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Colonial First State Global Asset Management (including First State Investments)

PRI reporting framework 2017

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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

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03.1. 以下を記載してください。(1)組織でのアクティブ運用上場株式にどのESG組み入れ戦略や組み合わせを使用しているか(2)アクティブ運用している上場株式の戦略または戦略の組み合わせ別内訳

ESG組み入れ戦略 (当てはまるものをすべてお選びください)
アクティブ運用される上場株式に戦略が適用される割合 (推定 +/- 5%)
82.2 %
アクティブ運用される上場株式に戦略が適用される割合 (推定 +/- 5%)
17.8 %
アクティブ運用している上場株式の合計 100%

03.2. 組織が実施しているESG組み入れアプローチ、および、特定のESG組み入れ戦略を選択している場合はその理由を説明してください。

Each team has a unique investment process most of which have been developed over many years by our leading investment professionals.

Responsible investment practices are applied by each of these teams in a way which complements their investment process and philosophy. Principles of stewardship and responsible investment are the common thread which tie our diverse investment capabilities together.

In order to maintain the high standards consistent with our ambitions and commitments, while allowing for the innovative and diverse approaches exhibited by our different teams, a strong governance framework around responsible investment is critical. 

In recent years we have begun to develop ESG themed investment funds led by our Stewart Investors team’s sustainability strategies. Development of these strategies occurs within our existing product development process.

In terms of screening, currently our policy is to screen out companies involved in the manufacture of cluster munitions and landmines, and companies/individuals on sanctions or high risk of sanctions lists.

03.3. ESG組み入れ戦略の組み合わせを使用して資産を運用している場合、ESG戦略の組み合わせをどのように使用しているかを簡単に説明してください。 [任意]

The Stewart Investors Sustainability Strategies are managed consistently with other investment strategies managed by the team, which have from their inception in 1988 integrated the consideration of ESG factors into investment decision-making through an investment approach which is focused on:

• Stewardship

• An absolute return mind-set

• Bottom-up analysis

• Long-term thinking

• Searching for quality companies

• Finding sustainable and predictable growth

• Strong valuation disciplines

The sustainability strategies augment this process by seeking to invest in the shares of those companies which the team believes are particularly well positioned to benefit from, and contribute to, the sustainable development of the countries in which they operate.

The team operates within and contributes to the broader Stewart Investors process which serves to strengthen both the traditional investment strategies and the newer sustainability strategies.


LEI 04. Type of ESG information used in investment decision

04.1. 組織でESG組み入れ戦略に使用しているESG情報およびこの情報の提供者を記載してください。

ESG情報の種類

この情報の提供者を選択してください

この情報の提供者を選択してください

この情報の提供者を選択してください

この情報の提供者を選択してください

この情報の提供者を選択してください

この情報の提供者を選択してください

04.2. 使用されているESG情報を簡単に説明してください。ESG組み入れ戦略全般での情報源の違いを明らかにしてください。

ESG information is obtained from a wide range of sources and incorporated into different teams' investment processes in different ways. In addition to the sources highlighted above there is an array of institutions who also provide relevant information that investment teams will use from time to time e.g. the World Bank. International Energy Agency, OECD etc.

Managing this flow of information is a significant challenge as we strive to ensure that investment professionals have the most relevant information. In order to achieve this an ESG information management project has been initiated which during 2016 made the following enhancements:

  • We finalised the development of "ESG Portfolio Monitor", an interactive online tool which has connected the ratings of two of our ESG research providers to our holdings and benchmark information. 
  • We established working groups on Human Rights, Climate Change and Executive Remuneration to gain a deeper understanding of the issues and develop guidance for the entire firm.
  • We conducted a tender process for climate change related research including for carbon footprinting.
  • The Stewart Investor team conducted open tenders for directly funded research on a range of specific ESG subjects. 

04.3. ブローカーがESG調査を提供することについてインセンティブを適用しているかを記載してください。

04.4. ブローカーに対しどのように奨励しているかを記載してください。

Each team has its own process for selecting and remunerating brokers. Four teams have an explicit process for doing so, while two remunerate on an ad-hoc basis, and three do not remunerate brokers for ESG research (it is our Indonesian equities team where brokers are not routinely producing ESG research). Two of our teams have an execution only service, one being a passive investor and the other has moved to a completely unbundled broker service. 

For those that have an explicit process this can take the form of panel reviews which include ESG criteria, voting by analysts or direct allocations for particular research.

One of our teams has an execution only service after they decided to unbundle brokerage from research. The team is now tendering for ESG research independently and paying for it from its own P&L.  

The unbundling of execution from research costs will increase with a number of our teams adopting that position. While driven by regulatory change we are supportive of greater transparency and value for clients from research services. 

04.5. 補足情報。[任意]


LEI 05. Information from engagement and/or voting used in investment decision-making

05.1. ESGへのエンゲージメントや(委任状による)議決権行使から得られる情報を投資の意思決定に利用できるプロセスが組織にあるかどうかを記載してください。

05.2. 補足情報。[任意]

ESG engagement and proxy voting is performed by the relevant analysts and portfolio managers not by a separate team. As a result analysis of a ESG issues which can influence an investment decision can also influence engagement and proxy voting activities or visa-versa. All investment teams either have a centralised database with ESG information or have a standard section of company reports which include their ESG assessments. 


(A) Implementation: Screening

LEI 06. Types of screening applied

06.1. 組織内でアクティブ運用している上場株式に適用するスクリーニングの種類を記載し、説明してください。

スクリーニングの種類

スクリーニング実行者

説明

We exclude cluster munition and loan mine manufacturers. The criteria were established under our cluster munitions policy which was approved by the Global Responsible Investment Steering Group. The companies captured by the policy are reviewed annually with any changes reported in our annual responsible investment and stewardship report. 

We also exclude sanctioned and very high risk countries, companies domiciled in those countries and indviduals. The process includes a two-tier system whereby some countries are completely blocked (such as Iran, North Korea, Syria) and others are heavily restricted. The process is described in the additional inforamtion section below.

06.2. スクリーニング基準の設定方法、基準の見直し頻度、基準の変更を顧客や受益者に通知する方法について説明してください。

For cluster munitions and land mines the criteria were established under our cluster munitions policy which was approved by the Global Responsible Investment Steering Group. The companies captured by the policy are reviewed annually with any changes reported in our annual responsible investment and stewardship report. 

For sanctioned and high risk countries we enforce country level restrictions based on the constituents of the Australian Department of Foreign Affairs and Trade (DFAT) Sanctioned Countries List and similar lists issued by Governments in other jurisdictions where our funds are domiciled. The constituents on each system are regularly reviewed and updated.

Any potential investments in companies domiciled in these countries would be rigorously screened to ensure that there is no association with any sanctioned individual, entity or regime prior to investment. No investment is possible in companies domiciled in any country on the DFAT list without clearance from Investment Compliance personnel as the system controls do not allow it.

In addition our controls include screens for any potential investment from a country deemed to be ‘very high risk’ in relation to politically exposed persons, sanctions and ultimate beneficial ownership controls. The scope of this framework will be wider than the sanctioned countries list and the countries deemed to be ‘very high risk’ are updated on a regular basis.


LEI 07. Processes to ensure screening is based on robust analysis

07.1. スクリーニングが徹底した分析に基づいていることを確実にするために、組織が使用しているプロセスを選択してください。

07.2. 補足情報。 [任意]


LEI 08. Processes to ensure fund criteria are not breached

08.1. ファンドの基準に違反がないことを確認するために組織が使用しているプロセスを記載してください。

08.2. ファンドのスクリーニング基準に対する違反が判明した場合、これらの違反を是正するために従うプロセスを説明してください。

Pre and post trade compliance systems prevent investment in excluded companies. Any breaches are managed through the investment compliance processes. 

08.3. 補足情報。


(B) Implementation: Thematic

LEI 09. Types of sustainability thematic funds/mandates

09.1. 組織が運用している、サステナビリティをテーマとするファンドやマンデートの種類を記載してください。

09.2. 組織でのサステナビリティをテーマとしたファンドのプロセスについて説明してください。 [任意]

The Stewart Investors Sustainability Strategies are managed consistently with other investment strategies managed by the team, which have from their inception in 1988 integrated the consideration of ESG factors into investment decision-making through an investment approach which is focused on:

• Stewardship

• An absolute return mind-set

• Bottom-up analysis

• Long-term thinking

• Searching for quality companies

• Finding sustainable and predictable growth

• Strong valuation disciplines

The sustainability strategies augment this process by seeking to invest in the shares of those companies which the team believes are particularly well positioned to benefit from, and contribute to, the sustainable development of the countries in which they operate.

The team assesses sustainability through three lens:

1. Sustainable Goods and Services

• Companies with a positive impact on society, environment, health

• Well positioned for shifting consumer preferences, regulatory headwinds, long-tail liabilities

2. Responsible Finance

• Purpose, license to operate, risk aware

3. Required infrastructure

• Infrastructure necessary to support long-term sustainable development

• Focus on environmental efficiency, operational performance, license to operate

The team operates within and contributes to the broader Stewart Investors process which serves to strengthen both the traditional investment strategies and the newer sustainability strategies.


(C) Implementation: Integration of ESG issues

LEI 10. Review ESG issues while researching companies/sectors

10.1. アクティブ戦略において企業やセクターを調査する際、ESG問題を見直しているかどうかについて記載してください。

ESG問題

これらの問題の見直しの対象および程度​

E(環境)

Environmental

S(社会)

Social

コーポレートガバナンス

Corporate Governance

10.2. 補足情報。 [任意]

Six of the investment teams systematically review the significance of ESG issues, two teams occasionally review the significance of ESG issues while our smart beta team does not currently review or incorporate these issues into their company analysis due to the nature of their investment process. One of the six teams reported that they systematically review the significance of environmental and governance issues but only occasionally for social issues. 

A full description of each team's approach is provided in our annual responsible investment and stewardship report: http://ri.firststateinvestments.com/2016/investment-team-profiles.htm 


LEI 11. Processes to ensure integration is based on robust analysis

11.1. ESG統合が徹底した分析に基づいていることを確実にするために、組織が使用しているプロセスを記載してください。

          Structured meetings and portfolio reporting is completed as part of quarterly reporting to Global Investment Assurance Committee.
        

11.2. ポートフォリオマネージャーがどのようにESG情報を保管・使用しているかについて説明してください。

          ESG ratings from two providers integrated with analyst tools Bloomberg and Factset. Group-wide ESG portfolio monitor tool has been developed.
        

11.3. 補足情報。[任意]

ESG information is maintained by each investment team separately. Some teams use multiple ways of collecting and storing information. One team has ESG information as a standard part of stock notes, while another maintains a centralised database with ESG ratings. Five teams do both these things while two also keep systematic records for how ESG information was incorporated. 

The quality of the ratings we receive from external providers is monitored by the responsible investment team using our ESG Portfolio Monitor tool . This includes feedback from investment teams on where they disagree with ratings which in turn is fed back to the providers. This process forms part of the quarterly investment committee reporting process. In addition, as part of this process, we compare ratings from our controversy monitoring provider (RepRisk) and our ESG research providers (Sustainalytics and MSCI Governance). 

We have also initiated a regular process where we compare the ratings from three ESG research providers (Regnan, Sustainalytics and MSCI Governance) providers for our Australian equities coverage. 


LEI 12. Aspects of analysis ESG information is integrated into

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12.1. 投資分析のどの側面にESG情報を統合しているかを記載してください。

12.2a. ESG情報を適正価値/ファンダメンタル分析やポートフォリオの構築へと統合するプロセスについて、組織でのプロセスの一部となっている手法を選択してください。

12.3. ESG情報をポートフォリオの構築にどう統合しているかを説明してください。

ESG issues are integrated in a number of ways for eight of the nine equity teams. The Realindex team don't currently incorporate ESG factors except for applying the policies on cluster munitions, landmine manufacturers and sanctions lists.

All but one team reduces or prioritises the investment universe (Two always, two often and four sometimes.)

One often and two sometimes overweight/underweight at a sector level (note three teams are sector strategies and so it was not applicable and two teams are benchmark unaware and so don't allocate across sectors) 

Six teams overweight or underweight at a stock level as part of overall analysis (one always, three often, two sometimes and two are benchmark unaware and so doesn't seek to over or underweight stocks); and

All eight of the active equity teams' buy and sell decisions consider ESG factors with the frequency and degree to which they influence the decision differing by team based on the type of asset and its circumstances. The majority of teams report their buy/sell decisions are often influenced by ESG factors. 

12.4a. 利益予想/バリュエーションツールの修正に使用した手法を説明してください。

Three teams reported adjustments to valuation tools and three teams reported adjustments to income forecasts.

One response noted that "There are no hard and fast rules but quality companies with better ESG credentials will generally merit a higher multiple; conversely, discounts may be applied to take into account any weaknesses or concerns we have in this regard."

Four teams do not make these types of adjustments but instead reported that it was implied or captured in quality assessments which influenced portfolio weights. For example one of our teams reported that:

"ESG analysis is integrated into our investment process through our quality assessment and ranking model. This model consists of 25 criteria that influence stock returns in general and infrastructure securities in particular. ESG criteria account for 20% of the overall quality score. The Quality Rating is combined with the Value Rating, which seeks to rank stocks in our focus list according to their relative mispricing, to provide an overall ranking of the securities on the focus list. This overall ranking is the focus of our stock selection and portfolio construction process."

12.2b. ESG情報を適正価値/ファンダメンタル分析および/またはポートフォリオの構築へと統合するプロセスについて、組織でのプロセスの一部となっている手法を選択してください。

12.4b. 利益予想/バリュエーションツールの修正に使用した手法を説明してください。

Three teams reported adjustments to valuation tools and three teams reported adjustments to income forecasts.

One example of how this is achieved is that an ESG score out of five is incorporate into the company CAPM beta and discount rate calculation feeding into the company valuation.

However four teams reported that do not make these types of adjustments but that it was implied or captured in quality assessments which influenced portfolio weights. For example one of our teams reported that:

"ESG information is not explicitly integrated into fair value analysis. We regard each of the areas within ESG as broadly equivalent in importance and avoid investing in companies which cannot demonstrate that they meet appropriate standards or who are not making clear progress towards meeting them in the context of their operating environment."

12.5. 補足情報。


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