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The Scott Trust Limited (Guardian Media Group)

PRI reporting framework 2018

You are in Strategy and Governance » Asset class implementation not reported in other modules

Asset class implementation not reported in other modules

SG 16. ESG issues for internally managed assets not reported in framework (Not Applicable)


SG 17. ESG issues for externally managed assets not reported in framework

17.1. Describe how you address ESG issues for externally managed assets for which a specific PRI asset class module has yet to be developed or for which you are not required to report because your assets are below the minimum threshold.

Asset Class

Describe what processes are in place and the outputs or outcomes achieved

Fixed income - SSA

Fixed Income - Covering all sub-classes

We note that many ESG and responsible investment initiatives focus on equities. We believe ESG issues are material for fixed income, including for SSA. Therefore, working with our consultant we undertook a specific project having monitoring calls or meetings with all non-passive fixed income managers in the long term fund specifically dedicated to discussing ESG integration and responsible investment. All managers held in this reporting period have gone through this process. 

Specific attention was given to reviewing how managers’ approaches differ between SSA and Corporate debt, and how approaches more broadly differ from those of equity managers, in terms of data/scoring, materiality, restrictions, time horizons and engagement. We were encouraged by the focus on ESG and interesting innovations of active managers in the fixed income space.

This was in addition to the other selection and monitoring work incorporating ESG in detail. Fixed Income manager must comply with our RI/ESG principles in the same way as our equity managers. This includes our fossil fuel divestment targets.

Fixed income - Corporate (financial)

As above

Fixed income - Corporate (non-financial)

As above

Fixed income - Securitised

As above

Private equity

The ESG attributes of investments are key as we build out the Private portfolio and we conduct ESG analysis on all new potential private investments. This is a key asset class where we can find proactive investments for a low carbon economy - e.g. sustainable infrastrucuture including renewables.

We focus on both the environmental and social impact of investments and many of the proactive impact investments opportunities are in the private space. During the reporting period, we focussed more on proactive impact in the private space. This diligence during the reporting period has lead to three subsequent private investment fund commitments offering both attractive market returns and a positive impact. We recognize innovation in this space and are keen to be a leading asset owner supporting it.

Commodities

See below, section SG 17.2

This exposure currently only consists of a small allocation to physical gold bullion. Any new selection of commodities would be made in accordance with our responsible investment policies - for example our fossil fuel divestment policy and our focus on climate risk.

Hedge funds - DDQ

Select whether you use the PRI Hedge Fund DDQ

Hedge funds

See below, section SG 17.2

During the reporting period we had further dialogue with our hedge fund managers about  ESG integration and climate risk. During the period this lead to the creation of separate fossil fuel free share classes at two hedge funds, into which we invested.

17.2. Additional information.

The degree of integration of ESG in the investment process of all our external managers is assessed as a key part of the manager selection and monitoring process. This includes in assets classes where we have smaller exposure. Given our policy to divest from fossil fuels over the medium term, such exposure is carefully monitored in these asset classes. It is also a key factor in the selection of new investments, as are broader ESG attributes, which are monitored both at fund level (e.g. voting polices) and by analysis of underlying investments.

We also inform all of our managers of our stance on ESG issues and what we expect as investors in their products.


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