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AMP Capital Investors

PRI reporting framework 2019

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Outputs and outcomes

SAM 08. Percentage of externally managed assets managed by PRI signatories

08.1. Describe how you ensure that best RI practice is applied to managing your assets

Measures

          Measures promoting best practice in RI may include overseeing our underlying managers' compliance with any relevant Responsible Investment Charter or policies; guiding managers on issues such as company engagements, monitoring managers voting and seeking information on company engagements; regular interactions / meetings; and periodic ESG surveys of external managers.
        

08.2. Additional information. [Optional]

 

Responsible Investment Leaders (RIL) funds:

ESG oversight for AMP Capital's RIL Range of funds is the responsibility of the RIL Ethics Committee. This includes overseeing our underlying managers' compliance with the RIL Charter, ensuring portfolio holdings continue to fit the RIL Charter, and guiding managers on company engagements. Regular (monthly or quarterly) ESG reporting is also required on areas including:

  • Confirmation the portfolio does not invest in any company with material exposure to areas of high social impact
  • A summary of the proportion of the portfolio invested in companies characterised as industry 'Leaders', 'Sustainers' and 'Unengaged' companies, in absolute terms and compared to the relevant Index.
  • An outline of any ESG engagement with portfolio companies
  • A summary of any other ESG related issues
  • Voting statistics including the number of resolutions where the manager voted for and against company management, and abstained from voting
  • Reasons why the manager abstained from voting or voted against company management.

Future Directions Funds (FDF)

AMP Capital may monitor and review FDF managers ESG practices through periodic surveys and or one on discussions, which may cover:

  • Policies relating to the manager's approach to assessing ESG performance of investee companies
  • Whether the firm is a signatory to the PRI. (If not, we ask for what the firm thinks about the PRI initiative.)
  • Summaries of their PRI assessments (if they are prepared to provide them)
  • Whether the manager is a signatory to other collaborative organisations or principles on ESG
  • How the firm integrates the consideration of ESG information into the investment process, how ESG is considered in research and analysis, and impact on portfolio construction
  • Primary internal and external sources of ESG information and research (e.g. analysts, internal specialists, brokers), how that data is incorporated into the investment process, and any proposed future changes
  • How the manager encourages companies to improve ESG disclosure
  • Proxy voting policies, including who has approved it and is responsible for implementation
  • Whether the manager receives external or independent advice on voting, from whom and to what extent they follow the service provider's advice
  • Processes for lodging proxy votes (e.g. via third parties)
  • An overview of voting activity and direction of votes cast (% of votes exercised, for, against, abstain, not voted)
  • Proportion of engagements considered successful and a list of ESG topics engaged on, and
  • Public policy engagement including collaborative engagements and any actions taken.

In addition, AMP Capital has undertaken a review of specific voting practices of external equities managers. AMP Capital also held one-on-one meetings with a selection of external managers and has also engaged equities managers on the implementation of AMP Capital's new ethical framework (exclusions policy) which continues to be progressively implemented across our external manager platform.

Further details available at www.ampcapital.com.au/esg

 

 


SAM 09. Examples of ESG issues in selection, appointment and monitoring processes

09.1. Provide examples of how ESG issues have been addressed in the manager selection, appointment and/or monitoring process for your organisation during the reporting year.

Topic or issue
          Regular monitoring and review of external equities managers proxy voting practices.
        
Conducted by
Asset class
Scope and process

Review of proxy voting activities and statistics of external equities managers including number of meetings, resolutions and direction of votes cast. Monitor alignment with AMP Capital's own ESG and Responsible Investment Philosophy and Proxy Voting Policy.

Outcomes

External managers exercise votes on the shares they hold on our behalf. However, AMP Capital also monitors the voting and where there may be concerns e.g. with regard to a specific governance issue, we can choose to engage with [ML1] the external manager. Further, AMP Capital also undertakes periodic reviews of our external managers with regard to their approach to considering ESG issues. Where possible, we also seek opportunities to meet and discuss their approaches to voting and ESG integration more broadly.

In order to better monitor the votes cast by our external managers (multi-manager platform) AMP Capital has arranged 'real-time' view-access of their voting activities. We are therefore able to monitor real-time voting activities of all portfolios managed exclusively for AMP Capital.

In 2018, our external managers submitted votes on 48,151  unique resolutions at 4,673  individual company meetings. Of the total number of voting instructions cast, 80% were in support of company resolutions (i.e. 'with management'), with 8% against, 1% abstain. Mixed (10%) and Other (1%) account for votes where individual managers may vote differently from each other.

 

Topic or issue
          Consultation with external managers on amendments to AMP Capital's ESG and Responsible Philosophy
        
Conducted by
Asset class
Scope and process

Extensive consultation and analysis undertaken with external managers on amendments to AMP Capital's firm-wide ESG and Responsible Investment Philosophy regarding ethics and investments. This includes the adoption of ethical exclusions across AMP Capital's entire investment portfolio.

 

Outcomes

Detailed consultation with underlying external equities managers on the adoption of selective company exclusions from AMP Capital's international equity portfolios. Modelling by external managers of the investment and risk-related impacts of adopting the modified investment universe.

Topic or issue
          Responsible Investment Leaders (RIL range of funds) 2018 Engagement
        
Conducted by
Asset class
Scope and process

The annual RIL Engagement Report captures company engagement activities and voting undertaken by AMP Capital and its external managers for the RIL range of funds (Australian and International shares). The objective of company engagement is to improve performance of an ESG issue by a particular company.

In 2018 our Australian and global equity managers asked a number of organisations across the world to do things differently in relation to the following matters: social media - targeting Facebook, Snapchat, Instagram on privacy & data issues; the underpayment of workers in Australia - spotlight on franchising; financials in Australia - responsible lending, cleaning up the sector after the Royal Commission; economic inequality in Europe - the issue that arguably drove Brexit & the rise of populism, threatening capitalism & democracy; climate change; gender diversity; and pollution in China and Africa.

Outcomes

RIL managers published a number of thought leadership pieces that were designed to kickstart public debate, such as: the investment implications of modern slavery in supply chains; tailwinds for nutritional quality; and micropollutants - tiny particles with toxic potentials.
AMP Capital produced a number of articles / videos focused on ESG issues and responsible investing, including: impact investing - making money from making the world a better place; how cyber security gives shareholders vital insights into governance quality; and how climate change is creating risks and opportunities for investors.

RIL Managers and AMP Capital have been active in industry initiatives, examples of which include: organising a plastics packaging roundtable in India designed to identify ways to reduce the use of plastics; chairing a committee of the RIAA Human Rights Working Group that produced an investor toolkit which outlines the investor relevance of human rights issues in the supply chain; and travelling to Cambodia with CARE Australia (NGO) to see their projects in garment factories in Phnom Penh to discuss productivity benefits from better management of / education about sexual harassment and nutrition for the predominantly female migrant work force.

Topic or issue
          Meeting with our investment consultant (Willis Towers Watson)
        
Conducted by
Asset class
Scope and process

One on one meetings with ESG specialists from our investment consultant Willis Towers Watson.

Outcomes

Gather general information on progress of ESG integration among investment managers. Improvements to general selection and monitoring considerations for external managers. Informed ratings of managers on ESG.

09.2. Additional information.


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