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Baillie Gifford

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 120%

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

Our primary method for incorporating ESG factors is through integration. We believe it is easier to generate out performance for our clients by assessing a company’s prospects for sustainable growth rather than by predicting short-term share price movements.

Management quality and their attitude to a broad range of stakeholders and externalities (social, environmental, cultural and political) are considered as a key part of analysing the five to ten year growth opportunities for a company. Poor ESG performance over this period will impact a company’s reputation with all stakeholders (customers, suppliers, employees, regulators, investors) which can ultimately impact the quality of a company’s earnings.

At Baillie Gifford, we believe that integrating ESG considerations into our research and engagement makes us better investors. As active growth managers with long-term investment horizons and low turnover, we seek companies with sustainable long term growth. ESG factors are naturally aligned with our investment philosophy and time horizon - long-term investments are more likely to be affected by ESG factors. . 

It is important to define integration appropriately with respect to the investment process. Baillie Gifford doesn't require systematic and explicit inclusion of predetermined criteria across different investment strategies, instead focusing on bottom up investment analysis to identify sustainable long term growth opportunities. ESG factors are incorporated where relevant to the sector, geography or company. For some companies, there may be highly material ESG issues which merit extensive additional research.

Working with the investment teams the Corporate Governance team are responsible for researching and engaging with the companies we hold on ESG factors. The team sits alongside the investment teams and produces company, sectorial and thematic research for the investment floor.

Screened strategies are predominantly driven by client specific restrictions. Bespoke arrangements are in place in parts of our business - for example one of our investment strategies incorporates screening for all clients invested in the strategy. Where screening applies, data from an external research provider is used to screen companies' performance relative to various ESG factors.

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

Incorporation through integration applies to all Baillie Gifford strategies. Screening is predominantly driven by client specific restrictions where data from external research providers is used to screen based on a clients requirements. One of our investment strategies incorporates screening for all clients invested in the strategy.


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)


(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]

All investors at Baillie Gifford look to identify and invest in long term, sustainable growth companies. Corporate Governance is a key element in the long term performance of a company and as such all investors consider this as part of their investment analysis. Where an environmental and/or social issue is of material relevance to the long term performance of a company, risks and opportunities in this area will be assessed. The Corporate Governance team works with the Investment teams to identify companies/sectors/issues that pose higher ESG risks and provide greater ESG opportunities. This then prioritises the work that the Corporate Governance team produces for the investors.


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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