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HSBC Global Asset Management

PRI reporting framework 2017

You are in Strategy and Governance » Innovation


SG 17. Innovative features of approach to RI

17.1. Indicate whether any specific features of your approach to responsible investment are particularly innovative.

17.2. Describe any specific features of your approach to responsible investment that you believe are particularly innovative.

We have asked all our mainstream Equities and Fixed Income investment teams to assess the ESG quality of their investee companies.

This has been first undertaken through the completion of templates called ESG checklists. Between 2010 and 2015, these checklists helped analysts to identify each company's strengths and weaknesses across our 16 offices. To date more than 1,500 checklists have been produced.

To support this in-house research effort, investment teams enjoy a wealth of research coming from various ESG third parties since 2008. Some 40,000 documents covering 9,000 companies in total are hosted on a dedicated ESG intranet capability. We regard the breadth and depth of this coverage the way it is shared with all teams globally and the very fact it is done by our “mainstream” investment professionals as innovative.  Moreover, this research includes Emerging and Frontier Markets.

Our ESG integration evolved in June 2015 with a new functionality: our ESG intranet now produces a two-page ESG Executive Summary for all covered companies.

Each of the 9,000+ Executive Summaries provides investment teams with a concise view ESG strengths and weaknesses and indicates whether those companies should be perceived as High Risk, Medium Risk or Low Risk ESG-wise. The objective of the Executive Summary is indeed to provide our c.600 portfolio managers and analysts with an instant ESG view and also a norm-based screening of their investment targets.

The High, Medium, Low risk classifications are derived from our proprietary ESG rating model. This model itself stems from on an in-house re-configuration of MSCI GICS sector/industry segmentation. For each sector/industry we have defined the key ESG issues with the highest level of financial materiality and summarized these in a document called the ESG Roadmap.

In our view, the fact this structured process applies to all our equity and corporate fixed income assets, across all our 26 geographies, in either developed and emerging markets, is genuinely "mainstream" and not limited to a small range of SRI funds can be considered best practice.

17.3. Additional information.