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PM Capital

PRI reporting framework 2018

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Engagement

Overview

LEA 01. Description of approach to engagement

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

01.1. Indicate whether your organisation has a formal engagement policy.

01.2. Attach or provide a URL to your engagement policy.

01.3. Indicate what your engagement policy covers:

01.4. Provide a brief overview of your organization’s approach to engagement

We believe that ESG is simply part of good business practice and we look at the regard a company's management team has for it. We incorporate ESG principles early on, with manufacturers of tobacco and weapons being screened from our investable universe.

The main areas that we cover within our research process include:

Environment - sustainability management practices and carbon emission policies

Social - this depends on the company but will include occupational health and safety standards, and labour practices

Governance - board structure, operational risk management, and directors and executive remuneration.

In the same way that there will be negative economic consequences for those businesses that cut corners around ESG issues, we also believe that there are positive economic benefits for those businesses that are proactive and progressive when it comes to ESG.

This is why we incorporate ESG issues into the valuation of businesses. These must be considered when looking at a company's risk management framework, given the impact they may have to the value of the company over time.

Not having a strong focus on ESG is, in our view, simply bad business, which leads to poor outcomes for investors.

01.6. Additional information [optional]

Please also refer to PM Capital's Responsible Investment Policy for the response to LEA01.2 in conjuction with the the Conflicts of Interest and Related-Party Policy attached to that question.


LEA 02. Reasoning for interaction on ESG issues

02.1. Indicate the method of engagement, giving reasons for the interaction.

Type of engagement

Reason for interaction

Individual/Internal staff engagements
          To support investment decision-making
        
Collaborative engagements
          To support investment decision-making
        
Service provider engagements
          To support investment decision-making
        

02.2. Additional information. [Optional]


Process

Process for engagements run internally

LEA 03. Process for identifying and prioritising engagement activities

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

03.1. Indicate whether your organisation has a formal process for identifying and prioritising engagement activities carried out by internal staff.

03.2. Describe the criteria used to identify and prioritise engagement activities carried out by internal staff.

other description

          Company Level - Engagement by Portfolio Managers who is in charge of the company analysis.
        

03.3. Additional information. [Optional]

PM CAPITAL encourages good ESG practices and we engage the management of the companies that we own around the improvement of ESG practices.
Failing a suitable outcome, we are may approach the boards of listed companies directly, as well as taking our case to the press.


We will generally oppose proposals where we see:

  • The election of inappropriate directors, particularly where there is not a majority of independent directors or where there has been excessive turnover of board / senior executives
  • Excessive management remuneration arrangements, or a lack of alignment between executive incentive structures and a company’s operating performance
  • The appointment of auditors who are not independent.
  • Agitating for change in this way helps us to unlock the inherent value in a company in order to achieve a better outcome for our investors.

One example involved Austar which, as part of their Employee Share Plan, provided $43 million in interest-free loans to 13 senior managers and an $8.2 million interest-free loan to their chief executive.


As a minority shareholder, we were unable to block the employee share plan and so raised our concerns with management. We then voiced our views in the press to ensure that the new Employee Share Plan had more appropriate incentives in place.


LEA 04. Objectives for engagement activities

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

04.1. Indicate if you define specific objectives for your engagement activities.

04.2. Indicate if you monitor the actions that companies take during and following your engagements activities carried out by internal staff.

04.3. Indicate if you do any of the following to monitor and evaluate the progress of your engagement activities carried out by internal staff.

04.4. Additional information. [Optional]

We will ensure any engagement has been handled as a part of our continued due dilligence.


Process for engagements conducted via collaborations

LEA 05. Process for identifying and prioritising collaborative engagement

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

05.1. Indicate whether your organisation has a formal process for identifying and prioritising collaborative engagements

05.3. Additional information [Optional]


LEA 06. Objectives for engagement activities

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

06.1. Indicate if you define specific objectives for your engagement activities carried out collaboratively.

06.2. Indicate if you monitor the actions companies take during and following your collaborative engagements.

06.3. Indicate if you do any of the following to monitor and evaluate the progress of your collaborative engagement activities.

06.4. Additional information. [Optional]


Process for engagements conducted with/on your behalf by service providers

LEA 07. Role in engagement process

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

07.1. Indicate if you play a role in the engagement process that your service provider conducts on your behalf.

07.3. Additional information. [Optional]


LEA 08. Monitor / discuss service provider information

08.1. Do you monitor and review the outcomes of the engagement activities undertaken by your service providers on your behalf?

Please select all that apply

08.2. Additional information. [Optional]


General processes for all three groups of engagers

LEA 09. Share insights from engagements with internal/external managers

09.1. Indicate if insights gained from your engagements are shared with your internal or external investment managers.

Type of engagement

Insights shared

Individual/Internal staff engagements

Collaborative engagements

Service provider engagements

09.2. Additional information. [Optional]


LEA 10. Tracking number of engagements

10.1. Indicate if you track the number of your engagement activities.

Type of engagement
Tracking engagements

Individual / Internal staff engagements

Collaborative engagements

Service provider engagements

10.2. Additional information. [OPTIONAL]


Outputs and outcomes

LEA 11. Number of companies engaged with, intensity of engagement and effort (Not Applicable)


LEA 12. Engagement methods (Not Completed)


LEA 13. Companies changing practices / behaviour following engagement (Not Completed)


LEA 14. Examples of ESG engagements (Private)


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