The emerging markets firm co-founded by leading Brexit advocate Jacob Rees-Mogg, Somerset Capital Management LLP, has become a signatory to the Principles for Responsible Investment (PRI).
Rees-Mogg, a social conservative who is Member of UK Parliament for North Somerset, co-founded the asset manager in 2007, although he no longer has day-to-day responsibilities at the £8.4bn (€9.4bn) firm.
He has a stake of at least 15% in the firm, according to his declaration of interests, and signed off on its financial accounts last month as a ‘designated member’.
Signing up to the PRI represents something of an about-turn by Somerset, which recently set up a Dublin-domiciled fund seeded by Swedish pension giant Forsta AP-fonden (AP1), a long-standing client.
According to its ESG policy on its website currently, Somerset says: “Whilst we are sympathetic to the aims of the UN-PRI, we prefer to allow our clients to make their own acquired judgement of the sincerity with which we apply our long-term research driven approach to investment.”It sees a “tension between ‘responsible’ investment, where that involves one-on-one engagement with management over such issues depending on the nature of the engagement, and the full disclosure and transparency of markets”.
It adds: “We make no claim to using environmental, social and governance concerns as tenets of ethics in the fashioning of investment returns.”
And it says its culture of investment analysis goes beyond the “narrow definition” of non-financial factors found in ESG; it looks also at legal, accounting, political, psychological and anthropological factors.
Somerset, which is headed by CEO Dominic Johnson, has not committed to the UK’s Stewardship Code, saying it is not relevant – although it supports the Code’s underlying objectives.
AP1 told Responsible Investor that signing the PRI is not a mandatory requirement and that integrating ESG into investment process is more important.
“In the case of Somerset they did a long and thorough study of what are the implications of becoming a signatory and came to the conclusion that it would be positive for them to sign.” The fund said the firm has been “integrating ESG in a good manner for a long time”.
With reporting by Paul Verney.