This report shows public data only. Is this your organisation? If so, login here to view your full report.

Boston Common Asset Management

PRI reporting framework 2019

You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes » (A) Implementation: Screening

(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

Boston Common employs a comprehensive set of ESG guidelines that are an integral part of our standard investment process. We look to avoid companies that are egregious violators of regulations, exhibit a pattern of negligence, or have a deteriorating record on measurable conduct. We favor companies that have made changes in policies and programs to address past problems. These criteria are industry-relative, such that a company is judged in relation to its peers.

We exclude companies with consistently poor ESG records, egregious practices, or unsustainable business models. Our assessment of worst actors utilizes sector-relative calibration, that may eliminate approximately the bottom quintile of companies within a sector. We add in companies with exemplary practices or innovative, desirable products and sustainable business models. Although we analyze information at a sub-sector level, we do not feel compelled to include best-of-class representatives from each group. For instance, we do not find any coal or gold mining or tobacco companies that are attractive from an ESG perspective. We are active portfolio managers and look for opportunity and diversification at higher levels of aggregation, typically at the sector or super-sector level.

Screened by

Description

We typically seek companies with superior records in environmental responsibility, labor relations, and human rights, that display a commitment to good standards and compliance, and that demonstrate  improving records in these areas. We also examine whether a company’s standards for its vendors broaden the impact of its policies. We favor companies that have made changes in policies and programs to address past problems and strive toward corporate accountability, viewing engaged shareholders as valuable allies in strategic decision-making.  We value Board diversity and independence in order to promote the preservation of the company’s long-term interests and those of its shareowners; and expect alignment of interests through remuneration, in order to ensure that senior executives and management interests are aligned with the interests of shareholders to enhance long-term value.

Screened by

          Montreal Convention on Anti-Personnel Landmines, Convention on Cluster Munitions, United Nations Declaration on the Rights of Indigenous Peoples.
        

Description

We avoid egregious violators of international norms and avoid companies that have a history of knowingly using forced labor, child labor, or sweatshops and a history of discriminating illegally against their employees. These criteria apply to a company’s suppliers as well as to its contractors. Further, we avoid companies that have a history of significantly and directly supporting human rights abuses. We also seek companies that respect the International Labour Organization's (ILO) standards related to freedom of association and the right to bargain collectively.

We have an absolute exclusion of investing in companies that manufacture biological, chemical, or nuclear weapons, anti-personnel landmines, or cluster munitions.

We use the UN Guiding Principles on Business and Human Rights as an engagement tool with our portfolio companies as well as industry groups to underscore the importance of transparency and improved disclosure to investors and internal systems to manage human rights risks.

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

We believe ESG research helps improve portfolio quality and financial return potential. There was no 'separate process' to establish our ESG criteria -we articulated a comprehensive approach to the consideration of ESG factors from our inception over 15 years ago. Our preference has always been to seek out companies who were on average better than their peers on the relevant ESG metrics for their sector. We have undertaken a semi-formal review process every three to four years to determine if there are issues we need to formally include in our guidelines. We do this more frequently for certain emerging issues. For example in 2018 while we have never invested in private prisons, given client and stakeholder concerns, we articulated this exclusion formally by issuing a statement, disclosing it on our website and sharing it with clients.  This review process has led to us identifying additional areas of concern. For example in the area of energy and climate change, as a result of changing market conditions which have made the extraction of oil sands more economical, we have confirmed the formal exclusion of investments in companies that generate their primary revenues from the mining, processing, or production of any product from bituminous sands, also known as oil sands or tar sands. This builds on our earlier decision to exclude companies whose primary revenues are from mining coal, transporting thermal coal or burning coal for electric power generation. We also avoid direct investments in companies that own or operate nuclear power plants, manufacture nuclear power reactors, mine uranium, or derive significant revenues from the nuclear industry. This is because we believe the tail risks are too great as safety and the long-term disposal of radioactive waste remain unresolved. We share our evolving thinking on these issues with our clients via our thought pieces, quarterly newsletters and client reporting.


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.

          We compare our own internal ESG view of companies with the ratings or findings of multiple ESG research providers.
        

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.

05.3. Indicate how frequently third party ESG ratings are updated for screening purposes.

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

05.5. Additional information. [Optional]

We conduct ESG research and analysis of each sector, highlighting emerging issues, best in class practices, risks and opportunities. Our ESG research also highlights leading companies in each sector. If the fundamentals and valuation analysis corroborate and supports the idea, such ESG leaders may be brought in to our portfolios. A complete sector level ESG analysis is done about once every 18 to 24 months. 

Each quarter, the ESG team reviews all account holdings to ensure compliance with Boston Common comprehensive and additional custom guidelines from clients if applicable. This occurs in two stages: Quarterly Compliance Review of Boston Common Model Strategies, followed by Quarterly Compliance Review of Custom accounts. We also review on a quarterly basis the account holdings by our subadvisors versus or comprehensive guidelines or a client’s custom guidelines, depending on the account.


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


Top