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Wellington Management Company LLP

PRI reporting framework 2018

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You are in Strategy and Governance » ESG issues in asset allocation

資産配分におけるESG問題

SG 13. ESG issues in strategic asset allocation

この指標には新しい設問が追加されています。事前に入力されている回答を精査してください。

13.1. ポートフォリオレベルで将来のESGトレンドのリスクプロファイルを計算するシナリオ分析やモデリングを組織が実施しているかどうかについて明示してください。

          Our approach varies by strategy and leverages Trucost's methodology. We are evaluating additional tools to inform our investment risk and business continuity process.
        

13.2. 組織が戦略的な資産配分やセクターまたは地理的な市場間での資産の配分においてESG問題を考慮しているかどうかを記載してください。

以下を行っている

13.3. 補足情報 [任意]


SG 14. Long term investment risks and opportunity

14.1. 貴社と貴社の事業活動にとって重要な影響を及ぼしうる短・中・長期的なリスクや機会を決定するプロセスを説明してください。

​Our enterprise risk management approach relies on “three lines of defense.” Line management has primary responsibility for the management of the risks inherent in their business function. Various support functions partner with line management to strengthen their management of risks by providing expert advice and guidance, project management, or other support resources. In addition, Internal Audit is a global, risk-based, and independent function that tests our operational control environment to provide assurance over the design and effectiveness of key operational controls to the Executive Committee, the Risk Management Committee, affiliate boards/risk committees, and senior management. Finally, oversight committees oversee and support risk management policies and practices at the firm.

14.1 CC. 気候に関連した短期、中期および長期のリスクと機会が、貴社の活動に重大な影響を及ぼす可能性があるかどうかを判断するためのプロセスを説明してください。

Please refer to our response in SG 07.1b CC above, where we describe the process used to determine which climate-related risks and opportunities could have a material impact on our organization and its activities.

Climate change and related policy movements toward a low-carbon future may present an array of near-and long-term risks and opportunities. We expect transition risks – regulatory uncertainties, coupled with changing energy market dynamics and improving technology – to become increasingly evident as the transition to a lower-carbon economy continues. In addition, the risks of unplanned disruptions due to severe weather events, generally referred to as physical risks, are becoming more frequent and acute. At its core, we view climate change as being about greater volatility and less-predictable outcomes. As we assess the potential impacts of a changing climate on our clients’ portfolios, we have identified several risks and opportunities.

14.2. 一部の投資リスクと機会は長期トレンドの結果として発生します。貴社では、以下のどの項目について取り組んでいるか明示してください。

14.2a cc. 「短」、「中」、「長期」をどのように定義するかを記述し、これらの期間にわたる重要な気候関連の問題を説明して下さい。

定義
気候関連の問題の説明
Short term
          1 year
        
          Please refer to SG 14.6 below.
        
Medium term
          3-5 years
        
          Please refer to SG 14.6 below.
        
Long term
          More than 10 years
        
          Please refer to SG 14.6 below.
        

14.3. 気候に関するリスクと機会に対応して組織で実施されている活動を選択してください。

14.4. 気候に関するリスクと機会の管理に際して採用している手段を選択してください。

14.4a CC. 気候に関連するリスクと機会を評価するために使用されるこれらの重要な指標についての詳細を記入してください。

指標の種類
カバレッジ
目的
指標の単位
方法
動向
制限・弱み
加重平均炭素濃度
          Majority
        
          Portfolio efficiency of operations - for comparison to benchmark
        
          tonnes CO2e/USD mn
        
          Weighted average of company-level intensity
        
          Portfolio dependent
        
          Reduces appearance of high-carbon holdings with low weight
        
カーボンフットプリント(スコープ1と2)
          Majority
        
          Portfolio exposure to carbon pricing - for comparison to benchmark
        
          tonnes CO2
        
          GHG emissions over which the company has control (Direct + First Tier indirect)
        
          Portfolio dependent
        
          Does not account for company size
        
ポートフォリオのカーボンフットプリント
          Majority
        
          Portfolio exposure to carbon pricing - for comparison to benchmark
        
          tonnes CO2
        
          Weighted average of GHG emissions over which the company has control, or derive from direct suppliers
        
          Portfolio dependent
        
          Can obfuscate high-carbon holdings
        
総炭素排出量
          Majority
        
          Portfolio exposure to carbon pricing - for comparison to benchmark
        
          tonnes CO2
        
          GHG emissions over which the company has control, or derive from direct suppliers
        
          Portfolio dependent
        
          Can include emissions that may be out of company's control (Scope 3)
        
炭素濃度
          Majority
        
          Efficiency of company operations - for comparison to benchmark
        
          tonnes CO2/USD mn
        
          GHG emissions over which the company has control, or derive from direct suppliers, divided by revenue
        
          Portfolio dependent
        
          Can obfuscate the magnitude of GHG emissions for high-carbon, large cap companies
        
炭素関連資産へのエクスポージャー
          Majority
        
          Risk of stranded assets - for comparison to benchmark
        
          m tonnes (coal), mmbbl (oil), bcf (gas)
        
          Reserves 2P for coal, oil, and gas
        
          Portfolio dependent
        
          Penalizes energy companies disproportionately
        

14.6. 補足情報 [任意]

While there is still much to be resolved in terms of implementation, the Paris Agreement signaled a clear global desire to move toward renewable energy and energy efficiency. We expect that the Paris Agreement will translate into country-level policy changes aimed at addressing carbon emissions and encouraging mitigation strategies, and we expect an increase in policies and market environments that favor more carbon-friendly businesses. While timing and scope of efforts may be uneven, we anticipate policymakers will produce clearer road maps and emission-trading schemes in the future that we believe will have investment implications for carbon-intensive industries. Moreover, despite the absence of universal policies, more companies are seeing the low-carbon transition as a competitive opportunity. Businesses that invest in resource efficiency across the supply chain will likely gain competitive advantages as more local and regional governments introduce various penalties and incentives, including carbon pricing. A proactive strategy should benefit a company's bottom line and reduce the cost of adhering to future regulation.

Climate change implications are not just long-term considerations. There are also many questions regarding current and near-term effects that need to be addressed, such as: Which coastal real estate is exposed to fat-tail climate change risks? Is disaster insurance mispriced? Which municipal bonds hold climate change-related risks? What is the impact of extreme temperatures and weather volatility on various commodities and supply chains?

Our portfolio managers and the ESG Research team see a range of potential investment opportunities emerging as efforts to address climate change continue to advance.

  • Renewables: With renewable energy becoming mainstream, the day is quickly approaching when wind and solar may no longer be thought of as "alternative" power sources. Industry watchers expect that more than 50% of incremental electricity capacity will come from renewable sources over the next five years. While the shift presents potential opportunities for renewable energy providers, it may pose challenges for incumbent power generators.
  • Energy storage: The current inability to store electricity causes significant inefficiency on power grids and heating and cooling systems. Large-scale energy storage has the potential to fundamentally alter the energy sector and generate value. Utility-scale batteries could enable wind farms and solar arrays to store electricity when demand and costs are low, and dispatch it when demand and costs rise.
  • Electrification: Across the transportation spectrum, vehicles and their supporting infrastructure are transitioning from fossil-fuel combustion to electric power. The worldwide shift of personal and commercial vehicles, railways, and cargo ships to electric presents a significant climate-risk mitigation opportunity, as mobile sources produce 14% of global emissions. In anticipation of rising demand, vehicle manufacturers have committed significant capital to the research and development of electric vehicles. Ultimately, however, the overall mitigation effect of low-carbon transport depends as well on changes in the global fuel mix and improved battery capacity.
  • Energy efficiency: Companies in every sector are seeking ways to reduce energy usage and the associated operational costs. Energy efficiency solutions such as light-emitting diode (LED) lighting and advanced heating and cooling systems have gained commercial traction as a result. The manufacturers of these technologies that help lower customers' carbon footprint along with their energy bills should be well positioned.
  • Infrastructure: Even if the guidelines set out in the Paris Agreement are met, the world will still need to make additional investments in infrastructure design to adapt to a changing climate. Local governments will likely require flood-management installations including floodwalls, bioswales, and permeable pavements to help minimize the effects of flooding following extreme precipitation events. A warmer planet is already increasing water-scarcity concerns. By 2030 global water demand is set to surpass supply by 40%, yet countries have underinvested in water management for decades. New infrastructure, including pipelines, plumbing, meters, and sanitization facilities, should become critically important in many areas of the world. Innovative water management solutions can also help reduce water consumption, ultimately lessening the strain on existing water infrastructure.
  • Real estate: How and where structures are built are two key considerations for climate-aware investors. Commercial and residential real estate constitutes approximately 40% of energy consumption. New methods and technologies used in building construction and system design are lowering the carbon footprint. Some studies have shown that "green" buildings that offer better air and light quality help boost worker productivity. Climate change will also impact the cost of real estate in places that are susceptible to volatile weather patterns. We expect that higher insurance premiums and infrastructure improvements needed to protect communities from climate change will alter the building-cost paradigm and may lead to new population migration patterns.
  • Green bonds: Finally, the rise of green bonds has the potential to serve as an opportunity for investors to finance the transition to a lower-carbon economy. The proceeds from the green bond market, which reached US$90 billion in 2016, are earmarked for environmentally friendly projects, such as renewable energy, climate adaptation infrastructure, and energy efficiency. Experts have estimated that it will take US$93 trillion worth of investments to meet the targets for addressing climate change. Green bonds are one way for private pools of capital to contribute to the financing of this transition. We believe this is a growing market with potential to serve as a meaningful tool to help reach the goals of the Paris Agreement.

As we assess potential climate risks to our operations, examples of climate-related risks identified include disruption to our power supply due to severe storms and flood risks due to the combination of severe weather events and rising sea levels. Improving the energy efficiency of our facilities, including our data centers, is an example of an opportunity we have identified.

14.7 CC. 気候関連のリスクを特定、評価、管理するためのリスク管理プロセスを挙げてください。

説明してください。

With an international transition to a lower-carbon economy underway, Wellington is focused on our responsibility to understand the potential effects of climate change on our clients' investment portfolios.

Climate change considerations are embedded in our environmental, social, and corporate governance (ESG) integration process. Our ESG Research team, part of the central Investment Research function, helps our portfolio managers and analysts gather deeper intelligence on ESG topics and integrate these considerations into the investment process. We believe that a holistic understanding of how companies deploy capital -- financial, physical, and human -- is helpful in framing an investment thesis, and examining ESG issues, including climate change, gives us a more complete picture.

Our ESG Research team provides our investment professionals with proprietary ESG ratings on companies, incorporating a range of ESG factors, including climate-change topics such as greenhouse gas emissions reduction targets, renewable energy use, and water scarcity management. Our team also works closely with our industry analysts to analyze sector-specific ESG risks including climate-change implications for more carbon-intensive industries.

Engaging with portfolio companies on the impact of a changing climate to their business and strategy is a key input to the process, and climate risk is among our top 3 engagement priorities in 2018. Our ESG Research team and investors engage with hundreds of company management teams on ESG topics each year. We believe that engaging with the companies we invest in plays a critical role in helping to identify, understand, and appropriately consider ESG risks such as climate change. As part of this process, our firm speaks with companies to gauge their exposure to climate-related events, assess management's awareness of this topic, evaluate their risk-management approach, and encourage adoption of best practices. Sample engagement questions include:

  • How does the board evaluate risks associated with climate change?
  • Are there individuals at the company who are specifically responsible for addressing issues associated with climate change?
  • What is the company doing to mitigate its own GHG emissions? Are there reduction targets and, if so, how did the company arrive at them?
  • How does the company consider climate-related opportunities such as product development and innovation?
  • Does the company conduct regular scenario analyses to understand the risks that climate change poses to the business?

As we continue to conduct research and develop tools to analyze climate-related risks for our client portfolios, insights gained can also be used to inform our operational risk management processes. As described previously, the Risk Management Committee (RMC) has primary responsibility for managing enterprise risk, including climate-related risks, and for evolving the firm’s risk management framework, as appropriate, to changes in the industry, our business, and the regulatory environment. It also is responsible for oversight of and coordination with the Operational Resilience Committee (ORC).

Please refer to SG 07.1b CC for a discussion of how we manage climate-related risks.

14.8 CC. 気候関連のリスクを優先させるためのプロセスを説明してください。

Please refer to our response to SG 14.7 CC above.

The prioritization of climate-related risks can come from any part of the ESG Research team’s process and tends to be related to both the materiality of climate risks to the issuer in question and the level of exposure and/or ownership of that issuer.  

As one component of the firm’s research process, companies are assigned an ESG rating using a proprietary, systematic process that uses third-party inputs and considers industry, home market, and company size in defining the peer universe. Each rating reflects a peer-relative assessment, so ESG ratings naturally identify positive and negative outliers which may warrant further research and/or engagement. For example, a company with a poor 'E' rating in an industry where climate change is deemed material by third party providers, could indicate that the company is not adequately managing this risk. Importantly, the rating is not a buy or sell signal but rather helps to flag companies and provides a starting point for deeper analysis by the covering ESG analyst. Another source of prioritization comes from the portfolio review process. An ESG analyst performs portfolio reviews with portfolio managers to identify holdings with the greatest ESG risks and opportunities, including climate change. This conversation often leads the portfolio manager to provide feedback about the companies which s/he would like the ESG Research team to conduct further research or engagement. Finally, the ESG Research team may engage with companies prior to an annual general meeting, including when shareholder proposals related to climate-related risks are submitted.

14.9 CC. 気候関連のリスクに関するより良い情報開示と実践を促すために、投資先企業とのエンゲージメント活動を行っていますか?

説明してください。

In December 2017, we signed the Statement of Support for the TCFD recommendations. The TCFD framework aligns with our belief that climate change is a strategic business issue that can impact long-term financial performance. Through engagement and proxy voting, we are encouraging our portfolio companies to adopt the framework and improve disclosures so that we can make more informed investment decisions on behalf of our clients. When we ask companies about their intention to adopt the TCFD's recommendations, we share our views about the purpose and spirit of the guidelines. The disclosure should serve as evidence that a company has a risk-management process in place to help it handle an array of climate risks.

 

14.10 CC. 気候関連の開示データをどのように使用するかを説明してください。

We believe that improved disclosure from companies will help us better assess climate-related risks and enhance our capacity to serve as fiduciaries of client assets. As we head into 2018, we will monitor the first wave of published company reports on climate risk, seeking verification that companies are working to create shareholder value by addressing climate risks related to their physical assets and by mitigating transition risks stemming from changing regulation and technology.


SG 15. Allocation of assets to environmental and social themed areas

この指標には新しい設問が追加されています。事前に入力されている回答を精査してください。

15.1. 貴社にて、特定の環境および社会をテーマとする分野に基づいてファンドに資産を配分したり、ファンドを運用しているかどうかについて明示してください。

15.2. Indicate the percentage of your total AUM invested in environmental and social themed areas.

1 %

15.3. 貴社にて投資しているのはどのテーマ別分野かを明示のうえ、AUMに占める当該資産クラスのパーセンテージを記載するとともに、その内容を簡潔に説明してください。

分野

          We have three relevant portfolios, Global Environmental Opportunities, Global Impact, and Global Impact Bond, which are highlighted here.
        

投資している資産クラス

.10 % of AUM
.02 % of AUM

簡潔な説明および投資尺度

Global Environmental Opportunities invests in companies directly addressing environmental risks. Well-selected investments among the universe of environmentally-focused companies can deliver a ‘double bottom line’ of both competitive investment returns and improved global sustainability.

Global Impact invests in rapidly growing companies whose innovations address some of the world’s most intractable social and environment problems. Our portfolio companies seek to achieve outsized financial returns by applying new business models and technologies, typically for large and under-serviced markets. Our portfolio is diversified across 10 distinct impact themes: Freedom from Hunger, Health, Clean Water and Sanitation, Affordable Housing, Education and Training, Financial Inclusion, Digital Divide and Cyber Security, Alternative Energy, Environmental Protection, Resource Efficiency.

Global Impact Bond invests in organizations addressing some of the world’s major social and environmental challenges. The approach invests primarily in investment grade securities issued by government, supranational, local agency, corporate, and securitized issuers, while seeking to address a range of impact themes including affordable housing, education, health, and alternative energy.

We also co-manage portfolios with Domini. Together, the two companies offer a fully integrated approach, within which each firm contributes its specialized skills to an investment process that  equally emphasizes our clients’ financial and sustainability goals.


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