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PM Capital

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.

PM CAPITAL incorporate ESG issues through screening out particular sectors or by incorporating into our view of valuation. The valuation reflects our assessment of the quality of the business as well as our assessment of the internal culture, management and Board driving it.

PM CAPITAL recognises the implications of environmental, social and governance factors as integral market forces that ultimately represent components of a company's performance and valuation. Intensive research and analysis is a key component of PM CAPITAL’s investment process and these factors are components of this analysis. We believe that poor practice across these areas will inevitably result in lower investment returns and poorer outcomes for all stakeholders of offending companies.

 PM CAPITAL considers factors in ESG issues through:

Screening

PM CAPITAL has a policy of exclusion when we feel that a company or sector can not as a result of its primary business activities be considered to be a Responsible Investment.

The exclusion of a stock or sector has a negligible effect on the size of the investable universe. PM CAPITAL is typically looking to hold 25-45 investment positions in its portfolios at any time. Some examples of sectors that are screened from our investable universe include tobacco manufacturers and weapons manufacturers.

While we exclude certain sectors, we acknowledge that this may in the short term affect investment performance on a relative basis. However, in the long term, we believe that the investment performance of quality business franchises will ultimately prevail and deliver above average shareholder value. Many people believe a negative screening process forces an unacceptable trade-off between ethical criteria and investment returns. For PM CAPITAL, research of sustainability factors within the context of an effective company risk management framework plays a key role in achieving our primary aim - that is, to maximize long-term returns for investors over a three to five year period.

 

Corporate Governance

Proxy Voting

PM CAPITAL has a policy of active engagement in which we use the fund's voting power in general meetings of company shareholders. PMCAPTIAL will generally oppose proposals such as:

election of inappropriate directors, particularly where there is not a majority of independent directors, where board quality is considered an issue, or where there has been excessive turnover of board / senior executives;
 excessive remuneration arrangements, or a lack of alignment of executive incentive structures with that of shareholders and a company's operating performance;
 appointment of auditors who are not independent.

 

Corporate Engagement

PM CAPITAL's investment team regularly meet with and engage operational management of companies that we invest in. We also engage Board members when deemed appropriate. We do not engage third parties to represent our views. The kinds of issues that might be raised with companies are:

Assessed gaps or flaws in a company's risk management framework:;
Assessed weaknesses in Board composition;
Excessive executive remuneration arrangements;
Concerns about corporate governance practices;
Concerns about environmental practices;
Concerns about social issues;

As such, consideration is given to analysing a range of sustainable business practices as well as the financial impact of a company's environmental and societal risks over our investment horizon; in particular, climate change and occupational safety.

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

PM CAPITAL considers factors in ESG issues through:

Screening

PM Capital has a policy of exclusion when we feel that a company or sector can not as a result of its primary business activities be considered to be a Responsible Investment.

The exclusion of a stock or sector has a negligible effect on the size of the investable universe. PM CAPITAL is typically looking to hold 25-45 investment positions in its portfolios at any time. Some examples of sectors that are screened from our investable universe include tobacco manufacturers and weapons manufacturers.

Corporate Governance

Proxy Voting: PM Capital has a policy of active engagement in which we use the fund's voting power in general meetings of company shareholders.

Corporate Engagement

PM Capital's investment team regularly meet with and engage operational management of companies that we invest in. We also engage Board members when deemed appropriate. We do not engage third parties to represent our views.

As such, consideration is given to analysing a range of sustainable business practices as well as the financial impact of a company's environmental and societal risks over our investment horizon; in particular, climate change and occupational safety.


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

Screening

PM CAPITAL has a policy of exclusion when we feel that a company or sector can not as a result of its primary business activities be considered to be a Responsible Investment.

The exclusion of a stock or sector has a negligible effect on the size of the investable universe.  PM CAPITAL is typically looking to hold 25-45 investment positions in its portfolios at any time.  Some examples of sectors that are screened from our investable universe include tobacco manufacturers and weapons manufacturers.

While we exclude certain sectors, we acknowledge that this may in the short term affect investment performance on a relative basis. However, in the long term, we believe that the investment performance of quality business franchises will ultimately prevail and deliver above average shareholder value.  Many people believe a negative screening process forces an unacceptable trade-off between ethical criteria and investment returns. For PM CAPITAL, research of sustainability factors within the context of an effective company risk management framework plays a key role in achieving our primary aim – that is, to maximise long-term returns for investors over a three to five year period.

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.

These are unlikely to ever change due to the nature of our investment philosphy.


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.

05.4. Indicate how frequently you review internal research that builds your ESG screens.

05.5. Additional information. [Optional]


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


(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

Environmental

Social

Social

Corporate Governance

Corporate Governance

08.2. Additional information. [Optional]


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


LEI 10. Aspects of analysis ESG information is integrated into (Private)


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