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Hermes Investment Management

Friedensstrasse 6-10

D-60311 Frankfurt am Main

www.hermes-investment.com/de

Contact Institutional Clients

Antonis Maggoutas

Head of Business Development, Germany & Austria

Phone: +49 69 913339 51

E-mail: Antonis.Maggoutas@hermes-investment.com

Contact Wholesale Clients

Valentin Richter

Associate Director - Business Development, Germany and Austria

Phone: +49 69 913339 31

E-mail: Valentin.Richter@hermes-investment.com

Company at a glance

At Hermes, we are committed to delivering superior risk-adjusted investment returns to our clients. In addition to our financial targets, we understand that the way we achieve our investment objectives will have wider societal impacts. As such, we seek to provide both for a better financial future for our ultimate stakeholders, as well as for a better, more sustainable, society. The pursuit of “outcomes beyond performance” drives the execution of all of our strategies.

We achieve this goal through a holistic approach to investing that incorporates environmental, social and governance considerations into all of our investment products. Our ability to mitigate ESG risks and capture investment opportunities arising from these considerations is essential to achieving consistent investment out-performance for our clients.

Our heritage has enabled us to put this into practice since 1983 – firstly to manage the assets of the BT Pension Scheme (BTPS), and subsequently to offer our skills to a broad and fast-growing range of customers globally, from institutions to advised private investors. Our specialist, high conviction investment teams manage assets across equities, credit, infrastructure, private equity, private debt and real estate.

Critically, Hermes has one of the world’s largest stewardship resources of any fund manager in the world . Launched over 14 years ago, Hermes EOS provides a platform for like-minded investors to pool resources, creating a powerful force for positive change.

Market position and target clients

Hermes Investment Management provides active investment strategies and stewardship. Our goal is to help people invest better, retire better, and create a better society for all. We have been doing this since 1983, first to manage the assets of our original owner, the BT Pension Scheme (BTPS), and more recently for a growing range of external customers, from institutions to advised private investors.

Our legacy of investing on behalf of one of the UK’s largest corporate pension schemes, along with our partnerships with some of the world’s leading institutions, provides us deep insight into the long-term needs of investors and enables us to offer solutions to their investment needs that may be hard to access elsewhere. Our strong heritage of acting in the interests of over 300,000 pension holders – not shareholders – means a culture of fiduciary responsibility is embedded at the heart of our organisation and gives us a track record of being very closely aligned to our clients. Today, we manage money for more than 500 clients in nearly 30 countries.

Investment philosophy in general

Hermes is an established investment management firm focused on Outcomes Beyond Performance: delivering excellent long-term investment performance and stewardship, while improving the lives of many. Our goal is to help people investment better, retire better, and create a better society for all.

We believe in independent and empowered investment teams, each with their own investment process, fully accountable for delivering sustainable long-term performance to our clients. We believe this structure provides focused, entrepreneurial asset management capabilities and supports our performance-oriented investment culture. Independent oversight is provided by our Investment Office, which pre-emptively and proactively ensures clients’ interests are always at the forefront of our portfolio managers’ considerations.

We believe that ESG considerations are a fundamental component of investment decisions and integrate them into our decision-making processes, in ways that are relevant to the specific strategy being managed. We have been doing so since our establishment in 1983. Hermes EOS, one of the world’s largest stewardship teams, actively engages in areas such as income equality, gender diversity, governance and environmental impact. We sit on many of the world’s leading ESG stewardship committees and advisory boards including:

  • PRI

  • CFA Future of Finance Advisory Council

  • GRESB

  • IIGCC

  • UNEP FI investment commission

  • UK Banking Standards Board

sub-category
Euroland / Europe x
USA

Japan
Global
x
Asien ex Japan
x
Latin America
Afrika
Emerging Markets (global)
x
Themes / Sectors
x
Market-Cap (Large-, Mid-, Small-Cap)

Active
x
Passive

ETF

Other

Short description of your competence and USPs in managing equities

As at 31st December 2018, Hermes managed EUR19,356 million across our equity capabilities.

A list of our equity products is shown below:

  • Asia ex-Japan

  • European Alpha

  • Europe ex-UK

  • Eurozone

  • Global

  • Global ESG

  • Global Emerging Markets

  • Global Emerging Markets SMID

  • Global Screened ESG

  • Global Small Cap

  • Impact Opportunities

  • SDG Engagement

  • US SMID

ESG PHILOSOPHY

ESG considerations are at the heart of our business and incorporated across our range of public and private markets capabilities. We believe we have a responsibility that extends beyond the financial and that we must consider the impact of our decisions on the world that our clients live in. To ensure that this is the case and that we continue to develop our integration of ESG across the business, we established the role of Head of Responsibility in 2014 and created a dedicated Responsibility Office.

Our responsible investment approach has been expressed through a number of policy guidelines and principles, both at the Hermes corporate level and by our stewardship and investment teams. These include the Hermes Responsible Ownership Principles, which seek to create a common understanding between boards, managers and owners of the proper goals of a public company. Complementing these global principles, we have also developed specific corporate governance guidelines for 15 major countries. These guidelines take into account the regulatory and legal context of a country as well as corporate governance best practice.

Hermes Ownership Principles:

https://www.hermes-investment.com/wp-content/uploads/2018/10/final-responsible-ownership- principles-2018.pdf

Hermes’ regional corporate governance guidelines:

https://www.hermes-investment.com/ukw/stewardship/eos-literature/

The Responsible Ownership Principles sets out our expectations for the companies we invest in on our clients’ behalf and covers the below points:

  • Transparency and communication

  • Corporate culture

  • Strategy

  • Financial disciplines, structure and risk management

  • Stakeholders, environmental and social issues

  • Governance


By being explicit about appropriate expectations, we aim to create a better framework for communication and dialogue between boards and management on the one hand, and shareholders on the other hand. This can contribute to better management of companies and ultimately the sustainable creation of wealth for their shareholders. The Principles were updated in 2010 to include lessons from the financial crisis.

Responsibility is, of course, a far wider concept than shareholder engagement. We believe it is our responsibility to lead discussion and debate about the fiduciary responsibilities of fund managers to our clients, their stakeholders and, ultimately, society at large. We are active participants in public policy discussions and support the 300 Club, founded and previously chaired by our CEO Saker Nusseibeh, as an independent forum for discussion and debate about the responsibilities of the industry.

We also believe that we should lead by example. We have a strong community engagement program in which many of our personnel participate. We have ISO 14001 accreditation for environmental responsibility and we adhere to the London living wage guidelines. Our internship and work experience programs actively seek out candidates from across the social spectrum.A broader description of our beliefs can be found at the following link:

https://www.hermes-investment.com/ukw/about-us/

ORGANISATION

Category

ESG-Officer x
UN PRI x
ESG-Company Report x
ESG (Company) Rating x

Investmentstrategies

Asset Classes
Equities x
Fixed Income x
Convertible Bonds
Real Estate x
Multi Asset
Others

Short describtion of your ESG-competences

We believe that the seamless integration of ESG considerations into the investment process is critical to a portfolio manager’s ability to achieve sustainable long-term out-performance at an acceptable level of risk. Gaining an understanding of the regulatory, reputational and managerial risks facing individual companies, and the implication these have on investors’ portfolios, helps  investors more effectively manage their exposures. Hermes feels that this relationship will only  strengthen.

The Hermes Global Equities team has observed a longer-term trend towards investors favouring companies that are well managed with a greater level of transparency. In response to this, the team developed a number of tools, including the ESG Dashboard, the QESG Score (proprietary ESG rating) and the Portfolio ESG Monitor, that are available for use by portfolio managers across Hermes. These tools highlight potential high-risk behaviour from an ESG perspective within companies, at which point Hermes Equity Ownership Services (Hermes EOS) – our specialist and dedicated in-house ESG advisory team – can be consulted further as required.


ESG Dashboard

The ESG Dashboard integrates Hermes EOS’s proprietary ESG research with data from a range of external providers, including Sustainalytics, Trucost, FactSet and Bloomberg. The Dashboard allows all Hermes investment teams to access key ESG-related information on any stock in their investment universe. The amalgamation of the different sources allows stocks to be assessed across many metrics. The Dashboard also highlights industry-specific key performance indicators related to social, ethical and environmental factors.


QESG Score

The QESG Score, which forms part of the ESG Dashboard, was built using the expertise of Hermes EOS. The Score identifies stocks with positive ESG characteristics and/or stocks demonstrating positive ESG change. Proprietary data generated internally is included, as well as best-of-breed ESG data sources (detailed above). The QESG Score was built from a conceptual standpoint and is tilted towards governance factors, which have been shown to add greater shareholder value and capitalise on the belief that well-managed companies will outperform over the long term.


Portfolio ESG Monitor

The most recent development has been the Portfolio ESG Monitor, which reports on ESG characteristics of portfolio stocks (both in absolute and benchmark-relative terms) including voting and engagement data from Hermes EOS. The Monitor also highlights companies with potential controversies and ESG concerns. The tool acts to promote discussion on thematic ESG risks as well as identify the best and the worst companies according to various ESG metrics. By thoroughly rating companies on these extra-financial criteria, businesses (and investment managers) can be steered towards greater consideration of the ESG issues. This incentive is complemented by direct dialogue with businesses that is made possible through Hermes EOS.


All investment teams at Hermes have access to the tools described above and a dedicated point of contact within Hermes EOS to help integrate ESG issues into their analysis.

ESG-Methods

Methods

ESG Intergration x
Best in Class

Exclusion Criteria x
Positiv Screening x
Impact Investing x
Engagement / Active Ownership x
Minimum

ESG Reporting x