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TT International

PRI reporting framework 2018

You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes

Implementation processes

LEI 01. Percentage of each incorporation strategy

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

01.1. 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%

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

At TT International, we believe that high standards of corporate responsibility tend to make good business sense and have the potential to protect and enhance investment returns. Consequently, our investment process specifically integrates ESG considerations into our investment analysis and is always discussed as part of a stock’s Investment Case prior to purchase..

The analysis of a company’s ESG performance is integrated into the investment process at TT and is formalised into our investment case template. ESG integration is primarily carried out by TT’s investment analysts, but our portfolio managers also actively analyse potential ESG factors when making investment decisions. Such analysis enhances our understanding of a company and its ability to deliver sustainable long term shareholder value. We accept that it is not always possible to apportion investment value to ESG issues but believe ESG performance can provide a proxy for the quality of management and as such can be integrated into stock valuation. On occasion, some ESG issues may have direct financial relevance (e.g. carbon emissions, water scarcity) and in these instances we endeavour to integrate these considerations into our valuation process.

TT's risk team maintains an ESG screen which analyses our portfolio across 11 different ESG risk factors. The aim of the screen is to identify areas of concern or missing information so as to guide further bottom-up research. The 'score' on the screen is never sufficient justification for an investment decision, but rather is a tool to aid our analysis. There is no substitute for our own fundamental ESG research.

 

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


LEI 02. Type of ESG information used in investment decision (Private)


LEI 03. Information from engagement and/or voting used in investment decision-making (Private)


(A) Implementation: Screening

LEI 04. Types of screening applied

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

Type of screening

Screened by

Description

TT has developed it's own, bespoke ESG ‘scorecard’ to quantitatively score each holding according to 14 metrics.

04.2. 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.

ESG analysis is fully integrated into TT's investment process from the inception of any stock analysis. Indeed just as the Investment Case template expects commentary on valuation assumptions and risks, so it is also mandatory to comment on Environmental, Social and Governance headwinds or tailwinds in stock selection. With an explicit focus on companies with persistently high quality attributes, the process also has a natural bias away from those with a poor ESG history. With focused and concentrated portfolio construction, combined with low turnover, every stock chosen must be of the highest conviction. If there is doubt about the company, either at the financial level (deliverability of earnings, balance sheet quality, for example) or at the ESG level (questions of labour exploitation, or unattractive management structure, for example), then there is no need to own any specific stock, and the team will focus their attention elsewhere.   

Our monitoring process flows from our ESG risk monitor which identifies areas for further ESG investigation and analysis. These flagged issues are referred to the Analyst in question for further work. We do not formally ‘measure’ the consequence of engagement activities but subjectively assess whether a company has taken steps to mitigate or remove the concerns that we have. Where the company has not, and we believe these concerns are a significant detriment to the outlook to shareholder value, we may reduce our holding. When improvement in ESG factors is a specific catalyst in the company’s Investment Case we formally monitor the results of our engagement as part of our review of the investment.

We would not formally notify clients of eny evolvement of our ESG screening criteria, however; we would notfiy the clietn upon and request for information.


LEI 05. Processes to ensure screening is based on robust analysis

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

05.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your ESG screening strategy.

05.5. Additional information. [Optional]


LEI 06. Processes to ensure fund criteria are not breached (Private)


(B) Implementation: Thematic

LEI 07. Types of sustainability thematic funds/mandates

07.1. Indicate the type of sustainability thematic funds or mandates your organisation manages.

07.2. Describe your organisation’s processes relating to sustainability themed funds. [Optional]


(C) Implementation: Integration of ESG issues

LEI 08. Review ESG issues while researching companies/sectors

08.1. Indicate which ESG factors you systematically research as part of your investment analysis and the proportion of actively managed listed equity portfolios that is impacted by this analysis.

ESG issues

Proportion impacted by analysis
Environmental

Environmental

Social

Social

Corporate Governance

Corporate Governance

08.2. Additional information. [Optional]


LEI 09. Processes to ensure integration is based on robust analysis (Private)


LEI 10. Aspects of analysis ESG information is integrated into (Private)


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