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Ashmore Group plc

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
100 %
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.

Ashmore integrates ESG factors into fundamental analysis across its liquid investment themes and scores them to the extent they are deemed material to investment returns.

Whilst ESG criteria has historically been focused on equity investing because of the influence which shareholder interests are able to exert on the management of a particular company, Ashmore believes that ESG is applicable to all asset classes. Ashmore considers that the way in which companies manage ESG factors can have an impact on business performance and valuation, and should be incorporated into investment decisions.

The stakeholders in a company encompass employees, local communities, wider society, governments, supply chains, customers and the natural environment. There are a wide range of ESG issues which could be relevant for a company depending on the industry in which it operates and its specific business profile.  ESG issues can become new sources of risk or opportunities for companies, and a company’s ability to respond to these issues can therefore act as an early signal of long-term competitiveness. To the extent practicable, Ashmore routinely monitors the ESG performance of the companies in which it invests through on-going company visits and other information channels. In addition, companies often disclose corporate governance practices through corporate policies, stock market listings, and market press releases (for example, Brazil has a separate category for companies committed to corporate governance best practice). Companies may also disclose environmental and social practices in annual reports and other reports to investors. These are then highlighted, as appropriate, in Investment Committee reports.

ESG metrics are used to measure, analyse, and rank securities. Assessments at the stock level tend to be qualitative and based on company public disclosures, interviews and/or company visits which are made to each company held in portfolios. In addition, Ashmore gathers information from market related channels, such as suppliers and clients. These assessments are then factored into the valuation and profitability metrics, which are evaluated relative to history, country and industry comparators.

As a global investor, Ashmore recognises that legislation and best practice standards vary between countries and regions, and that it must remain sensitive to these differences.  However, at a minimum, Ashmore expects the companies in which it invests to comply with the national legislation that applies to them.

In the Listed Equities themes Ashmore believes that good corporate governance helps to align the interests of company management with those of its shareholders.  Where possible, Ashmore seeks to maintain constructive dialogue with company management.

Ashmore considers whether companies have corporate governance frameworks that are in line with applicable country codes and serve shareholder interests.  Views on corporate governance do not constrain investment decisions however; often the most profitable investments can be made in companies where an improvement in corporate governance practices is anticipated. In many jurisdictions, and to the extent consistent with Ashmore’s fiduciary duty to its clients, Ashmore exercises voting rights as a means to signal views to company management.  Ashmore has developed detailed guidelines to guide voting decisions, but will, as appropriate, consider resolutions on a case-by-case basis taking into account all available information.

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


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)


(A) Implementation: Screening

LEI 04. Types of screening applied

04.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by

Description

Examples of investment areas where Ashmore offers screening of portfolios based on (or informed by) client requirements (using recognised investment industry identifiers and coding into Ashmore's portfolio management system) include:‐
• Alcohol
• Animal / food products
• Armaments manufacturers or dealers
• Gambling
• Pornography
• Tobacco

Ashmore screens for, and prohibits, investment in companies manufacturing cluster munitions banned under the Oslo Convention. Ashmore at all times seeks to comply with all sanctions imposed by applicable government authorities, and also at a geographic level; and screens across all investment themes for countries which are on the United Nations and EU/UK Sanctions and the US Office of Foreign Assets and Control (OFAC) lists.

Screened by

          Ashmore screens across all investment themes for countries on the following lists:
• UN and EU/UK sanctions
• US Office of Foreign Assets and Control (OFAC)
        

Description

Ashmore screens for, and prohibits, investment in companies manufacturing cluster munitions banned under the Oslo Convention.

Ashmore screens across all investment themes for countries on the following lists:
• UN and EU/UK sanctions
• US Office of Foreign Assets and Control (OFAC)

04.2. Describe how the screening criteria are established, how often the criteria are reviewed and how you notify clients and/or beneficiaries when changes are made.

Ashmore's funds and segregated accounts each has a specific investment mandate which sets out the parameters for investment. Within the Equities theme Ashmore is able to screen client portfolios to meet client requirements for geographic, sector and stock specific restrictions. Stock specific restrictions may include securities which meet clients’ own ESG criteria.


LEI 05. Processes to ensure screening is based on robust analysis

05.1. Indicate which processes your organisation uses to ensure screening is based on robust analysis.

          Use of recognised industry identifiers and coding into Ashmore's portfolio management system. Use of UN, EU/UK sanctions and US OFAC country lists.
        

05.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your ESG screening strategy.

05.5. Additional information. [Optional]

The Equities investment committees research, monitor and incorporate ESG factors regarding existing or potential investments into its investment process.


LEI 06. Processes to ensure fund criteria are not breached (Private)


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