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

PRI reporting framework 2017

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Fundraising of infrastructure funds

INF 06. Fund placement documents and RI

06.1. Indicate if your most recent fund placement documents (private placement memorandums (PPMs) or similar) refer to responsible investment aspects of your organisation.

06.2. Indicate how your fund placement documents (PPMs or similar) refer to the following responsible investment aspects of your organisation:

06.3. Describe how your organisation refers to responsible investment for infrastructure funds in fund placement documents (PPMs or similar). [Optional]

Our fund raising documents explicitly note our commitment to responsible investing. In the PPMs for European Direct Infrastructure Fund II and the Global Diversified Infrastructure Fund, our approach and commitment to ESG is explained to in various sections of the document. For example, the documents include comments such as:

"…As long-term investors with substantial ownership in the companies we own, we focus on understanding the wider environment with which the investments operate in and on creating long-term, sustainable alpha. For example, as part of our internal assessment of environmental, social and governance ("ESG") risks and opportunities, we explored the impact of carbon regulation across all infrastructure sectors (including those we are not currently invested in).

The conclusions help us to deliver alpha through optimal portfolio construction (e.g. seek to increase exposure to sectors poised to benefit from carbon regulation and minimise exposure to those which may be risk-exposed). This 'top-down approach' dovetails with our active management expertise at the asset level."

Our fund raising documents also specifically note that we are a signatory to the United Nations Principles for Responsible Investment and seek to apply those principles in managing infrastructure businesses on a long term sustainable basis.

The documents also includes notes on our coverage of ESG risks and opportunities in:

  • Our investment and market research;
  • Our investment process, including the due diligence and investment appraisal for new investment opportunities (i.e. alongside portfolio suitability, industry/regulatory environment, competitive position and expected returns), and our active asset management for existing portfolio businesses (on an asset-by-asset basis); and
  • 'Risks relating to investment' section (i.e. alongside other investment risks such as demand risk, diversification, political risk, interest rates and liquidity risk) of the PPM documents.

Existing and prospective investors (and other interested parties) will also have access to our annual ESG report.  This report is a key piece of our Investor Relations communication material.  We also offer our Investors an opportunity to dial into an annual webinar on ESG, where we discuss examples of ESG in practice within our portfolio companies.

 

In our annual report we describe in detail our approach to responsible investment and ESG issues and contains links to other policies and publications. The material includes our ESG policies and commitment to ESG implementation in our business and our investments. The information provided also includes membership details of ESG related organisations such as the Long Term Infrastructure Investors Association (LTIIA), the Investor Group on Climate Change (IGCC) and the UNPRI. 


INF 07. Formal commitments to RI

07.1. Indicate whether your organisation makes formal commitments in fund formation contracts, Limited Partnership Agreements (LPAs) or in side letters relating to responsible investment in infrastructure when requested by clients.

07.2. Additional information.

Our commitment to responsible investment is embodied in the disclosure documents (e.g. Information Memorandum, Private Placement Memorandum) of the relevant Fund, or included in our formal responses to 'Requests for Proposal' for separately managed accounts or fund reviews etc. Our ESG approach is also included in the DDQ and data room. This is made available to potential and existing clients.

Our portfolio companies also publish reports on sustainability, environmental performance and other relevant issues, for example carbon or energy reduction. We make these available publically on the corporate websites. We have been  a pioneer of fully integrated reporting in the UK and plan to roll this out to other larger investment companies in the coming years.

Whenever clients have a specific query or focus on a particular ESG issue, we are happy to engage.  This includes clarifying our approach and addressing the specific client queries, ensuring it is consistent with our approach, and including it as required in any side letters or specific documentation. Given our approach is relatively advanced in the market place clients are usually comfortable with us leading the discussion and adding addressing any specific client requirements.


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