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RBC Global Asset Management

PRI reporting framework 2017

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You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes » (C) Implementation: Integration of ESG issues

(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

11.1. Indicate which processes your organisation uses to ensure ESG integration is based on a robust analysis.

11.2. Describe how ESG information is held and used by your portfolio managers.

11.3. Additional information.[Optional]

Our investment teams are at varying stages in developing their ESG integration processes. All of our investment teams have access to comprehensive ESG research and are incorporating ESG factors into their investment decision making. We have integrated ESG scores into our standard and proprietary trade management software/applications. 

Our Global Equity and Emerging Market Equity teams fully integrate ESG factors in a disciplined, fundamental investment process. Both teams use a robust analysis process and keep records that capture how ESG information and research was incorporated into investment decisions.


LEI 12. Aspects of analysis ESG information is integrated into

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

12.1. Indicate which aspects of investment analysis you integrate ESG information into.

12.2a. Indicate which methods are part of your process to integrate ESG information into fair value/fundamental analysis and/or portfolio construction.

12.3. Describe how you integrate ESG information into portfolio construction

The methods used to integrate ESG information into portfolio construction depend on the particular investment team. For example, our Emerging Markets Equity Team uses a scorecard with a wide range of questions as the prime determinant of portfolio weights. ESG questions comprise a significant percentage of the scorecard. Our Global Equity team integrates ESG factors in their portfolio construction. Some of our Canadian equity teams have developed checklists to identify material risks, and these factors are used as a guide to determine materiality of ESG factors.

Our SRI strategies integrate ESG factors as part of the portfolio construction through the selection of qualifying securities.   

12.4a. Describe the methods you have used to adjust the income forecast / valuation tool

Some of our investment teams are more advanced in adjusting the income forecast or valuation based on ESG factors. For example, our Emerging Markets Equity team takes into account sustainability factors, which may include, for example, companies that invest in infrastructure or research and development, and may adjust income statements to capitalize on these investments. In addition, the Emerging Markets Equity Team makes adjustments where margins are artificially increased in the short-term by factors such as a low tax rate, squeezing suppliers or employees, or overcharging customers. Our Global Equity team adjusts factors in the income statement depending on its scenario analysis. 

12.2b. Indicate which methods are part of your process to integrate ESG information into fair value/fundamental analysis and/or portfolio construction.

12.4b. Describe the methods you have used to adjust the income forecast / valuation tool

Please see response above. 

12.5. Additional information.


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