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Threadneedle Asset Management Ltd

PRI reporting framework 2017

You are in Strategy and Governance » Governance and human resources

Governance and human resources

SG 07. RI roles and responsibilities

07.1.

Roles present in your organisation

          Head of Equities, Desk Heads
        
          RFP, Communications, Compliance, Risk, Quant
        

Other description (1)

Other description (2)

          Legal, CPM, CRM, Mandate Monitoring
        

07.2. For the roles for which you have RI oversight/accountability or implementation responsibilities, indicate how you execute these responsibilities.

The responsibility for our governance and responsible investment activities lies with the Head of Responsible Investment. The RI team is embedded within the investment department and the head of the RI team reports to the Head of Equities. The Chief Investment Officer, EMEA, has executive responsibility for RI policies and their implementation, as appropriate, across asset classes. The heads of regional equity departments, as well as the heads of our fixed income teams are also actively involved in supporting these activities and their appropriate integration into the investment process.

The RI team is composed of five people (we have increased the size of the team by one FTE over the year) with responsibility for ESG research, integration, engagement, proxy voting and ESG reporting. The dedicated staff includes the Head of Responsible Investment, a Director of Responsible Investment Portfolio Management, a Sustainable and Responsible Investment Officer and two Responsible Investment Analysts.

Our portfolio managers, analysts and RI team work collaboratively to monitor and engage with the companies we invest in. This is with a view to understanding the dynamics, opportunities and risks inherent in the businesses and to protect the interests of our clients and the capital they have invested, within the risk-return profile sought by a fund. This approach to stewardship should not, therefore, be relied upon by a third party to assume any assurance around the potential risks inherent in an investment made by the firm. As part of this we are mindful of company and industry specific issues as well as the influence of normal market practice in a company’s home jurisdiction. In doing so, however, we are guided by the best interests of our clients and will consider any issues and the rationales and explanations provided by companies in that context.

Within this approach:

  • Porfolio managers take lead responsibility for the assessment and monitoring of companies' strategies, management, performance, merger and acquisition activity and factors influencing the value proposition of a business.
  • Disclosure, accounting, risk and capital management issues are assessed by both portfolio managers and the RI team.
  • The RI team takes lead responsibility for the assessment and monitoring of companies’ ESG approach and practices.

The research and analysis emerging from this monitoring and ongoing dialogue with companies is disseminated as part of the firm's culture of idea sharing and provides one mechanism through which we seek to try and identify potential issues at an early stage. This is supplemented with the use of externally-sourced ratings (e.g. on ESG, Credit, Accounting Risk and Controversies), analytics and research. These assist us in taking a proactive approach to identifying potential issues and prioritising our engagement activities.

Proxy voting administration and vote execution are undertaken by our back office, under the instructions of the RI team.

The RI team also has regular interaction with the Head of Property Risk who is responsible for environmental and health and safety due diligence in property, reporting into the Managing Director of Property.

Responsibility for implementation of responsible investment processes also lies with other departments and individuals. Corporate Communications disseminate information internally and externally related to industry developments, some of which specifically relate to responsible investment. Compliance and Mandate Monitoring are responsible for oversight of the systems and portfolios themselves to ensure ESG-related mandates are not breached and, universally, controversial weapons restrictions are hard-coded into trading platforms. Legal contribute to ensuring the approach is effective, risks fully managed, strategies make best use of legal rights, source external specialist legal advice where necessary. Client Portfolio Managers are required to represent portfolios to clients and this involves deep knowledge of the investment process, related responsible investment activities and the rationale for specific holdings within the portfolio.

07.3. Indicate the number of dedicated responsible investment staff your organisation has.

5 Number

07.4. Additional information. [Optional]


SG 08. RI in performance management, reward and/or personal development

08.1. Indicate if your organisation’s performance management, reward and/or personal development processes have a responsible investment element.

Board members/Board of trustees

08.2. Describe any activities undertaken during the reporting year to develop and maintain Board members’ skills and knowledge in relation to responsible investment.

Board members are briefed fully on key engagements and in agreeing strategies and resources for interventions e.g. involvement with Sika. Senior executives are also involved in participating or leading key engagements and initiatives, e.g. the Investor Forum and Pre-Emption Group as well as approving key public policy positions.

Chief Executive Officer (CEO), Chief Investment Officer (CIO),  Investment Committee

Other C-level staff or head of department

          Head of Equities, Desk Heads
        

Portfolio managers

Investment analysts

Dedicated responsible investment staff

Other role (1) [from SG 07]
          RFP, Corporate Communications, Compliance, Risk
        
Other role (2) [from SG 07]
          Legal, CPM, CRM, Mandate Monitoring
        

08.3. Provide any additional information on your organisation’s performance management, reward and/or personal development processes in relation to responsible investment.

For those portfolio managers managing ESG-related mandates, variable pay will be linked the performance of those funds.

Investment performance is a major factor within that performance appraisal, judged relative to each fund's targets on a 1- and 3-year basis, with a bias towards 3-year performance in order to incentivise delivery of longer-term performance. The firm has in the year moved towards measuring 1-, 3- and 5-year performance with a strong weight on longer-term performance, to emphasise the importance of rewarding stable and sustainable performance over short-term volatility.

On a firm wide basis, contribution to investment floor thinking and collaboration within the firm is expected as part of our corporate objectives. As part of our performance appraisal process, each employee receives a rating and individual feedback on the firm's Values - Respect, Integrity, Excellence and Client Focus – and supporting competencies.


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