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Sompo Asset Management Co., Ltd.

PRI reporting framework 2019

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

Implementation processes

LEI 01. Percentage of each incorporation strategy

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
90 %
Percentage of active listed equity to which the strategy is applied
10 %
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.

Basically we incorporate ESG factors into our valuation model. Some ESG dedicated strategies incorporate ESG factors into screening process as well.

We believe ESG is an essential factor to determine intrinsic value of a company.

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

As a responsible shareholder, we carefully examine ESG factors that affect corporate value and attractiveness of investment. Also, we consuct continuous dialogue with the management through our day-to-day research activities. For "Screening and integration strategies", we send ESG questionnaires to all the companies in the research universe once a year. Our ESG research team at Sompo Risk Management & Health Care Inc. analyzes and evaluates the answers. The result of evaluation is incorporated in our investment process including stock selection of ESG strategies and is reported back to the respondents. This dialogue encourages implementation of our ESG process and UNPRI principles.


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 

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

02.3. Describe how you incentivise brokers.

As well as for brokers' other research activities, when we find ESG brokers' reports/seminars for ESG are valuable, we evaluate the broker highly. We pay the broker in accordance with our evaluation.

02.4. 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]


(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

We do not invest in companies that produce cluster munitions-we remove the companies involved in producing cluster munitions from our investment universe. Also, we do not invest in corporates that have severe issues with their governance or that had any legal violations.

Screened by

Description

 "Sompo Japan Green Open" and "Sompo Japan Eco Open" : positive screening based on E (Environment).

For "Sompo Japan SRI Open" and "SNAM Sustainable Investment Fund (Exclusive for Qualified Institutional Investors)" : positive screening based on ESG.

For "Virtuous Cycle Society Japan Equity Fund", we conduct positive screening based on "S (Social) and G (Governance)" , especially focusing on their labour-reform policy.  

04.2. Describe how you notify clients and/or beneficiaries when changes are made to your screening criteria.

The screening criteria are established after discussing with the external advisor (Sompo Risk Management Inc.).

We review and revise, if necessary, the screening criteria each year, working in close cooperation with the advisor.

We notify the relevant changes to clients and/or beneficiaries via the meetings and/or regularly-published reports.


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.

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

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

06.1. Indicate which processes your organisation uses to ensure fund criteria are not breached.

06.2. If breaches of fund screening criteria are identified - describe the process followed to correct those breaches.

06.3. Additional information.[Optional]


(C) Implementation: Integration of ESG factors

LEI 08. Review ESG issues while researching companies/sectors

08.1. Indicate the 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

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

Proportion of actively managed listed equity exposed to investment analysis

10.2. 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 calculate companies intrinsic value by the integral process which reflects both financial information and ESG information (non-financial information) into the expected return and risk.

The ESG information is obtained through the ESG questionnaire and day-to-day research by the analysts. Such ESG information is analysed from many different angles and finally reflected into the intrinsic value as the important determinant factor of discount rate and mid- to long-term earnings forecast.

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

We put a higher discount rate or conservative earnings forecast on a company with lower ESG valuation.

10.6. Additional information. [OPTIONAL]


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