SICO is a leading regional asset manager, broker, and investment bank headquartered in the Kingdom of Bahrain with a growing regional presence in Saudi Arabia and the UAE. SICO has a well-established track record as a trusted regional wholesale bank offering a comprehensive suite of financial solutions, backed by a robust and experienced research team that provides regional insights and analysis of many of the region’s major equities and fixed income securities. Our mission as an organization is to inspire, enable, and create sustainable value for our stakeholders, clients, people, and the communities we serve.
We acknowledge that ESG is continuously gaining traction in the region, and we want to be ahead of the curve by aligning our operations with international best practices, as well as global and regional peers who are working to become responsible investors, integrating ESG considerations in our investment decision process.
The long-term performance of the investment portfolio can be affected by ESG issues (such as the increased focus on sustainable development, climate change, or the global transition to more sustainable and inclusive economies), and by integrating ESG criteria as part of our investment process, we are gaining a deeper insight into potential underlying risks to prospective gains and mitigate them accordingly.
Developing a comprehensive ESG framework as defined by the UNPRI, the world’s leading proponent of Responsible Investment, is very important for SICO. As a regional wholesale bank, SICO remains committed to promoting responsible investment, and is continuously working to integrate ESG considerations into the fabric of its operations, which allows SICO to create long-term value for its stakeholders.
Furthermore, SICO is committed to promoting transparency in the presentation of its investments and, therefore, adopts the highest international standard and global practices, such as the Global Investment Performance Standards (GIPS), to protect the interests of its shareholders and clients above all else.
This Responsible Investment Policy covers SICO’s Equity and Fixed income asset management department and the Strategy, Partnership and Treasury department. This document seeks to assist in creating an efficient process by acting as a point of reference and providing a series of initiatives to be carried out by all the relevant employees involved in the integration of ESG considerations into SICO’s investment decision process.
This policy has been developed to provide guidance to the organization on how ESG factors should be integrated into its investment decision process as an additional lens to support the identification of potential risks likely to affect our investment portfolio. We expect this policy to evolve over time to reflect changes in business practices and the regulatory landscape. Accordingly, we monitor this policy annually and will typically review our approach when required.
ESG is a component of our investment due diligence process which involves integrating additional views of an investment that go beyond a common quantitative analysis. SICO’s investment teams will have access to sufficient ESG data to assess existing and expected investments and monitor investments for significant developments.
The firm will establish an ESG Senior Management Committee consisting of Senior Management as well as senior members of the corporate and asset management departments and control functions. This committee will be the main governance structure to drive and manage ESG initiatives for the different departments involved (Asset Management Dept. and Strategy, Partnership and Treasury department). The committee meets at least twice a year to assess SICO’s efforts across the organization as a whole and each of the different departments and identify those areas which will help SICO to further improve its performance in terms of ESG.Furthermore, the oversight of the responsible investment activities at SICO is also integrated across the investment departments mentioned before, as follows:
Equity and Fixed Income Asset Management Department:
Strategy, Partnership, & Treasury Department:
Our ESG Investment approach is based on the following principles:
Our ESG Investment approach entails the integration of ESG considerations within SICO’s investment process, combining traditional internal financial analysis with additional third-party data (e.g., ratings) associated with environmental, social, and governance topics. A list of potential ESG factors considered in the investment analysis include, among others:
Given the differences in the investment decision process of our varying investing lines of business, SICO takes a bespoke approach to the integration of ESG considerations within each of our asset management departments. However, our general approach focuses on integrating ESG factors in our existing investment decision process to identify, assess and mitigate potential risks and benefit from potential opportunities linked to our investment portfolio.
SICO’s investment teams are responsible for the integration of third-party ESG data when conducting the appropriate research on investment trends, market potential, investor segments, and investment opportunities, as well as for the analysis of credit research, and debt analysis, etc., as well as when identifying potential risks likely to impact our investment portfolio.
Furthermore, the third-party ESG data is also used to obtain information on the impact of selected ESG issues on general market conditions and specific investment avenues, present critical research information and risk parameters to the investment teams, while ESG considerations are also included as criteria within SICO’s due diligence processes.
Within our Equity Investment operations, we integrate third-party ESG data to identify potential risks and opportunities in our asset managers’ investment analysis and decision-making process, as an additional mechanism to determine if any of our investments might be impacted by any reputation or business issues. The process is led by the Buy-side Research team, who uses the information provided by third-party rating agencies to incorporate ESG data in the investment analysis, including:
Furthermore, the screening of our investments against certain ESG factors might lead to their exclusion based on the identification of significant risks in the following areas:
Fixed Income Management
Within our Fixed Income operations, we also integrate third-party ESG data in our investment analysis and decision-making process of our asset managers, to enhance risk-adjusted returns and manage downside risk through the identification of risks and opportunities that might not be otherwise identified without the application of the ESG lens.
The process is led by the Buy-side Research team, who uses the information provided by third-party rating agencies to incorporate ESG data in the investment analysis to:
The Strategy, Partnership & Treasury department
Our treasury operations include investments in different types of products such as direct investments (Equity and Fixed Income), Externally Managed Funds (such as Mutual or Hedge Funds), SICO’s Funds, and Derivatives.
Within the operations of this department, we integrate third-party ESG data (e.g., ratings) in the investment analysis and decision-making process. Particularly for our Externally Managed Fund Investments, we strive to identify the level of incorporation of ESG considerations by the Fund Managers in their own investment decisions through: