How Railpen incorporates ESG issues into our Long Term Income Fund

We believe a long-term investment portfolio should have key characteristics, including:

• Stable returns: Returns can come from both capital appreciation and income generated by the investments. Providing steady returns help to meet current and future needs. This can come from investments in stocks, bonds, real estate, infrastructure, and other income-generating assets.

• Diversification: Help to spread risk and reduce the impact of any single investment that may underperform. This can lead to more stable and consistent returns over the long-term.

• Defensiveness: Individual investments should protect against downside risk particularly in times of uncertainty. This means that assets are resilient and can deliver returns in most environments.

• Inflation protection: Inflation can erode the purchasing power of investments over time. Assets should seek to provide protection against inflation through returns that keep pace with inflation, either explicitly or implicitly.

• Legacy: Having a long-term view means considering the world of future generations.  Investments should contribute positively to help shape a better future, but also to protect against association to bad practices that will eventually have to be phased out.

We integrate Environmental, Social, and Governance (ESG) factors into our LTIF approach to provide a number of benefits

1. Improved risk management: ESG considerations can help identify potential risks that may impact a company's performance, such as reputational damage, legal issues, and regulatory changes. By taking these factors into account, alongside all other risks, investors can make more informed investment decisions and potentially reduce the risk of loss (i.e. downside protection).

2. Improved financial performance: Companies with strong ESG practices tend to have more sustainable business models and better long-term financial prospects. This can lead to improved financial performance and higher returns for investors.

3. Increased transparency: Integrating ESG considerations into investment decisions often leads to greater transparency in companies' operations and governance. This allows for better investment oversight as well as asset enhancing opportunities that could drive better returns.

4. Positive impact on society and the environment: By investing in companies with strong ESG practices, we can help drive positive change and contribute to a more sustainable future.

Overall, incorporating ESG considerations into a diversified investment portfolio can lead to a more responsible, sustainable, and profitable investment strategy. Read more about our approach to LTIF and ESG issues in our new report »