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GAM Holding AG

PRI reporting framework 2017

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ESG incorporation in actively managed listed equities

Implementation processes

LEI 03. Percentage of each incorporation strategy

New selection options have been added to this indicator. Please review your prefilled responses carefully.

03.1. Indicate (1) which ESG incorporation strategy and/or combination of strategies you apply to your actively managed listed equities and (2) the breakdown of your actively managed listed equities by strategy or combination of strategies (+/- 5%)

ESG incorporation strategy (select all that apply)

Percentage of active listed equity to which the strategy is applied
100 %
Total actively managed listed equities 100%

03.2. Describe your organisation’s approach to incorporation and the reasons for choosing the particular ESG incorporation strategy/strategies.

GAM believes that each of our investment teams has the duty to explore all aspects that could potentially impact their investment decision-making in the best interest of our clients, including the consideration of environmental, social and governance ("ESG") aspects and active ownership practices. These can potentially have a material impact on investment risk and investment opportunities and therefore on long term investment returns.

Our approach has been to lay the foundation for working with our investment teams to encourage and explore the most appropriate ways for them to integrate ESG considerations into their investment processes. Our overarching aims are to ensure we fulfil our fiduciary duty and meet the evolving requirements of our clients.

GAM's heritage as an independent, pure play asset manager is built on a foundation of high conviction investing. Although GAM has a common distribution platform, we actively foster a broad range of independent investment teams who are accorded an extraordinary degree of latitude in their investment philosophies and processes. We do not, for example, hold a ‘house’ view – each team has the freedom to invest as they wish. Therefore we formulated our ESG incorporation strategy to take account of diversity while building a framework that is robust, systematic and scaleable over time.

In the first phase of our ESG integration, we treat ESG issues as potential risk factors. Poorly managed ESG risks may lead to negative investment returns. Based on data and research from our appointed ESG specialist data provider, Sustainalytics, we identify the worst ESG rated companies globally from their universe coverage and, if we hold any of these companies in our portfolios, our investment managers provide us with their investment rationale on whether those ESG factors represent a material risk to the investment case. We eschew pure negative screens; based on our philosophy, we believe it is best practice to combine the initial quantitative negative screens with the qualitative judgement of our expert investment managers. If, however, screens are specifically required by our clients, we are happy to accommodate such requests. We already do this for some of our clients who invest via segregated mandates. Over time, as we carry out more research into how ESG factors can help improve investment performance, we will evolve our responsible investment framework to reflect our thinking.

03.3. Where assets are managed using a combination of ESG incorporation strategies, briefly describe how these combinations are used. [Optional]


LEI 04. Type of ESG information used in investment decision (Private)


LEI 05. Information from engagement and/or voting used in investment decision-making (Private)


(A) Implementation: Screening

LEI 06. Types of screening applied

06.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by

Description

Based on data and research from our appointed ESG specialist data provider, Sustainalytics, we identify the worst ESG rated companies globally from their universe coverage and, if we hold any of these companies in our portfolios, our investment managers provide us with their investment rationale on whether those ESG factors represent a material risk to the investment performance of those companies overall. At this level, and at this stage of our progress as a PRI signatory, we find this approach works for us across both fixed income and equities because we are targeting the companies / entities rather narrowly separating by source of capital (equities / debt). We eschew pure negative screens; based on our philosophy, we believe it is best practice to combine the initial quantitative negative screens with the qualitative judgement of our expert investment managers. If, however, screens are specifically required by our clients, we are happy to accommodate such requests. We already do this for some of our clients who invest via segregated mandates. Over time, as we carry out more research into how ESG factors can help improve investment performance, we will evolve our responsible investment framework to reflect our thinking.

06.2. Describe how the screening criteria are established, how often the criteria are reviewed and how you notify clients and/or beneficiaries when changes are made.

The screening criteria are based on 175 indicators, data on which is collected and monitored by Sustainalytics. They have a historical database that goes back to 2009, of which we are able to make use. Sustainalytics has been appointed to be our group-wide ESG data provider and we have agreed the development of the first screen of the worst (bottom 5%) ESG rated companies in their universe. Each quarter, we will screen all our portfolios to check if any of those companies are held, either as equity or debt. If this is the case, our managers will review their investment rationale for these companies. They will consider whether the ESG risks would, on balance, have a financially material impact on investment performance.  Their investment decisions are recorded to create a reportable audit trail.

The criteria is reviewed each quarter and more frequently if new information is received intra quarter. We do not notify clients and/or beneficiaries on a regular basis as these screens form part of our investment processes, which may evolve from time to time. We can however, share information on request.


LEI 07. Processes to ensure screening is based on robust analysis

07.1. Indicate which processes your organisation uses to ensure screening is based on robust analysis.

07.2. Additional information. [Optional]

During the quarterly screening review of poorly rated ESG companies, the external research and data used by Sustainalytics to identify companies to be excluded / included is subject to additional assessment by the members of the Responsible Investment Working Group and reviewed together with the portfolio managers.


LEI 08. Processes to ensure fund criteria are not breached (Private)


(C) Implementation: Integration of ESG issues

LEI 10. Review ESG issues while researching companies/sectors

10.1. Indicate if E, S and G issues are reviewed while researching companies and/or sectors in active strategies.

ESG issues

Coverage/extent of review on these issues

Environmental

Environmental

Social

Social

Corporate Governance

Corporate Governance

10.2. Additional information. [Optional]


LEI 11. Processes to ensure integration is based on robust analysis (Private)


LEI 12. Aspects of analysis ESG information is integrated into (Private)


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