T. Rowe Price Global Impact Equity Fund

Product Name

T. Rowe Price Global Impact Equity Fund

Issuer

T. Rowe Price

Category

Investment

Type

Fund or Trust

Target

Retail, Wholesale, Institutional

Certified Since

2021

Asset Classes

International equities

Markets

New Zealand, Australia

Investment Approaches

Impact investing, ESG Integration

It Includes:

  • Riaa icons 14 Education
  • Riaa icons 32 Green property
  • Riaa icons 12 Healthcare and medical products
  • Riaa icons 11 Impact investments
  • Riaa icons 10 Renewable energy and energy efficiency
  • Riaa icons 15 Social and sustainable infrastructure
  • Tree green background Sustainable land and agricultural management
  • Riaa icons 13 Sustainable transport
  • Riaa icons 31 Sustainable water

It has some level of screening for:

  • Riaa icons 41 Alcohol
  • Riaa icons 36 Armaments
  • Riaa icons 33 Fossil fuels
  • Riaa icons 42 Gambling
  • Riaa icons 99 Pornography
  • Riaa icons 35 Tobacco

It fully excludes:

    Overview

    The T. Rowe Price Global Impact Equity Fund has a dual mandate to seek positive environmental or social impact and to out-perform the MSCI AC World ex Australia index. The Fund will invest in companies capable of achieving and sustaining above-average, long-term earnings and cash flow growth and are, in the opinion of the Investment Manager, expected to generate a positive impact under at least one of the Impact Pillars. The materiality of positive impact is assessed according to specific, in-house proprietary impact screening process that aligns to one of the Impact Pillars. In order to have a positive impact under the Impact Pillars, companies must meet at least one of the following four criteria: • Majority of current or future revenues or profits tied to at least one of the Impact Pillar; • Majority of expected revenues or profits in the next 10-years tied to at least one of the Impact Pillar, as projected by the Investment Manager; • Best-in-class impact situations where a company is a leader in generating material social or environmental impact in its respective business activity or sector; and • Unique impact situations where a company has made or is expected to make a material social or environmental impact outside the scope of its otherwise normal business activities.


    Description


    All our investments must satisfy our material impact criteria, measured against three pillars and eight sub-pillars. Our approach and our investments are anchored to the UN Sustainable Development Goals (“SDGs”), a globally recognised framework aligns all parties in the impact journey.

    We ensure impact materiality of our investments through two proprietary screens:

    • Exclusion list—We exclude areas of the global economy that we do not believe can generate positive impact. These include adult entertainment, alcohol, fossil fuels*, gambling, tobacco, for-profit prisons, weapons, and stocks that screen individually on conduct-based metrics. 
    • Impact framework—The Responsible Investment (RI) team establishes industry-specific, forward-looking impact inclusion criteria, guided by three investment pillars and eight sub-pillars aligned to the UN SDGs. 
               - Climate and resource impact(Reducing greenhouse gases (“GHGs”); Promoting healthy ecosystems; Nurturing circular economies)
               - Social equity and quality of life(Enabling social equity; Improving health; Enhancing quality of life)
               - Sustainable innovation and productivity(Sustainable technology; Building sustainable industry and infrastructure)

    Eligible companies must meet at least one of the following four impact inclusion criteria:

          1.    Majority of current revenues or profits is tied to at least one impact sub-pillar
          2.    Majority of projected revenues or profits in 10 years is tied to at least one impact sub-pillar
          3.    Best-in-class response to impact situations: e.g., response to diversity or clean energy leadership 
          4.    Unique impact situation: e.g., COVID vaccine development and treatment

    We seek to align the activities of prospective investment candidates with specific SDGs. The RI team defines industry-specific impact inclusion criteria using two main screens:

    • Automatic screen in (e.g., >50% of revenue exposure)
    • Best-in-class screen

    With respect to the best-in-class screen, the positive impact of a company’s activities may require deeper analysis than just current or future majority revenues. Technological enablers of the environmental transition and leaders in their regions or sectors on societal criteria are examples of where early identification, engagement, and recognition of impact markers are key, especially if the exogenous impact on the environmental or society is outsized. 

    Screen criteria are forward-looking and consider parameters specific to each industry, its outlook, and its forecast pace of growth. For example, screen thresholds for electric vehicle production vary by time horizon (projected revenue exposure by 2020, 2030, and 2040). 

    This initial industry-specific impact screening results in an impact universe of approximatively 600-700 companies and, importantly, ensures both materiality, since a company’s activities must contribute to at least one impact pillar, as well as measurability, defined by of industry-specific thresholds. 

    *Fossil fuel exclusion has the potential to adapt over time as companies with exposure to fossil fuel production demonstrate a clear path to energy transition with substantive reporting and targets. 

    Sign up to learn more and get updates on ethical and responsible investing