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RBC Global Asset Management

PRI reporting framework 2017

Export Public Responses

You are in Direct - Listed Equity Incorporation » Outputs and outcomes

Outputs and outcomes

LEI 14. How ESG incorporation has influenced portfolio composition

14.1. Indicate how your ESG incorporation strategies have influenced the composition of your portfolio(s) or investment universe.

Describe any reduction in your starting investment universe or other effects.

The starting investment universe for our designated socially responsible strategies is reduced to exclude companies that manufacture and/or provide services for alcohol, gaming, military weapons, pornographic materials, nuclear power and tobacco products.  In addition we also apply a qualitative screen that eliminates companies with poor practices in the areas of community, corporate governance, employee relations, environment, human rights, and product safety.

When we control the investment policy for a portfolio, we will not knowingly invest in companies whose business activities would contravene the prohibitions contained in the Anti-Personnel Landmines Convention or the Convention on Cluster Munitions.

Specify the percentage reduction (+/- 5%)


Describe any alteration to your investment universe or other effects.

For our global equity fossil fuel free strategy, the strategy will not invest in issuers or investment vehicles that are directly involved in extracting, processing or transporting coal, oil, or natural gas, or issuers included in the Carbon Underground 200.  Companies that fall with this category are eliminated from the strategy's investment universe.

Select which of these effects followed your ESG integration:

          ESG factors are part of the risk assessments done for prospective and existing investee companies and will help inform the design of our engagement program.

14.2. Additional information.[Optional]

Our investment teams analyse the impacts of ESG integration differently. For example, our Emerging Markets Equity team looks at the sector and stock level, while our Global Equity team tends to focus on the stock level. 

LEI 15. Measurement of financial and ESG outcomes of ESG incorporation

15.1. Indicate whether your organisation measures how your approach to ESG issues in listed equity investments has affected financial and/or ESG performance.

15.2. Describe how you are able to determine these outcomes.

Currently we provide monthly ESG snapshot reports to the portfolio managers of approximately 80 core strategies which include ESG scoring and controversy indicators for each of the strategies.  We are also preparing carbon footprint reports for a limited number of strategies (eight), which include detailed GHG emission attribution analysis.  For our socially responsible strategies we prepare detailed attribution analysis which includes the impact of the ESG screens on performance. 

Our Global Equity and Emerging Markets Equity teams do undertake analysis on the impact of ESG criteria on the financial performance (risk and return) of the portfolios.  However, a systematic assessment of the impact of ESG impacts across all of our equity portfolios is not undertaken at this time.

LEI 16. Examples of ESG issues that affected your investment view / performance

16.1. Provide examples of ESG issues that affected your investment view and/or performance during the reporting year.

ESG issue and explanation

We engaged with a global specialty chemicals company whose main business is selling cleaning and sanitation products. We were encouraged by our service providers' ESG ratings for the issuer and our own analysis demonstrated that it exhibited strong qualities in environmental management because of its solutions in the water treatment market. In addition to having a suitable business model, we believe it also has the right type of service culture for continued success.

We built on our initial engagement, meeting with the company again to discuss water sustainability issues. The company communicated the opportunities it sees in the areas of water treatment and demonstrated how such opportunities are influencing its corporate finance activities.

Impact on investment decision or performance

Encouraged by the company's sustainable business model, the investment team leading these engagement efforts maintains a positive outlook for the company.

ESG issue and explanation

We engaged with a biotechnology company multiple times over the year on the risk and opportunities of bioagriculture. Although the company has faced challenges in some areas, bio-agriculture presents significant opportunities for ongoing growth. For example, bio-agriculture presents potential sustainability impacts  which could contribute to feeding a growing global population in a more sustainable manner.

Impact on investment decision or performance

We continue to engage with the company on the risk and opportunities of bio-agriculture and view its work in this area as an opportunity for sustainable growth into the future.

ESG issue and explanation

We engaged on several occasions with a Korean insurance company where we were happy with the
overall insurance franchise, but believed that in a number of ways capital management had become
unfriendly to minority shareholders. We were also aware that a few other shareholders had taken a similar approach.

Impact on investment decision or performance

We are now beginning to see clear signs that capital management has improved and we have experienced a positive share price reaction.

16.2. Additional information.[Optional]