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Pengana Capital Group

PRI reporting framework 2017

You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes

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 200%

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

Hunter Hall primarily applies an ethical screening policy to all its portfolios.

Hunter Hall’s approach to environmental and social issues differs from a typical ESG incorporation strategy
in that we address them through various exclusion policies. Our approach to governance issues is more aligned with the ESG methodology. Good corporate governance is one of the key elements we assess, when applying our fundamental research process to the companies we invest in. Within our investment process, we favour those companies that can demonstrate a transparent approach to financial and corporate governance related disclosure, particularly where they are listed in emerging markets. In our view, good governance is a key driver of generating shareholder value over the long term.

Hunter Hall also applies an ESG agenda across the business, which includes policies on engagement, proxy voting, etc.

Hunter Hall believes incorporating ESG factors in to the investment decisions will result in superior performance over the long term.

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

Specifically, Hunter Hall's ‘negative screen’ seeks to avoid investment in companies that derive operating revenues from direct and material business involvement in –

  • the manufacture or sale of weapons and weapons components
  • tobacco manufacture
  • gambling outlets or systems
  • intensive animal farming
  • animal testing for cosmetics
  • activities that give rise to human rights violations
  • unremediated destruction of the environment
  • uranium mining and nuclear reactors
  • fossil fuel exploration, production, refining, storage and transporation

 

Screened by

Description

Hunter Hall's positively screened fund, the Global Deep Green Trust (GDG) invests in companies that are deemed to contribute positively to environmental, humanitarian, social and sustainability issues. The GDG invests globally in activities such as:

  • renewable energy from solar, wind, waves, geothermal, biomass, advances in battery, storage and transmission technologies and efficiency gains
  • technologies and products which reduce environmental damage such as hybrid automobile engines, water purification and desalination, waste management and advanced materials
  • medical services and devices, biotechnology, pharmaceuticals and veterinary care
  • education and communications
  • animal husbandry, aquaculture, fisheries, forestry and agriculture conducted in an environmentally sustainable and humane way
  • activities and instruments involved in microfinance, water management, biodiversity credits, carbon credits, intellectual property related to DNA

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.

Hnter Hall's flagship fund was established 23 years ago and the Manager's ethical investment policy has evolved and been refined over the last 16 years. The negative screen has remained relatively consistent with the last major changes being the introduction of a traffic light system in 2010 and the implemenation of a fossil fuel screen in 2014.

The positively screened fund was launched in 2007 which lead to the addition of the positive screen.

Any change requires board approval and clients are notified via an update to the website, email or direct mail.


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.

          Portfolio Managers/Analysts conduct their own comprehensive research as part of their fundamental analysis to determine companies' activities and products, including compliance with ethical policy.
        

07.2. Additional information. [Optional]

Portfolio Managers and Analysts conduct their own research as part of their fundamental analysis of potential and existing investments.

Further, Hunter Hall has appointed Australian SRI/ESG research provider CAER (Corporate Analysis, Enhanced Responsibility) to conduct an annual audit of all investments that have been added to the portfolio and not previously been reviewed externally. This is to ensure that no potential issues have been overlooked by the investment team members in their fundamental analysis of investee companies.

The basis for the evaluation is Hunter Hall's ethical screening policy, and the outcome of the review is a report highlighting investments which may not be compliant with the ethical investment policy. The report is considered by the investment team in consultation with the SRI Analyst and follow-up analysis of possible non-compliant investments may be undertaken. Hunter Hall has final discretion on whether or not to divest non-compliant investments. 

On occasion, Hunter Hall may choose to engage with an investee company, rather than divest, as a better way to effect change.

Through CAER 's network Hunter Hall has access to research from EIRIS on many of our international investments.


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


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