Our ambition is for ESG integration to be at the core, rather than an additional element, of the investment process. In our investment process, we principally undertake asset allocation (where needed) and portfolio construction; and then delegate security selection to the third-party managers either through mandates or purchase of funds. (In some instances, this activity is carried out by internal investment managers.)
We select and continue to hold these managers based on our confidence in their ability to deliver their investment objectives, along with their associated strategies and practices to responsible investment. We inform our external managers of our focus on and commitment to the PRI principles.
As part of our due diligence and ongoing monitoring we review the managers’ integration of the principles and practices of responsible investing. This includes review of the ESG policies and governance of potential managers, identifying how effectively they integrate ESG factors into their investment decisions, and how the fund communicates ESG information to its investors. Throughout the life of an investment, we monitor identified ESG risks and work with managers to ensure effective oversight.
We encourage managers to engage in an open dialogue with us about their own approach to responsible investment and how ESG factors impact their investment analysis and decision-making processes.
To support our ESG integration, we use external research sources to provide ESG data and insight and will use external data provider(s) to supplement our internal analysis by our investment teams. This includes company and industry reports and thematic research on specific ESG issues, as well as data and screens for our teams. We believe these insights, and in particular quantitative data, should be used alongside, rather than be a replacement for, our investment professionals’ analysis.