This report shows public data only. Is this your organisation? If so, login here to view your full report.

Alexander Forbes Investments Limited

PRI reporting framework 2018

You are in Indirect – Manager Selection, Appointment and Monitoring » Outputs and outcomes

Outputs and outcomes

SAM 08. Percentage of externally managed assets managed by PRI signatories (Private)


SAM 09. Examples of ESG issues in selection, appointment and monitoring processes

09.1. Provide examples of how ESG issues have been addressed in the manager selection, appointment and/or monitoring process for your organisation during the reporting year.

Topic or issue
          Manager Selection
        
Conducted by
Asset class
Scope and process

Managers are required to complete Responsible Investing (RI) Due Diligence Questionnaires, which allow us to assess how they incorporate ESG into their investment process. These questionnaires focus on four key areas namely: 

1) ESG integration: How managers integrate ESG into their investment process including examples 

2) Resources:  What internal and external resources relating to research, systems and staff are used

3) Engagements: What policies and procedures around engagements and proxy voting are in place and examples and outcomes of engagements

4) Firm Wide Commitment: Whether their process is formalised through a Responsible Investing policy, the firms commitment to industry bodies and codes, public disclosure of RI activities

 

 

Outcomes

A formal ESG summary is produced based on the responses from the RI DDQ and our engagements with managers and included in all manager research reports that are available on our Global Investment Manager Database (GIMD).  

Based on these four areas managers are assigned an ESG rating between 1 - 4, where 1 represents a leader in the RI space. Portfolio managers are encouraged to appoint managers with an ESG rating of 3 or above. In the event that a manager with an ESG rating of 4 is appointed, the manager is required improve to a rating of 3 or above the following 12 month period or risk having their appointment terminated. This process is in place to assist managers in improving their ESG rating. 

Topic or issue
          Manager Appointment
        
Conducted by
Asset class
Scope and process

Mandates, particularly equity and property mandates, require that appointed managers integrate ESG into their investment process.

These mandates also include Proxy Voting Guidelines and Corporate Governance Recommendations for appointed managers. 

Managers ESG scores are also considered during the appointment process. 

Outcomes

Including ESG requirements in mandates ensures that managers adhere to our RI reporting requirements relating to communicating and disclosing ESG enhancements to their investment process, key ESG risks and opportunities affecting current holdings and investment decisions, engagements with company management and proxy voting. 

Topic or issue
          Manager Monitoring
        
Conducted by
Asset class
Scope and process

Managers are required to comment on any ESG enhancements to their investment process, key ESG risks and opportunities affecting current holdings and investment decisions, engagements with company management and proxy voting reporting during regular report backs. 

In addition, where there are contentious issues relating to any holdings, we will specifically engage with managers on any areas of concern.

We have more recently formalised our process around monitoring these engagements. Managers responses are compared and rated based on their level of disclosure and understanding of ESG concerns using a heat map. 

Proxy voting results are also monitored on a quarterly basis. 

Outcomes

Reporting on ESG risks and opportunities affecting current holdings gives us an opportunity to monitor over time how managers are addressing these specifically through engaging with company management or adjusting their holding based on concerns. It also allows us to assess how active managers are in engaging with company management and whether they are in a position to influence and effect change i.e. how seriously management take their ownership responsibilities. 

Monitoring proxy voting ensures that all managers are are being active owners and not abstaining from any resolutions, and gives us an indication of concerns managers have and whether their engagements support these. We are cognisant that engagements often happen behind the scenes and attempt to monitor whether managers engagements are in line with their voting activity. 

Through monitoring company specific engagements across managers using our more recently established heatmap, we are able to gain insight into the level of understanding and commitment to mitigating ESG risks by different managers, which provides insight into the quality of the manager.  

09.2. Additional information.


Top