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Delivering holistic returns

It’s our mission to deliver outcomes beyond performance

We at Federated Hermes believe our primary purpose is helping beneficiaries retire better by providing world-class active investment management and stewardship services. We think the best way to achieve this is to deliver holistic returns: outcomes for our clients that go far beyond the financial to consider the impact our decisions have on society, the environment and the wider world. We have these responsibilities because our work has the potential to affect the world in which beneficiaries live and work today as well as the one in which they will retire into tomorrow. Our goal is to help people invest better, retire better and to create a better society for all. We view the implementation of this goal as having four core components:

ESG-aware investing: We believe that a responsible investment approach encompasses systematic consideration of a range of nonfinancial factors alongside more traditional financial analysis of cash flows and price-to-earnings ratios. It involves the incorporation of longer-term risk factors including a company’s relationship with its stakeholders as well as its impact on the environment, society and governance. But it also necessitates recognizing the importance of the long-term health and stability of the markets in which we invest. Indeed, our analysis needs to be a dynamic process which necessitates going beyond the use of external ESG ratings and undertaking fundamental company research and utilizing insights gleaned from engaging with company boards and management. The feedback loop from our engagements with companies is an essential component of our investment approach.

Active ownership and management: The responsibilities of investors do not stop with a decision to buy or sell a stock. Instead, we must act as engaged owners of the companies in which we are invested and the assets that we manage. This means engaging in constructive dialogue and taking action where necessary through our ownership rights, serving as active stewards to ensure that investors’ capital is deployed in companies in the best way possible to deliver sustainable wealth creation.

Ultimately, it is our belief that the financial system should operate in the interests of its ultimate beneficiaries.

Advocating in beneficiaries’ interest: We believe it is our responsibility to lead and participate in discussion and debate about the fiduciary responsibilities of institutional investors to their clients, stakeholders and ultimately, society at large. Ultimately, it is our belief that the financial system should operate in the interests of its ultimate beneficiaries. At present, however, the ability for capital markets to support the delivery of holistic returns is impeded by a number of market inefficiencies and indeed market failures that necessitate policy or regulatory intervention. To that end, the international business of Federated Hermes has a broad public policy engagement agenda advocating for a global financial system that works for investors and beneficiaries.

Behaving as a responsible business: We aim to meet the expectations that we have of others. Each of us individually has a responsibility to lead by example and act ethically and with integrity. To that end, our employees abide by a Pledge of Responsibility, which expresses the commitment of each of us individually to always put the interests of our clients and their beneficiaries at the heart of what we do. As a firm we are a signatory to the Principles for Responsible Investment, have internal responsibility offices, employ consultant engagers and have adopted a series of guidelines and charters to ensure that all directors, officers and employees of the company conduct themselves in a highly ethical manner.

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