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LocalTapiola Asset Management Ltd

PRI reporting framework 2017

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Outputs and outcomes

SAM 11. Percentage of externally managed assets managed by PRI signatories

11.1. Indicate approximately what percentage (+/- 5%) of your externally managed assets are managed by PRI signatories.

86 %

11.2. Describe how you ensure that best RI practice is applied to managing your assets

Measures

          We carried out an ESG survey to our external managers where they were encouraged to disclose their RI practices and achievements. We also meet regularly with their representatives and RI is also an ongoing topic in the meetings.
        

Measures

          We converted LocalTapiola Emerging market equities mutual fund from 'fund of funds' strategy to in-house managed strategy with a quantitative factor model, where ESG in one decisive factor. We utilize an ESG rating provided by a third-party service provider as one parameter of the model.
        

11.3. Additional information. [Optional]

PRI signatory status is not a prerequisite, but the great majority of our external managers are signatories to UN PRI. Our external managers have often similar investment philosophy to LocalTapiola Asset Management. During 2016 we extended a small share of our externally mangaged assets into alternative investments. That is the reason the percentage share of PRI signatories has slightly declined.


SAM 12. Examples of ESG issues in selection, appointment and monitoring processes

12.1. Provide examples of how ESG issues have been addressed in the manager selection, appointment and/or monitoring process for your organisation during the reporting year.

Topic or issue
          LocalTapiola Emerging market equities mutual fund
        
Conducted by
Asset class
Scope and process

Manager appointment and monitoring process. With emerging market equities it has always been more difficult to get detailed ESG information on the external managers' mutual fund constituents.

Outcomes

We converted the strategy in emerging market equities to be managed in-house with a quantitative model, where ESG is one of the factors in the quantitative stock picking model. For that purpose we apply ESG ratings provided by a third-party service provider.

Topic or issue
          ESG Questionnaire
        
Conducted by
Asset class
Scope and process

Our survey questionnaire to the external managers

Outcomes

The Questionnaire facilitated comparing managers' responses. All external managers are given an internal ESG score and the scores are reviewed at least annually. This year the Questionnaire and the responses had a definite role in the review process.

Topic or issue
          Increasing externally managed assets to managers with higher internal ESG score
        
Conducted by
Asset class
Scope and process

We monitor the returns of the externally managed assets constantly. We also review how we are serviced by our external managers.

Outcomes

We transferred assets from managers with lower internal ESG scores to those with higher ESG score. This was evident both in equities and fixed income. This also applies to both passive and active funds. The main reason was to achieve better returns within each asset class, taking into account ESG issues simultaneously

12.2. Additional information.


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