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The Scott Trust Limited (Guardian Media Group)

PRI reporting framework 2018

You are in Indirect – Manager Selection, Appointment and Monitoring » Appointment


SAM 04. Appointment processes (listed equity/fixed income)

04.1. Indicate if in the majority of cases and where the structure of the product allows, your organisation does any of the following as part of the manager appointment and/or commitment process

04.2. Provide an example per asset class of your benchmarks, objectives, incentives/controls and reporting requirements that would typically be included in your managers’ appointment.

Asset class


          Customized ESG benchmark tilting world equity index to lower carbon emissions, higher green revenues and zero fossil fuels

ESG Objectives

          Zero Fossil Fuels - specified in IMA. Emission reductions must meet target specified in IMA
          Separately managed account designed specifically for our own ESG requirements, which are specified in the investment management agreement contract. As well as excluding all exposure to fossil fuels, the bespoke benchmark targets a 50% carbon emissions reduction and a 100% increase in exposure to Green Revenues, whilst limiting tracking error to the broader standard global benchmark.
          Voting policy in Investment Management Agreement (IMA)

Incentives and controls

Reporting requirements

04.4. Indicate which of these actions your organisation might take if any of the requirements are not met

04.5. Provide additional information relevant to your organisation's appointment processes of external managers. [OPTIONAL]

          The majority of listed equity investments are held in pooled funds, where the assessment of ESG and responsible investment is made at the selection (and later monitoring) stage, with appointment documentation more necessarily based on the standard terms of the pooled fund.  

However, during the reporting period we agreed to move our large passive equity component to a customised separately managed account with the agreed ESG integration (low carbon methodology, ex fossil fuels and related reporting) a key part of the appointment. This section (SAM 7) applies to this appointment decision. 

We would typically take this step in listed equities in the majority of cases where the structure of the product allows – e.g. in all separately managed accounts, where ESG customisation to meet our objectives would be expected to be a key factor in investing in this manner. It is not done in the majority of all listed equity appointments when we also consider the pooled funds, where we instead have a thorough selection process. 

We also invested in a new emerging markets equity fund during the period integrating ESG and explicitly excluding fossil fuels. While this is a pooled fund, we were the anchor investor and played a key role in the design of the product. These specific ESG requirements were therefore included in fund documentation.