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Ausbil Investment Management

PRI reporting framework 2018

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ESG incorporation in actively managed listed equities

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
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.

The basic premise of Ausbil’s philosophy is that stock prices ultimately follow earnings and earnings revisions. We believe that the market places excessive emphasis on the current situation and does not sufficiently take into account the likelihood of future changes to the earnings profile of individual companies and sectors. Ausbil seeks to bias the portfolio toward companies with strong earnings and quality management with capabilities to deliver those earnings. Ausbil believes proprietary and in-depth ESG analysis, as an integral component of fundamental stock research, can play a significant part in that process. In our view, ESG integration in fundamental stock research provides for better informed investment decisions for our investments and our clients. ESG factors may directly impact a company’s earnings and the way a company manages key ESG risks can also be seen as a proxy for management quality. Engagement on ESG issues is an essential component for all funds.

In addition, Ausbil has a number of specific mandates that combine ESG integration with a screened universe based on individual client requirements.

Ausbil’s investment research process is based on four stages: macroeconomic analysis, sectorial analysis, stock selection and portfolio construction. As part of that analysis, relevant ESG risks and opportunities – captured by Ausbil’s proprietary ESG research produced by a dedicated ESG Research Team - are considered and integrated in each phase.

Ausbil’s dedicated ESG Research Team produces proprietary ESG research where key outputs include stock-specific ESG scores and detailed ESG stock summaries, which are key inputs in the Investment Team’s stock summaries. The ESG stock summaries include an ESG SWOT analysis with a list of key ESG-related risks and opportunities that may have a material impact on earnings or Ausbil’s view on earnings sustainability and / or management quality.

Stock analysts and ESG research analysts work closely together at a sector based and stock level to assess ESG-related impacts on earnings drivers, earnings outlook, valuation and investment view and ultimately the investment recommendation. At the portfolio construction phase, Ausbil’s ESG research provides for an overlay as it allows the portfolio construction committee the option of tilting a portfolio to reflect a thematic.

For stocks that are not covered by Ausbil’s ESG Research Team, e.g. some microcap companies in the Microcap Fund and companies in the Global Small Cap Fund, the Microcap Fund Team includes ESG research (particularly on corporate governance) as part of the fundamental stock research process.

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

Mandates that combine ESG integration and screening rely on specific screening requirements stipulated by clients. The negative screens apply on top of the general ESG integration.

The stocks excluded as a result of negative screens are either supplied by the client or ascertained by Ausbil’s dedicated ESG Research Team based on criteria stipulated by the client.


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)


(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
Social
Corporate Governance

08.2. Additional information. [Optional]

Ausbil’s proprietary ESG research on Australian listed companies includes a detailed and systematic review of all E, S and G factors relevant to a particular company. The research is updated on a timely basis.


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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