As we are an investment manager ourselves, we have a very small allocation to external managers (<10% AUM). All of our external managers are PRI Signatories and consistent with PRI Principle 1 they incorporate ESG issues into investment analysis and decision-making processes.
We also require some of our external managers to implement additional ESG strategies such as screening. For example, our externally managed Sustainable International Shares mandate that has both Ethical (thermal coal, alcohol, gaming, tobacco, pornography, weapons) and Best of Sector screens in addition to ESG integration strategies in place.
Under our instruction, the external manager for our Sustainable International Share mandate manage the fund's proxy voting decisions in accordance with a Sustainability Policy for the fund’s proxy voting framework. The framework is based on proxy voting guidelines that are consistent with the objectives of sustainability-minded investors and fiduciaries. The guidelines are updated on an annual basis to take into account emerging issues and trends on ESG topics, as well as the evolution of market standards, regulatory changes and client feedback.
We also require our external manager to complete an annual ESG Due Diligence Questionnaire that requests information on any changes in RI/ESG-related policies, philosophy, governance, practices (across investments, incentives and active ownership). It also requests information on a number of RI related reporting requirements - such as TCFD alignement and climate risk-related metrics disclosures, as well as proxy and engagement reporting (including ESG related case studies).