Corporate Bond Selection: With very few exceptions, corporate bonds that Resco invests in include Environmental, Social & Governance (ESG) data derived from sources including Bloomberg’s ESG Dashboard and ESG Performance Scorecard. In comparing its ESG performance, the corporate bond segments of Resco’s portfolios presently reference the commensurate blend of the Bloomberg Barclays Global Aggregate Corporate Index and the Bloomberg Barclays Global High Yield Index, depending upon the makeup of Investment Grade and High Yield corporate bonds in the portfolio.
Non-Corporate Instrument Selection: While the ties between sovereign interest rates and currencies and their underlying relationship with ESG criteria are more subjective than those of corporate issuers of equity and debt, we can take into account the distribution of wealth (via metrics like GDP per capita), the levels of corruption present (via metrics like the Corruptions Perception Index) as well as civil and political rights as we form biases toward those countries that promote fairness and democracy.
Portfolio-level ESG Budget: Resco uses an ESG budgeting process that assists it in fulfilling its mandate as an absolute return manager without affecting its cumulative impact with regard to ESG. Resco’s portfolio managers aim to create ESG budget surpluses that can offset, for example, a non-rated issuer that doesn’t report on its ESG impact.
Counter Party Selection: While the flow of responsible investments into financial instruments used in investment management is the primary focus of most Responsible Investment policies, we also extend this to counter parties where either Resco or its funds are responsible for expenses incurred in the process of investment management. Where permitted, we reward those counter parties by showcasing their ESG & Responsible Investment commitments on our website.
Corporate Structure & Transparency: Resco was incorporated as a Limited Company in the United Kingdom, where its founders clearly identified the virtues of a fair and open system of corporate taxation, individual taxation and national welfare. While alternatives structures for tax minimisation were available to the founders, such advise was overlooked on the basis of common sense and fairness. 100% of Resco’s net income is directed to and taxed by those jurisdictions where its operating expenses are incurred to derive that income. Presently 100% of Resco’s income is realised in the United Kingdom.
Corporate Earnings: Resco observes that deviations from ‘normal’ corporate earnings margins are what tend to create generally-negative and non-client-centric perceptions of the asset management industry, and seeks to limit excessive profits first by employing capital to grow the health of its corporate culture and second by giving back to clients, the community and employees if what it terms ‘super profit’ cycles are experienced. A pre-tax earnings margin of 15% is targeted while a hard limit of 25% will trigger action points that will bring our average earnings margins back to target.
Environmental Impact: At this point in Resco’s growth phase, it utilises practical measures by working in a space that employs smart energy efficiency techniques and offsets its carbon using UK metric tonnage per capita guidance, as published by the World Bank.
Giving: Resco will consistently give to organisation that direct their expertise and resources to endeavours that bring fairness to an otherwise unfair world. Regardless of Resco’s capacity to donate its time and money to these endeavours, it will do so consistently and use its communications channels to help raise awareness of those who are doing a great job of helping others. You will find those beneficiaries of Resco’s donations in its monthly newsletter.