MFS1 believes that the best approach is the first approach: promoting sustainability within a corporation. This approach can also produce the best outcomes for investment portfolios, and ultimately, drives sustainable changes to the economy.
Before selecting securities for a fund, MFS integrates ESG factors into their investment research. Embedding ESG factors helps MFS understand and manage any company-specific risks and opportunities within the portfolios.
MFS has also developed a comprehensive ESG training program to strengthen expertise on sustainable investing topics across the firm. The goal? Empower and encourage its employees to incorporate sustainability issues into all facets of their work.
MFS produces company-specific, sectoral and thematic ESG research, which helps the investment management teams make better decisions on behalf of investors. MFS also engages with the organizations in which they invest to advance relevant sustainability issues. This engagement may take the form of:
- encouraging greater disclosure and transparency,
- seeking management support of sustainability and/or greater accountability,
- exercising voting rights in support of sustainability initiatives.
A recent example
With this focus on engagement, MFS has encouraged companies to take action. For example, MFS has prompted companies to reduce greenhouse gas emissions and their overall environmental impact. This is particularly true in relation to fossil fuel companies.
Last summer, MFS used its proxy voting rights to support the election of an activist hedge fund’s nominees to an oil company’s board. This hedge fund had raised concerns about the performance, strategy and board composition at the multinational. The critique centred on poor capital allocation and a lack of board preparedness for an energy transition.
MFS had long viewed the company's actions as insufficient to manage its climate transition risks. After much consideration, MFS and other large institutional investors agreed that voting in favour of the hedge fund’s four nominees was necessary to increase the board’s overall level of awareness of and experience in renewable technologies. As a result of this historic vote, three of the four dissident candidates were elected to the oil company's board of directors.
MFS's sustainability efforts don't stop there. Here are a few more highlights:
- MFS is a signatory to the United Nations Principles for Responsible Investment (PRI);
- They have 1.3 billion CDN dollars in green, social and sustainability bond assets under management (as of December 31, 2020);
- MFS participates in and is an investor member of the Climate Action 100+ group;
- Named Provider of the Year in the Irish Pensions Awards ESG category two years in a row;
- One of the top 10 fund managers committed to ESG according to the Responsible Investment Brand Index.
1 MFS Investment Management or MFS refers to MFS Investment Management Canada Limited and MFS Institutional Advisors, Inc. MFS Investment Management is the sub-advisor to the Sun Life MFS Funds; SLGI Asset Management Inc. is the registered portfolio manager.
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the fund’s prospectus. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.
The views expressed in this commentary are those of the authors and are subject to change at any time. Views expressed regarding a particular company, security, industry or market sector should not be considered an indication of trading intent of any mutual funds managed by SLGI Asset Management Inc. or sub-advised by MFS. These views are not to be considered as investment advice nor should they be considered a recommendation to buy or sell.
Information presented has been compiled from sources believed to be reliable, but no representation or warranty, express or implied, is made with respect to its timeliness or accuracy. This commentary may contain forward-looking statements about the economy and/or markets; their future performance, strategies or prospects. Forward-looking statements are not guarantees of future performance, are speculative in nature and cannot be relied upon.