Sustainability: a core MFS commitment

MFS Investment Management¹ believes that the best approach is the first approach: promoting sustainability within a corporation.

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.

An 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.

Already in 2021, 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.

Since then, MFS engaged with several companies through Climate Action 100+, encouraging them to adopt best practices such as setting science-based emissions reduction targets and enhancing their ESG disclosures.

Other initiatives

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),
  • the CFA Institute Diversity, Equity, and Inclusion Code (USA and Canada) (the "DEI Code") and
  • the CEO Action for Diversity & Inclusion^TM pledge;
• MFS participates in and is an investor member of the Climate Action 100+ group;
• MFS is a supporter of the FAIRR Initiative’s investor network since 2021;
• MFS appointed a Chief Diversity, Equity and Inclusion Officer. This newly created position is responsible for enhancing MFS’ efforts to become a more diverse, equitable and inclusive workplace.