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Resolution Capital Limited

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 100%

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

The objective of Resolution Capital in considering ESG issues at a company level is to identify companies with best practices approaches to corporate governance as well as environmental practices and sustainability. Resolution Capital acknowledges the challenges faced in these reviews, given the following:

  • The absence of a universally accepted benchmark for assessing environmental impacts;
  • The differing standards and methods of measurement of environmental impact across jurisdictions;
  • The differing attitudes of management and tenants globally to the provision of environmental and social standards.

Due to varying measurement and application of ESG standards, Resolution Capital employs a varying combination of ESG collection points due to a lack of uniformity in companies’ practices and disclosures globally.

We pay close attention to corporate governance issues to ensure an appropriate level of alignment of interests between management and shareholders.  We assess corporate governance through analyzing proxy statements, through conversations with management and through assessments of company actions,

For environmental issues, we consider management's approach to setting environmental standards across their asset base.  We view more efficient buildings as being more competitively positioned in their marketplaces and thus better placed to lease up and to do so at superior rents. 

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

By way of example, RCL initially screens for corporate governance by favouring internally-managed vehicles which typically have better alignment with shareholder objectives compared to externally-managed vehicles. However, that does not mean all internally-managed vehicles are investable. We then review a range of other factors which may lead to a different conclusion.

RCL assesses environmental and social considerations based on communication directly with company management and based on a review of company disclosures. In addition, we try to assess thematic demand drivers which may see some companies achieve better outcomes than others.


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

Externally managed vehicles are discounted in our stock selection process due to the potential for the misalignment of interests between the external advisor and the vehicles’ shareholders.

Screened by

Description

Internally managed vehicles are the standard in our portfolio construction.

We vote against excessive remuneration levels.

Further, property developers that embrace green building standards are favoured for their efforts to minimize their activities’ impact on the environment.

We screen for key environmental ratings and key metrics such as operating expense ratios, occupancy and rental rates as these are driven by tenants who demand efficient buildings and investors who seek to optimise long term outcomes for all stakeholders.

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.

Identifying good corporate governance standards is central to Resolution Capital's security underwriting process. We have a long standing bias against externally managed vehicles due to the high likelihood of a mismatch in the interests of the manager and shareholders. Our quarterly commentary indicates changes in the portfolio, as well as the rationale for such moves. We identify and report adverse changes in corporate governance – both in structure and in policy – when they occur.

Resolution Capital keeps our investor interests paramount, and we support these interests through our voting record. In the past we have voted against proposed remuneration levels when deemed excessive or largely delinked from performance. For instance, we voted against an excessive pay package, granting options up to 10% of the issued shares, proposed at Hysan Development in May 2015. 

Our proxy voting record is also disclosed on our website https://www.resolutioncapital.com.au/about/

 


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]


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


(B) Implementation: Thematic

LEI 09. Types of sustainability thematic funds/mandates

09.1. Indicate the type of sustainability thematic funds or mandates your organisation manages.

09.2. Describe your organisation’s processes for sustainability themed funds. [Optional]

Resolution Capital manages investment funds focused on global real estate securities. We do not have environmentally or socially-themed funds at this time.


(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]

We review E, S and G issues while researching companies whenever possible. However, due to differing company disclosures, there is some variation in our ability to effectively collect and analyse this data.  Regarding Corporate Governance, we review this information for every company in which we invest.  Environmental and Social considerations have varying degrees of disclosure and comparability. RCL seeks to standardise these considerations as much as possible.


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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