Managers are provided an internal rating (A, B, C or N/A) by the investment staff after considering four broad categories. Consideration of ESG is an integral component of the 'Strategy' Category. There are three sub-categories:
- What they say they do: Review of their ESG Policy, RI Policy, memberships (including UNPRI)
- How their portfolio looks: Review of the Combined ESG Rating (which is a weighted average of undelying portfolio investments, based on modified MSCI ESG scores.
- How thansparent they are and how well they report.
The appointment process follows an internal Investment Recommendation (IR) procedure which requires a written ESG consideration for each investment. This is discussed as part of the overall consideration at the weekly committee meeting. Mandates require specific clauses on exclusions, proxy voting and reporting.
Monitoring includes ESG ratings on individual equity portfolios, updated exclusions, proxy voting monitoring, engagement monitoring and discussions on how managers may have performed in relation to GRESB real estate or property indecies and sustainability performance.