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Greentech Capital Advisors, LLC

PRI reporting framework 2018

You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities

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
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.

We believe that companies that embrace robust environmental, social and governance (ESG) standards will achieve strong and sustainable growth and profitability over the long term.

The GCA Sustainable Growth Fund invests in companies that are solving constraints around energy, food and water, so we place the greatest emphasis on the environmental component of ESG.  We not only invest in pure-play companies, but also companies making the migration to providing these sustainable products/services.  We require that 50% of revenue come from sustainability initiatives and that this component of overall revenue be growing faster than the corporate average. 

The GCA Emerging Markets Sustainable Growth Fund invests in companies that embrace robust ESG standards across emerging and frontier markets.  We believe that emerging and frontier markets will be the engines of global growth in the next century. At the same time, they face considerable challenges related to climate change, urbanization, pollution, disease, governance, infrastructure deficits and institutional capacity. By focusing on material ESG factors and combining rigorous bottom-up fundamental analysis with macroeconomic factors, we identify drivers of growth and profitability while mitigating risk.

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

02.1. Indicate what ESG information you use in your ESG incorporation strategies and who provides this information.

Type of ESG information

Indicate who provides this information  

Indicate who provides this information 

Indicate who provides this information 

Indicate who provides this information 

Indicate who provides this information 

Indicate who provides this information 

02.2. Provide a brief description of the ESG information used, highlighting any different sources of information across your ESG incorporation strategies.

We assign each company a grade (high, medium, low) for its environmental, social and governance profile, but we do not employ a rigid, quantitative ESG scoring methodology to evaluate a company’s sustainability and determine inclusion and sizing in a portfolio. This approach doesn’t work for the team for several reasons:

  1. The limited disclosure of ESG data in our investment universe makes it difficult to score or rank companies in absolute or relative terms.
  2. We feel that many ESG factors are qualitative; and while we try to incorporate these into our model assumptions and decision-making, we don’t believe that translating them into an abstract quantitative score helps us make better investment decisions.
  3. Scoring is almost by definition backward-looking. We see some of the most exciting investment opportunities among companies that are at a sustainability inflection point. Such companies may not have been doing everything right in the past, but as they embrace value-creating ESG practices and we can get some visibility into the implementation of these changes, we want to be able to take advantage of this change over our long-term holding period.

02.3. Indicate if you incentivise brokers to provide ESG research.

02.5. Additional information.[Optional]


LEI 03. Information from engagement and/or voting used in investment decision-making

03.1. Indicate if your organisation has a process through which information derived from ESG engagement and/or (proxy) voting activities is made available for use in investment decision-making.

03.2. Additional information. [Optional]


(B) Implementation: Thematic

LEI 07. Types of sustainability thematic funds/mandates

07.1. Indicate the type of sustainability thematic funds or mandates your organisation manages.

07.2. Describe your organisation’s processes relating to sustainability themed funds. [Optional]

The whole firm is dedicated to sustainability and ESG investing.  All of our funds incorporate ESG and thematic portfolios that address sustainability.  


(C) Implementation: Integration of ESG issues

LEI 08. Review ESG issues while researching companies/sectors

08.1. Indicate which ESG factors you systematically research as part of your investment analysis and the proportion of actively managed listed equity portfolios that is impacted by this analysis.

ESG issues Proportion impacted by analysis
Environmental
Social
Corporate Governance

08.2. Additional information. [Optional]


LEI 09. Processes to ensure integration is based on robust analysis

09.1. Indicate which processes your organisation uses to ensure ESG integration is based on a robust analysis.

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

09.4. Indicate how frequently you review internal research that builds your ESG integration strategy.

09.5. Describe how ESG information is held and used by your portfolio managers.

09.6. Additional information.[Optional]


LEI 10. Aspects of analysis ESG information is integrated into

New selection options have been added to this indicator. Please review your prefilled responses carefully.

10.1. Indicate which aspects of investment analysis you integrate material ESG information into.

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

10.2a. Indicate which methods are part of your process to integrate ESG information into fair value/fundamental analysis and/or portfolio construction.

10.3. Describe how you integrate ESG information into portfolio weighting.

We manage high conviction, concentrated portfolios of companies that meet high standards across the E, S and G.  Companies that not only meet our ESG standards, but also present high adjusted risk / reward ratios over our holding period, often represent top 10 positions (as a percentage of AUM) in the portfolios and are sized accordingly. 

10.4a. Describe the methods you have used to adjust the income forecast / valuation tool

  • The teams focus on material factors that impact valuation and quantify them if possible. These conclusions are then incorporated into the valuation model (impact on growth, margins, cost of capital)
  • The teams run probability weighted scenario analysis or adjustments to discount rates (e.g. explicit corporate governance discount)

Proportion of actively managed listed equity exposed to investment analysis

10.2b. Indicate which methods are part of your process to integrate ESG information into fair value/fundamental analysis and/or portfolio construction.

10.4b. Describe the methods you have used to adjust the income forecast / valuation tool

  • The teams focus on material factors that impact valuation and quantify them if possible. These conclusions are then incorporated into the valuation model (impact on growth, margins, cost of capital)
  • The teams run probability weighted scenario analysis or adjustments to discount rates (e.g. explicit corporate governance discount)

10.5. Additional information.


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