City of London Investment Management Company Limited (CLIM) is a significant long-term investor in closed-end funds (CEFs) and seeks to promote growth in the industry by encouraging CEFs to make their product more attractive to investors. CLIM firmly believes that businesses which adopt best practice in their ESG policies will ultimately earn better returns. We use Sustainalytics, a global leader in ESG research and data, to measure the ESG characteristics of the underlying CEF investments and as a basis to promote ESG awareness to CEF boards and their investment managers. Improving CEF governance has been a key objective for CLIM since our business was founded but we do not otherwise select CEF’s according to their ESG characteristics. However, a key consideration is to encourage CEFs to be more explicit about how ESG considerations are integrated into their investment processes.
CLIM is a signatory of the PRI – Principles for Responsible Investment. PRI is an independent initiative, supported by the UN, that encourages investors to use responsible investment to enhance returns and better manage risks.