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PRI reporting framework 2019

Export Public Responses

You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage

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

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

Pendal follows a ’multi-boutique’ business model, where teams of investment professionals focus exclusively on asset management while distribution, compliance, business and general management functions are delivered centrally. Given our boutique structure we do not have a CIO or a Pendal-wide investment philosophy. However, common themes related to our active and fundamental approach do apply such as:

  • Our fiduciary responsibility is to always put our clients first.

  • The importance of active stewardship which is central to our investment philosophies and engagement and proxy voting framework.

  • Markets are imperfectly efficient and that active management can therefore be beneficial as a mechanism to improve portfolio risk and return.

  • All factors (financial and non-financial) considered material to the risk/return outcomes of an investment should be taken into account. How an organisation manages non-financial factors, such as ESG issues, can also provide valuable insight into possible exposures to negative incidents or emerging opportunities.

  • Investment alpha is driven by “anticipating change” – a change in earnings, the prevailing economic or market environment, or the market’s rating of a security. We believe this type of change is best identified via bottom-up, fundamental research by analysts who are well acquainted with the security and with the broader market.







01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

Responsible investing is part of Pendal Australia’s strategic vision. One of our five year goals is to be a leading provider of these solutions for our clients and it is a key part of our five year Business Strategy Plan. This stems from a commitment from the Board and our Global CEO.

Pendal Australia has a RI Philosophy and Approach document that is available to the public on our website. We believe there are important responsible investment principles that can be applied across all of our investment boutiques, providing guidance to our investment teams. The document has been approved by the Pendal Australian Management Team and is reviewed annually or more frequently if required. 

Pendal's RI philosophy is based on three core beliefs:

  1. Attention to environmental and social performance and to corporate governance can improve the quality and consistency of long term wealth creation.
  2. As an active manager, we are well positioned to help our clients manage these risks and thus enhance returns, including through innovative investment solutions that provide opportunities to invest in line with the values of our clients.
  3. Our actions and decisions can affect practices in the entities in which we invest, in turn affecting the environment, our stakeholders and the community. We have both a duty and an interest in managing this influence.

In addition to integrating ESG via our active management processes, we strive to assist our clients to meet their objectives through innovative, performance-driven investment solutions (namely customised RI products utilising ethical and sustainable investing strategies) and this RI tailoring extends through to our active ownership services. Active ownership is a natural extension of our active management investment process. Pendal engages in an ongoing dialogue with the management of the companies in which we invest to manage risk, effect change and protect value over the long term.  We are committed to transparency in our active ownership practices, and provide comprehensive information to clients such as disclosing proxy voting and engagement on our website.

As a fiduciary and a corporate citizen, our approach to RI also extends beyond product solutions for our clients.  We view effective management of our impact upon the environment, the community and other stakeholders as critical to our continued ability to deliver sustainable value to our clients, employees, and our shareholders.


01.6. Additional information [Optional].

I confirm I have read and understood the Accountability tab for SG 01 I confirm I have read and understood the Accountability tab for SG 01

SG 01 CC. Climate risk (Private)

SG 02. Publicly available RI policy or guidance documents

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

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

02.3. Additional information [Optional].

SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

Pendal employs an overarching Conflicts of Interest Policy, which is intended to identify, monitor and manage conflicts of interest. The policy sets out the procedure for managing potential conflicts, including procedures relating to:

  • participation in activities that involve an actual or perceived conflict with duties and responsibilities to Pendal or transactions which are prejudicial to Pendal;
  • participation in dealings that involve an actual or perceived conflict with the interests of a customer or a position which unfairly puts the interests of one customer before another’s, regardless of the size or nature of that relationship;
  • where acting as a trustee, ensuring that employees make decisions in that capacity having regard to the fiduciary obligation to act in the best interests of the fund members; and
  • acting in accordance with the terms of Pendal’s investment mandates. 

03.3. Additional information. [Optional]

SG 04. Identifying incidents occurring within portfolios

04.1. Indicate if your organisation has a process for identifying and managing incidents that occur within portfolio companies.

04.2. Describe your process on managing incidents

Pendal has an effective incident management process in place to ensure prompt notification, escalation and rectification of any incidents or potential incidents. The process requires all employees to identify, report and escalate any known or suspected incidents. The Risk & Compliance and Legal functions are stakeholders in the incident management process to assist with assessing the incident, the actions required to contain and rectify the incident and the reporting implications.

All incidents involving non - compliance with regulatory requirements, licence conditions or internal policies and procedures, or a breakdown of key controls are assessed by Risk & Compliance to ascertain their significance and regulatory reporting requirements. Significant breaches are reported to ASIC as required by the Corporations Act. Incidents are governed by the Pendal Incident Management Policy, which is owned by Risk & Compliance. All incidents are reported to the Executive Committee Risk Forum on a quarterly basis and the Pendal RE Boards, Managed Investment Compliance Committee and the Audit and Risk Committee on a monthly basis. Pendal’s management of incidents in portfolio companies involves a detailed analysis by the analysts and portfolio manager team, drawing on public disclosures, internal resources, and our own direct engagement with the company. The 3 key steps in our analysis are identifying:

  1. What happened? (And what is the likely impact on the company’s performance? What are the likely implications for shareholders?)
  2. Should the company have known about it? (Is it a signal of larger oversight or accountability issues in the company or its supply chain?)
  3. What is the company doing to fix the situation? [Most companies will have an incident at some point. It is how management responds (accepts responsibility) and what they do about it (addressing internal and external, financial and non-financial issues or impacts and consideration of the potential for broader implications). This is the real test in terms of the quality of management and the overall sustainability of a company.]

In addition, our process also utilises Regnan’s Incident or “Red Flag” system to independently identify incidents with the potential to be material within our portfolio companies. Where such “Red Flags” are identified by Regnan, we will review the incident alongside our own research (as per above) and will adjust our exposure with consideration in a manner consistent with the materiality of the incident and the fund’s investment guidelines.

Examples of such incidents within our RI strategies may be:

• Companies that have committed significant or recurrent environmental offences within the last three years, or have been successfully prosecuted and required to provide remedies for such offences within the last year are excluded.

• Companies that have breached human rights, OH&S, anti-discrimination/equal opportunity or trade practices legislation within the last three years, or have been required to pay compensation or provide remedies for such breaches within the last year are flagged.