initiative received, totalling 160 investors with collective assets under management of US$6.59 trillion1. It is clear that the investor community recognises the challenges of mineral sourcing within the semiconductor supply chain, and believes more action is required in order to develop conflict mineral-free supply chains and improve industry practice.

A brief recap of the conflict mineral issue

There have been five broad trends impacting the sourcing of Tin, Tungsten, Tantalum, Gold and Cobalt (known as conflict minerals (CMs)):

  • The mining of these minerals has shifted from Australia and Canada to central Africa.
  • Smelting & refining (SORs) capacity has moved to Asia. SOR ownership is increasingly Chinese.
  • Frameworks on mineral traceability have stagnated. The OECD guidance is over five years old.
  • Regulation and public opinion are forcing greater scrutiny of complex supply chains.
  • High demand for semiconductors could encourage corner cutting in the sourcing of minerals.

Examination of a small sample of conflict mineral statements suggests that progress has been disappointing since an academic study of 1300 companies in 2015 found:

“The reports ultimately reveal shallow, almost cynical, compliance with poorly crafted rules built on a regulatory paradigm better suited to simpler contexts”. The Conflict Minerals Experiment. Jeff Schwartz. P133.

Despite valiant efforts, some conflict mineral statements show that progress is slow and that confidence in companies’ ability to track the provenance and integrity of minerals is low.

To this point, a central and candid sentence in the conflict mineral statement of one large American equipment manufacturer in 2021 has not meaningfully changed since the company started producing their SD form² for the SEC in 2014: 

For the significant majority of smelters reported by the Surveyed Suppliers, there is inadequate information available to assess the source of the conflict minerals they process. Therefore, for Covered Products manufactured in 2020… concluded in good faith that it lacks sufficient information to trace the chain of custody of any conflict minerals contained in its Covered Products up through the supply chain to a specific smelter or, in turn, to a country or mine of origin”.

The problem has not gone away and the associated human rights abuses are still evident. Only at the beginning of April we became aware of a crowd funding initiative to help finance legal proceedings against large technology brands by families from the Congo³. This points to intensifying reputational headwinds.

What have we done so far?

With the support from signatory investors, on 30 November 2021, we wrote to 29 companies. In the letter, we have encouraged the companies to: 

  • Develop and invest in technological solutions to improve traceability, possibly blockchain.
  • Increase transparency and reporting on minerals from mine to product.
  • Encourage and participate in industry wide collaboration to improve industry practices.
  • Impose and enforce harsher sanctions on non-compliance.
  • Reduce demand for new materials by improving recycling initiatives.

To date we have received a response from 21 of the companies. We have requested meetings with all the companies that have responded to the letter, and to date we have had meetings with eight companies.

What have we found?

  • The industry made an early decision to trace minerals in the downstream from smelters or refiners (SORs) and not in the upstream, from the mines. This means that the problem of mineral mixing before the minerals arrive at the SORs materially hinders the tracing of mineral provenance from mine to product.
  • The industry places a heavy reliance on the processes and assurances provided by the Responsible Mineral Initiative (RMI). Yet the RMI states clearly: “This assurance process does not result in a material certification nor does it determine that material at the company is “conflict-free” or is otherwise free of human rights abuses in the supply chain”.
  • Despite relying on suppliers for information, there is little industry collaboration. One foundry said fears of collusion, as with price fixing, was an issue and an explanation.
  • The RMI is considered to be the pinnacle of industry collaboration and yet some companies had little knowledge of the RMI. We note the RMI represents ten industries and is not dedicated to semiconductors.
  • Conflict minerals remain an issue still to be integrated into many senior executive committee agendas.
  • Few companies appear to be going beyond the requirements prescribed by OECD framework, as adopted by the RMI.
  • No company interviewed, so far, has committed budget for research on conceptual/unproven technological solutions, like blockchain.  A chicken and egg scenario was commented on here.

Have we achieved anything?

  • Many companies have asked for suggestions on how they could do more and we have been asked to share any good ideas/better practices we may identify during this engagement.
  • One company, which was previously unfamiliar with the RMI, now plans to pay for RMI services.
  • A foundry stated that this letter, with the weight of interest from investors, will raise the prominence and profile of the conflict minerals issue to the board level.
  • Another foundry suggested they would consider committing budget to research on conflict minerals tracing.


It is extremely early days for this multi-year engagement but it is clear that tracing mineral provenance is an extremely complex challenge for companies. Progress is slow. While there is a unanimous desire to improve practices, some companies are more eager and able to meet this challenge than others. Surprisingly, the strength of ambition to improve practices has been independent, so far, of company size or industry prominence. This may point to complacency within certain areas of the industry.

We will continue to update you on any progress we make and any challenges we encounter. 


[1] As at 30 November 2021

[2] An SD form is a specialised disclosure report used for investment disclosure reports outside the typical filing categories for the U.S. Securities and Exchange Commission (SEC) forms. SD reports include Conflict Minerals Disclosures and Responsible Sourcing reports.

[3] International Rights Advocates. Multinational companies are liable for human rights abuses within their supply chains

Reference material

European (ex UK) Sustainability strategy launch

On the 25 January 2022, we launched a new European Sustainability strategy portfolio which excludes UK-listed companies. The portfolio comprises 39 companies we consider to be among the very best sustainability companies in Europe (ex-UK), and complements the European Sustainability (inc-UK) strategy, which was launched in mid-2021.

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

Morningstar awards

We are delighted that Stewart Investors Sustainable Funds Group has won the inaugural Fund Manager of the Year – Sustainable Investing category at the 2022 Morningstar Australia Awards; as well as the Best Asset Manager - Sustainable Investing category and the Best Global Equity Fund for the Stewart Investors Worldwide Leaders Sustainability Funds (USD ACC) at the 2022 Hong Kong Morningstar Awards for Investing Excellence. 

First Sentier Investors announcement

On 1st March 2022, First Sentier Investors announced their decision to proceed with the closure and orderly wind-down of the St Andrews Partners investment team. This does not lead to any significant changes to the Sustainable Funds Group.

Q4: 1 October - 31 December 2021

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

During the quarter, we launched another collaborative engagement effort, supported by 160 investors with collective assets under management of US$6.59 trillion, focused on conflict minerals within the semiconductor supply chain.

Tantalum, tin, tungsten, gold and cobalt (referred to collectively as conflict minerals) are vital materials and building blocks of the semiconductor industry. The poor traceability of these minerals along complex supply chains, including smelting and refining, can obscure the provenance of these minerals. This can lead to the inadvertent financing of armed conflict and the abuse of human rights.

We are long-term investors who believe that sound labour practices and good environmental management go hand in glove with shareholder returns. As regulators and consumers pay increasing attention to the challenges of mineral sourcing within the semiconductor supply chain, we believe there is an opportunity for companies to take a lead in the development of conflict mineral-free supply chains. Specifically we wrote to 29 companies involved in the manufacture of semiconductors encouraging them to: 

  • develop and invest in technological solutions to improve traceability, possibly blockchain,
  • increase transparency and reporting on minerals from mine to product,
  • encourage and participate in industry wide collaboration to improve industry practices,
  • impose and enforce harsher sanctions on non-compliance,
  • reduce demand for new materials by improving recycling initiatives.

We are in the early stages of this engagement and intend to provide further updates on progress and company responses in due course.

UNCTAD Sustainable Fund Awards 2021

In October, at the World Investment Forum 2021, UNCTAD (United Nations Conference on Trade and Development) launched the Sustainable Fund Awards to recognise companies' commitment to Sustainable Development Goals (SDGs) funding and the achievements of high-quality, high-impact sustainable funds.

We are honoured that one of our Global Emerging Markets Sustainability funds was one of two winners awarded the UNCTAD Sustainable Emerging Market Fund Award 2021.

Further information on the awards is available online as well as the awards ceremony where Sujaya Desai, Co- Portfolio Manager, makes an acceptance speech on the team’s behalf. 

Global Emerging Markets Leaders Sustainability - UK and European launch

On the 2 December 2021, our Global Emerging Markets Leaders Sustainability strategy, which launched in the US in April 2020, became available to clients in the UK and is now available in Europe.

The fund invests in 25-60 high-quality emerging markets companies that we consider to be particularly well positioned to contribute to, and benefit from, sustainable development.

More information on the fund and strategy is available on our website.

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