About first sentier investors and the authors

First Sentier Investors is a global asset management group integrating environmental, social and governance (ESG) considerations across investment teams. The white paper was led by the Responsible Investment team, headed by Kate Turner, with contributions from FSSA Investment Managers, Stewart Investors, Igneo Infrastructure Partners, First Sentier Australian Equities Growth, and First Sentier Global Listed Infrastructure. Each team provided practical insights from their portfolios on how ESG factors interconnect across industries and asset classes.

Background

The paper advocates for a holistic, integrative approach to ESG investment, recognising synergies and trade-offs between environmental, social and governance issues. Rather than assessing single factors in isolation, this framework evaluates how interconnected ESG elements can influence long-term financial, environmental and societal outcomes. Examples include sustainable supply chains, equitable energy transitions, and the interaction of climate and nature-related risks. This method aims to align investment and sustainability goals for more informed decision-making.

Introduction

Traditional ESG approaches are often siloed and fail to address interdependencies. The report argues for a shift from a narrow ‘climate-first’ model towards one that addresses all material sustainability risks and opportunities simultaneously. Investors should recognise that addressing one issue, such as carbon reduction, may inadvertently worsen others—like inequality or modern slavery—if managed in isolation. The paper highlights that integrating trade-offs and synergies enables more resilient investment decisions and identifies overlooked opportunities.

Supply chains showing the way

Global supply chains face increasing sustainability challenges from deforestation, labour rights violations, and pollution. A holistic approach that improves transparency and traceability can mitigate financial and reputational risks while promoting resilience. Stewart Investors’ research on smallholder farmers (SHFs)—who produce up to 80% of certain crops—identified 14 key sustainability issues including land use, labour rights, biodiversity, and water management. Companies such as Costco, HDFC Bank and Marico demonstrate how education, fair pricing and inclusive financing can strengthen supply chains and communities. Collaborative efforts like the International Cocoa Initiative and Global Platform on Sustainable Natural Rubber highlight cross-sector cooperation to reduce modern slavery and improve livelihoods.

Towards a just and equitable transition

The paper emphasises that investors must integrate social considerations into climate transition strategies. A just transition balances decarbonisation with fairness for workers and communities. Igneo Infrastructure Partners developed “Five Minimum Standards” for all portfolio companies covering health and safety, environment, diversity, governance and employee engagement. Case examples include Igneo’s supply chain work on solar panels, ensuring traceability and addressing modern slavery risks.
The Global Listed Infrastructure team’s engagement with Xcel Energy shows how utilities can manage workforce impacts and community relations during coal plant closures. Xcel’s “Just Transition Position Statement” outlines proactive communication, workforce retraining, and transparent progress reporting to sustain long-term community and investor trust.

Navigating the intersection of cultural heritage and the environment in the mining industry

The mining sector plays a vital role in the low-carbon transition but poses environmental and cultural heritage risks. The report references the Global Investor Commission on Mining 2030, which promotes systemic risk management and stronger community engagement. The Australian Equities Growth team examined miners’ relationships with First Nations groups following the Juukan Gorge incident. Companies such as Rio Tinto and BHP have updated land-use agreements, improved heritage management, and invested in renewable energy partnerships to rebuild trust and safeguard cultural and environmental assets.

The Climate-Nature Nexus

The report stresses that climate and nature are interlinked. Poorly designed climate solutions can harm biodiversity, such as forest clearing for solar installations or impacts of offshore wind farms on marine fauna. Igneo’s Terra-Gen initiative monitors avian activity to prevent bird collisions at wind farms, while FSSA Investment Managers’ engagement with Midea Group illustrates how innovative refrigerant technologies can reduce greenhouse gas emissions and comply with tightening climate regulations.

Conclusion

Integrating ESG factors holistically allows investors to identify synergies, manage trade-offs, and make informed, long-term decisions. Companies that transparently address interdependent ESG challenges can strengthen resilience, create sustainable value, and build stakeholder trust, contributing to a more sustainable global economy.