sustainability report

2023 MFS Annual Sustainability Report


 

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  • APPROACH, GOVERNANCE AND ENGAGEMENT

    Our Approach, Governance and Engagement

    • In Our CEO's Words

    • Our Approach to Sustainability

    • Resourcing Our Firm’s Sustainability Strategy

    • Examples of Engagement in Action

    In Our CEO's Words

    In Our CEO’s Words

    Hear from Michael Roberge, MFS chair and CEO, on the evolution of sustainability and why client alignment remains our north star.

    Our Approach to Sustainability

    Our Approach to Sustainability

    Three Pillars Underpinning Our Strategic Approach to Sustainability

    Our purpose is to create value responsibly. That’s why we assess sustainability issues that could materially affect our clients, our business and our investments.

    But it’s not just about bottom-up research. We believe constructive stewardship gives us a deeper understanding of the companies we invest in so we can better deliver durable competitive advantages and financial returns.

    Resourcing Our Firm’s Sustainability Strategy

    Resourcing Our Firm’s Sustainability Strategy

    At the heart of our commitment to sustainability is a decentralized approach. Because we spread the responsibility for integrating material sustainability factors across our global investment team, ESG considerations are handled by the same people who are making investment decisions all day long — not a separate team. Bringing together financial and nonfinancial analysis equips our decision-makers with a comprehensive view of the companies and issuers they cover.

     

    MFS Sustainability Strategy and Governance Structure

    To support this approach, we’ve set-up a collaborative global structure to share insights and provide context for every decision.

    Examples of Engagement in Action

    Examples of Engagement in Action

    As well as bottom-up research, active ownership requires thoughtfully engaging with companies on the most material sustainability issues.

    Explore case studies on our discussions with companies and issuers:


  • Client Alignment

    • Regular Review of Industry Initiatives

    • TCFD Action Plan

    Regular Review of Industry Initiatives

    Regular Review of Industry Initiatives

    Working together with the broader investment community can boost the effect of our sustainability initiatives and help clients fulfill their fiduciary duties.

    Learn how we decide which initiatives to join and the extent of their impact.

     Our 5 Key Pillars

     Meeting Client Expectations

     Our Collaboration With PRI

     Our Work With Climate Action 100

    TCFD Action Plan

    TCFD Action Plan

    Because climate change creates financially material risks and opportunities for most companies, investors need a pragmatic plan to position their portfolios.

    Our 2023 Strategic Climate Action Plan is written in line with the Task Force on Climate-Related Financial Disclosures (TCFD) and provides the following:

    • An overview of TCFD and reporting requirements
    • Details on our commitment to net zero
    • Metrics and targets for our investments
    • A roadmap for 2024

  • Our Roadmap to Achieving Net Zero

    • NZAM Commitment and Approach

    • Carbon Intensity at MFS Strategy Level

    NZAM Commitment and Approach

    NZAM Commitment and Approach

    As a signatory to Net Zero Asset Managers initiative (NZAM), we’re committed to supporting the goal of achieving net zero carbon emissions by 2050 or sooner.

    Carbon Intensity at MFS Strategy Level

    Carbon Intensity at MFS Strategy Level

    To provide clients greater transparency, our carbon intensity analysis helps us assess a company’s carbon reduction targets so we can better determine the climate risk of different portfolios set against their benchmarks.

    Representative Strategies Carbon Intensity1

      2022 2023

    Equity - Global

    WACI Coverage WACI Coverage (%)
    MFS Global Equity

    100

    100

    100

    99

    MFS Global Value Equity

    78

    95

    71

    98

    MFS Global Growth Equity

    65

    98

    71

    98

    MFS Low Volatility Global Equity

    262

    100

    171

    99

     

      2022 2023

    Fixed Income

    WACI Coverage WACI Coverage (%)
    MFS Global Credit

    249

    80

    190

    79

    MFS US Credit

    377

    83

    281

    83

    MFS Euro Credit

    308

    79

    195

    82

    We’ve also developed robust tools that allow our portfolio managers to show clients how many companies in their portfolio disclose carbon emissions data and have implemented a net zero or science-based target.

    Weighted Average Carbon Intensity (Scope 1+2) (tonnes CO2e/$revenues). Sources: S&P/Trucost, FactSet and Clarity AI. The information set forth above is dependent on the accuracy and availability of emissions data for which MFS relies on issuers and third-party data providers. Lower portfolio data coverage will yield less reliable carbon intensity metrics. 2022 fixed income strategies WACI have been recalculated using S&P/Trucost.


  • Our Inclusive Culture

    • DEI at MFS

    DEI at MFS

    DEI at MFS

    Diversity, equity and inclusion (DEI) are foundational to the work we do as active managers, essential to our longevity and critical to our purpose of creating value responsibly.

    We believe operating from a place of inclusion means welcoming the ideas of diverse thinkers and making our firm a place where every voice is valued and everyone can flourish.

    2023 Firmwide Highlights - DEI Progress

    CONNECT WITH GLOBAL ORGANIZATIONS
    AND SUPPORT DIVERSE COMMUNITIES

    • CFA DEI Code Signatory
    • CEO Action for Diversity & Inclusion signatory
    • Workforce Disclosure Initiative (ShareAction) participant and supporter
    • Member of Nicsa’s Diversity Project
    • Member of the Diversity Project UK
    • Support underserved communities through decades-long charitable partnerships

    SELF-IDENTIFICATION METRICS

    • 2.3% LGBTQ+ identifying
    • 8.7% Employees with disabilities
    • 0.6% Protected veteran
    294
    EMPLOYEES (147 PAIRINGS) PARTICIPATED IN OUR HIGH-POTENTIAL MENTORSHIP PROGRAM
    99
    EMPLOYEES (58 PAIRINGS) PARTICIPATED IN WE@MFS (WOMEN’S ERG) MENTORSHIP PROGRAM

     

     

    MFS may incorporate environmental, social, or governance (ESG) factors into its investment decision making, fundamental investment analysis and engagement activities when communicating with issuers. The statements or examples provided above illustrate certain ways that MFS has historically incorporated ESG factors when analyzing or engaging with certain issuers but they are not intended to imply that favorable investment, ESG outcomes or engagement outcomes are guaranteed in all situations or in any individual situation. Engagements typically consist of a series of communications that are ongoing and often protracted and may not necessarily result in changes to any issuer’s ESG-related practices. Issuer outcomes are based on many factors and favorable investment or engagement outcomes, including those described above, may be unrelated to MFS analysis or activities. The degree to which MFS incorporates ESG factors into its investment decision making, investment analysis and/or engagement activities will vary by strategy, product, and asset class, and may also vary over time, and will generally be determined based on MFS’ opinion of the relevance and materiality of the specific ESG factors (which may differ from judgements or opinions of third-parties, including investors).  Any examples above may not be representative of ESG factors used in the management of any investor’s portfolio. Any ESG assessments or incorporation of ESG factors by MFS may be reliant on data received from third-parties (including investee companies and ESG data vendors), which may be inaccurate, incomplete, inconsistent, out-of-date or estimated, or only consider certain ESG aspects (rather than looking at the entire sustainability profile and actions of an investment or its value chain), and as such, may adversely impact MFS’ analysis of the ESG factors relevant to an investment. The information included above, as well as individual companies and/or securities mentioned, should not be construed as investment advice, a recommendation to buy or sell or an indication of trading intent on behalf of any MFS product.

    The views expressed are those of the author(s) and are subject to change at any time. These views are for informational purposes only and should not be relied upon as a recommendation to purchase any security or as a solicitation or investment advice. No forecasts can be guaranteed.

    Unless otherwise indicated, logos and product and service names are trademarks of MFS® and its affiliates and may be registered in certain countries.

    This material is directed at investment professionals for general information use only with no consideration given to the specific investment objective, financial situation and particular needs of any specific person. Any securities and/or sectors mentioned herein are for illustration purposes and should not be construed as a recommendation for investment. Investment involves risk. Past performance is not indicative of future performance. The information contained herein may not be copied, reproduced or redistributed without the express consent of MFS Investment Management (“MFS”). While the information is believed to be accurate, it may be subject to change without notice. MFS does not warrant or represent that it is free from errors or omissions or that the information is suitable for any particular person’s intended use. Except in so far as any liability under any law cannot be excluded, MFS does not accept liability for any inaccuracy or for the investment decisions or any other actions taken by any person on the basis of the material included. MFS does not authorize distribution to retail investors.

Our Approach, Governance and Engagement

  • In Our CEO's Words

  • Our Approach to Sustainability

  • Resourcing Our Firm’s Sustainability Strategy

  • Examples of Engagement in Action

In Our CEO's Words

In Our CEO’s Words

Hear from Michael Roberge, MFS chair and CEO, on the evolution of sustainability and why client alignment remains our north star.

Our Approach to Sustainability

Our Approach to Sustainability

Three Pillars Underpinning Our Strategic Approach to Sustainability

Our purpose is to create value responsibly. That’s why we assess sustainability issues that could materially affect our clients, our business and our investments.

But it’s not just about bottom-up research. We believe constructive stewardship gives us a deeper understanding of the companies we invest in so we can better deliver durable competitive advantages and financial returns.

Resourcing Our Firm’s Sustainability Strategy

Resourcing Our Firm’s Sustainability Strategy

At the heart of our commitment to sustainability is a decentralized approach. Because we spread the responsibility for integrating material sustainability factors across our global investment team, ESG considerations are handled by the same people who are making investment decisions all day long — not a separate team. Bringing together financial and nonfinancial analysis equips our decision-makers with a comprehensive view of the companies and issuers they cover.

 

MFS Sustainability Strategy and Governance Structure

To support this approach, we’ve set-up a collaborative global structure to share insights and provide context for every decision.

Examples of Engagement in Action

Examples of Engagement in Action

As well as bottom-up research, active ownership requires thoughtfully engaging with companies on the most material sustainability issues.

Explore case studies on our discussions with companies and issuers:


Client Alignment

  • Regular Review of Industry Initiatives

  • TCFD Action Plan

Regular Review of Industry Initiatives

Regular Review of Industry Initiatives

Working together with the broader investment community can boost the effect of our sustainability initiatives and help clients fulfill their fiduciary duties.

Learn how we decide which initiatives to join and the extent of their impact.

 Our 5 Key Pillars

 Meeting Client Expectations

 Our Collaboration With PRI

 Our Work With Climate Action 100

TCFD Action Plan

TCFD Action Plan

Because climate change creates financially material risks and opportunities for most companies, investors need a pragmatic plan to position their portfolios.

Our 2023 Strategic Climate Action Plan is written in line with the Task Force on Climate-Related Financial Disclosures (TCFD) and provides the following:

  • An overview of TCFD and reporting requirements
  • Details on our commitment to net zero
  • Metrics and targets for our investments
  • A roadmap for 2024

Our Roadmap to Achieving Net Zero

  • NZAM Commitment and Approach

  • Carbon Intensity at MFS Strategy Level

NZAM Commitment and Approach

NZAM Commitment and Approach

As a signatory to Net Zero Asset Managers initiative (NZAM), we’re committed to supporting the goal of achieving net zero carbon emissions by 2050 or sooner.

Carbon Intensity at MFS Strategy Level

Carbon Intensity at MFS Strategy Level

To provide clients greater transparency, our carbon intensity analysis helps us assess a company’s carbon reduction targets so we can better determine the climate risk of different portfolios set against their benchmarks.

Representative Strategies Carbon Intensity1

  2022 2023

Equity - Global

WACI Coverage WACI Coverage (%)
MFS Global Equity

100

100

100

99

MFS Global Value Equity

78

95

71

98

MFS Global Growth Equity

65

98

71

98

MFS Low Volatility Global Equity

262

100

171

99

 

  2022 2023

Fixed Income

WACI Coverage WACI Coverage (%)
MFS Global Credit

249

80

190

79

MFS US Credit

377

83

281

83

MFS Euro Credit

308

79

195

82

We’ve also developed robust tools that allow our portfolio managers to show clients how many companies in their portfolio disclose carbon emissions data and have implemented a net zero or science-based target.

Weighted Average Carbon Intensity (Scope 1+2) (tonnes CO2e/$revenues). Sources: S&P/Trucost, FactSet and Clarity AI. The information set forth above is dependent on the accuracy and availability of emissions data for which MFS relies on issuers and third-party data providers. Lower portfolio data coverage will yield less reliable carbon intensity metrics. 2022 fixed income strategies WACI have been recalculated using S&P/Trucost.


Our Inclusive Culture

  • DEI at MFS

DEI at MFS

DEI at MFS

Diversity, equity and inclusion (DEI) are foundational to the work we do as active managers, essential to our longevity and critical to our purpose of creating value responsibly.

We believe operating from a place of inclusion means welcoming the ideas of diverse thinkers and making our firm a place where every voice is valued and everyone can flourish.

2023 Firmwide Highlights - DEI Progress

CONNECT WITH GLOBAL ORGANIZATIONS
AND SUPPORT DIVERSE COMMUNITIES

  • CFA DEI Code Signatory
  • CEO Action for Diversity & Inclusion signatory
  • Workforce Disclosure Initiative (ShareAction) participant and supporter
  • Member of Nicsa’s Diversity Project
  • Member of the Diversity Project UK
  • Support underserved communities through decades-long charitable partnerships

SELF-IDENTIFICATION METRICS

  • 2.3% LGBTQ+ identifying
  • 8.7% Employees with disabilities
  • 0.6% Protected veteran
294
EMPLOYEES (147 PAIRINGS) PARTICIPATED IN OUR HIGH-POTENTIAL MENTORSHIP PROGRAM
99
EMPLOYEES (58 PAIRINGS) PARTICIPATED IN WE@MFS (WOMEN’S ERG) MENTORSHIP PROGRAM

 

 

MFS may incorporate environmental, social, or governance (ESG) factors into its investment decision making, fundamental investment analysis and engagement activities when communicating with issuers. The statements or examples provided above illustrate certain ways that MFS has historically incorporated ESG factors when analyzing or engaging with certain issuers but they are not intended to imply that favorable investment, ESG outcomes or engagement outcomes are guaranteed in all situations or in any individual situation. Engagements typically consist of a series of communications that are ongoing and often protracted and may not necessarily result in changes to any issuer’s ESG-related practices. Issuer outcomes are based on many factors and favorable investment or engagement outcomes, including those described above, may be unrelated to MFS analysis or activities. The degree to which MFS incorporates ESG factors into its investment decision making, investment analysis and/or engagement activities will vary by strategy, product, and asset class, and may also vary over time, and will generally be determined based on MFS’ opinion of the relevance and materiality of the specific ESG factors (which may differ from judgements or opinions of third-parties, including investors).  Any examples above may not be representative of ESG factors used in the management of any investor’s portfolio. Any ESG assessments or incorporation of ESG factors by MFS may be reliant on data received from third-parties (including investee companies and ESG data vendors), which may be inaccurate, incomplete, inconsistent, out-of-date or estimated, or only consider certain ESG aspects (rather than looking at the entire sustainability profile and actions of an investment or its value chain), and as such, may adversely impact MFS’ analysis of the ESG factors relevant to an investment. The information included above, as well as individual companies and/or securities mentioned, should not be construed as investment advice, a recommendation to buy or sell or an indication of trading intent on behalf of any MFS product.

The views expressed are those of the author(s) and are subject to change at any time. These views are for informational purposes only and should not be relied upon as a recommendation to purchase any security or as a solicitation or investment advice. No forecasts can be guaranteed.

Unless otherwise indicated, logos and product and service names are trademarks of MFS® and its affiliates and may be registered in certain countries.

This material is directed at investment professionals for general information use only with no consideration given to the specific investment objective, financial situation and particular needs of any specific person. Any securities and/or sectors mentioned herein are for illustration purposes and should not be construed as a recommendation for investment. Investment involves risk. Past performance is not indicative of future performance. The information contained herein may not be copied, reproduced or redistributed without the express consent of MFS Investment Management (“MFS”). While the information is believed to be accurate, it may be subject to change without notice. MFS does not warrant or represent that it is free from errors or omissions or that the information is suitable for any particular person’s intended use. Except in so far as any liability under any law cannot be excluded, MFS does not accept liability for any inaccuracy or for the investment decisions or any other actions taken by any person on the basis of the material included. MFS does not authorize distribution to retail investors.

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