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Sparinvest S.A.

PRI reporting framework 2017

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Organisational Overview
Basic Information [OO 01 - 09] Gateway asset class implementation indicators [OO 10 - 12]
Strategy and Governance
Investment policy [SG 01 - 04] Objectives and strategies [SG 05 - 06] Governance and human resources [SG 07 - 08] Promoting responsible investment [SG 09 - 11] Implementation not in other modules [SG 12 - 16] Innovation [SG 17]
Indirect – Manager Selection, Appointment and Monitoring
Overview [SAM 01 - 02] Selection [SAM 05 - 06] Appointment [SAM 07.1 - 07.2-5] Monitoring [SAM 08 - 10] Outputs and outcomes [SAM 11 - 12] Communication [SAM 13]
Direct - Listed Equity Incorporation
Overview [LEI 01 - 02] ESG incorporation in actively managed listed equities [LEI 03 - 12] Implementation processes [LEI 03 - 12] (A) Implementation: Screening [LEI 06 - 08] (C) Implementation: Integration of ESG issues [LEI 10 - 12] ESG incorporation in passively managed listed equities [LEI 13] Outputs and outcomes [LEI 14 - 16] Communication [LEI 17]
Direct - Listed Equity Active Ownership
Engagement [LEA 01 - 16] Overview [LEA 01 - 02] Process [LEA 03 - 10] Process for engagements run internally [LEA 03 - 04] Process for engagements conducted via collaborations [LEA 05 - 06] Process for engagements conducted with/on your behalf by service providers [LEA 07 - 08] General processes for all three groups of engagers [LEA 09 - 10] Outputs and outcomes [LEA 11 - 15] Communication [LEA 16] (Proxy) voting and shareholder resolutions [LEA 17 - 27] Overview [LEA 17] Process [LEA 18 - 22] Outputs and outcomes [LEA 23 - 26] Communication [LEA 27]
Direct - Fixed Income
Overview [FI 01 - 03] ESG incorporation in actively managed fixed income [FI 04 - 16] Implementation processes [FI 04 - 06] (A) Implementation: Screening [FI 07 - 10] (C) Implementation: Integration [FI 14 - 16] Fixed income - Engagement [FI 18 - 20] Outputs and outcomes [FI 21 - 22] Communication [FI 23]
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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

New selection options have been added to this indicator. Please review your prefilled responses carefully.

03.1. Indicate (1) which ESG incorporation strategy and/or combination of strategies you apply to your actively managed listed equities and (2) the breakdown of your actively managed listed equities by strategy or combination of strategies (+/- 5%)

ESG incorporation strategy (select all that apply)

Percentage of active listed equity to which the strategy is applied
100 %
Total actively managed listed equities 100%

03.2. Describe your organisation’s approach to incorporation and the reasons for choosing the particular ESG incorporation strategy/strategies.

Our equity fund range includes active fundamental stock-selecting funds, active quantitative funds, and passive funds.

ALL FUNDS: All funds (active and passive) apply an exclusionary screen for controversial weapons and securities in breach of EU sanctions.

ACTIVE FUNDAMENTAL FUNDS: In our active fundamental funds, our aim is to understand the long-term intrinsic value of company, and any risks to that value. Indeed, we aim to assess the downside risk before the upside potential. Consequently, issues which may impact a company in the short or long-term are considered highly relevant to our analysis, and this includes many environmental, social and governance issues. As such, we integrate ESG considerations into our security analysis, alongside other fundamental factors. We also engage with companies as deemed appropriate (see separate section on engagement).

In addition, certain of our equity funds (labelled ‘Ethical’) use a negative screen to exclude companies. The exclusionary criteria for these funds result from ongoing consultation with clients, but are broadly categorised as norm-based and sector-based criteria:

  • Norm-based screen for violations of global norms: environmental protection, human rights, labour standards and anti-corruption.
  • Sector-based screen for companies with certain exposures to sectors such as: alcohol, tobacco, gambling, pornography, weapons and thermal coal & oil sands.

 

PASSIVE FUNDS: with regards to our Passive funds, we work on the understanding that the concept of ESG incorporation in investment decision-making (Principle 1) does not apply to funds whose sole objective is to replicate an index - unless the index itself is focused on ESG considerations. Accordingly, we only apply active ownership (Principle 2) to these funds which, as a result, participate in voting and engagement.

 

ACTIVE QUANTITATIVE FUNDS: With our quantitative funds, there is an aim that the portfolio’s ESG score gradually improves over time, so that at rebalancing quantitative ESG information is integrated into portfolio construction decisions on a ceteris paribus basis. As it is for the passive funds, we only apply active ownership (Principle 2) to these funds, specifically proxy voting.

03.3. Where assets are managed using a combination of ESG incorporation strategies, briefly describe how these combinations are used. [Optional]

As noted above in 03.2, ESG risk factors are integrated into our investment process and investment decisions, across all active equity funds. This extends to ongoing monitoring of existing holdings, exercise of proxy voting, and engagement with holdings, and supra-holding engagements. We use certain external service providers for ESG research and proxy voting advice, while ultimate decisions are made internally.

All funds are subject to the controversial weapons and EU sanctions exclusionary screen.

In addition, the Ethical fund range has sector and norm-based exclusions, as detailed in 03.2. Research for these screens is provided by an external service provider, ISS-Ethix. Note that negative results from these screens may result in a company being excluded from our Ethical funds, but not excluded from other active funds. Where the exclusion is based on normative issues, we choose to engage with the company in order to seek improvement and the prevention of recurrence. We find that the research provided by ISS-Ethix in this regard has useful crossover application in our ESG integration strategy.

LEI 04. Type of ESG information used in investment decision (Private)

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

(A) Implementation: Screening

LEI 06. Types of screening applied

06.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by

Description

Across all funds, we exclude companies involved in controversial weapons and securities in breach of EU sanctions. (We note that on occasion, certain sanctions may have the effect of excluding specific countries, but we have no direct country exclusion screens ourselves).

In addition, we provide certain funds which add an additional focus on “Ethical Investment”, which is based on negative screening to exclude companies from the investment universe or investment shortlist, on certain specific grounds. These equity funds are easily identified by the label “Ethical” within the fund name, and are primarily used to meet client needs. The exclusionary criteria for these funds result from ongoing consultation with clients, but are broadly categorised as norm-based and sector-based criteria:

  • A norm-based screen for violations of global norms: environmental protection, human rights, labour standards and anti-corruption.
  • A sector-based screen for companies operating within sectors such as: alcohol, tobacco, gambling, pornography, weapons, thermal coal and oil sands.

(In the above checklist, we reflect this latter sector-based screen as "Product", "Activity" and "Sector". Note that we do not have any broad GICS sector-level exclusions).

Screened by

          Paris Agreement on Climate Change

Description

Note that our Norm-Based screening is a negative exclusionary screen, as detailed above. It assesses companies’ adherence to international norms for human rights, the environment, labor standards and anti-corruption. It adheres to the UN Global Compact Principles.

06.2. Describe how the screening criteria are established, how often the criteria are reviewed and how you notify clients and/or beneficiaries when changes are made.

A key role of the RI Committee is to be aware of potentially relevant new screening requirements. Any potential review to screening criteria is informed by ongoing consultation with clients, other industry participants and general industry trends.

Clients are notified of changes vial both direct communication such as presentations or coverage in our Responsible Investment Review, and via our website. 

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

07.1. Indicate which processes your organisation uses to ensure screening is based on robust analysis.

07.2. Additional information. [Optional]

Normative and sector-based screens are researched and implemented by an external service provider (ISS-Ethix). Internal staff, including both dedicated RI staff and portfolio managers and analysts will review the analysis alongside their own findings based on information from the company in question. Where necessary, more detailed or up-to-date analysis will be requested from the service provider. 

LEI 08. Processes to ensure fund criteria are not breached (Private)

(B) Implementation: Thematic

LEI 09. Types of sustainability thematic funds/mandates (Not Applicable)

(C) Implementation: Integration of ESG issues

LEI 10. Review ESG issues while researching companies/sectors

10.1. Indicate if E, S and G issues are reviewed while researching companies and/or sectors in active strategies.

ESG issues

Coverage/extent of review on these issues

Environmental

Environmental

Social

Social

Corporate Governance

Corporate Governance

10.2. Additional information. [Optional]

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

LEI 12. Aspects of analysis ESG information is integrated into (Private)

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