USS matches RI monitoring to the mandate and asset class.
For example, we will confirm adherence to our ethical investment policy for the USS Investment Builder ethical investment funds in listed equities and fixed income.
For all listed equity fund managers we will review voting histories, voting and engagement case studies and ESG integration processes. On occasion, the USS RI team may direct voting.
For passive equity portfolios, whilst USS expects the fund manager to adhere to principles of good stewardship with an active approach to voting and engagement, we would expect ESG activities to focus more on risk management.
The monitoring of external asset managers for listed equity and fixed income overall, is led by the StratCo team. They request asset managers complete a quarterly exceptions questionnaire to flag changes. This includes the following questions on RI and helps the scheme identify where follow-up is required:
RI Public Equities Quarterly Questionnaire:
- Changes to ESG policy, RI approach or staff have taken place.
- New ESG and/or reputation risks have arisen in the portfolio.
- Public reporting and disclosure on RI (including Stewardship Codes, PRI obligations etc.) has been delayed or changed.
- Ethical and Sharia funds: The screening policy has been breached.