Embedding ESG data with traditional financial analysis of a company. ESG integration is core to our investment approach and the foundation of sustainable investing at Sun Life. The way we integrate ESG factors into our investment decision-making varies across our range of asset classes, portfolios and asset management and wealth businesses, but it’s essential to our sustainable investing activity.
We believe we can maximize our opportunity to make a positive impact when we complement ESG integration with stewardship, engagement and/or the intention to create positive change.
There are two approaches to screening: divestment and exclusion, and positive screening.
i) Divestment and exclusion: Excluding specific companies, industries or sectors based on values, ethical considerations, or negative ESG characteristics. Examples include fossil fuel-free funds and tailored portfolio construction to exclude certain companies or sectors, or the bottom performers on ESG ratings.
ii) Positive screening: Including specific companies, industries or sectors based on values, ethical considerations, or positive ESG characteristics. For example, targeting low greenhouse gas (GHG) emitters or top performers on ESG ratings.
We believe engagement can be more powerful than divestment. As a large asset management and wealth business, we can engage directly with companies and investment managers on ESG issues to better understand their approach to managing issues under consideration. We also engage through collaborative industry initiatives. Working alongside other institutional investors helps us better understand how our peers are thinking about common issues.
Thematic and impact investing:
Thematic investing focuses on specific sustainability-oriented areas or themes to guide investment choices, such as renewable energy, waste and water management, sustainable forestry and agriculture. Impact investing is investing with an aim to generate specific, quantifiable, positive ESG impacts and financial return.
We leverage expertise across our asset management and wealth businesses to develop, identify and offer sustainability-themed investments that also meet the specific sustainable investing goals of our Clients.