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Element Investment Managers

PRI reporting framework 2019

You are in Strategy and Governance » ESG issues in asset allocation

ESG issues in asset allocation

SG 13. ESG issues in strategic asset allocation

13.1. Indicate whether the organisation undertakes scenario analysis and/or modelling and provide a description of the scenario analysis (by asset class, sector, strategic asset allocation, etc.).

Describe Incorporating the scenario if SA is downgraded to junk status (Sovereign Governance and Social Scenario Analysis) into our asset allocation decision, as well as the choice of underlying securities and weightings.
Describe Long-term viability and social implications of high water use industries in water scarce countries. Scenario analysis to assess the long-term viability of investing in industries which are seen as high carbon emission industries.

13.2. Indicate if your organisation considers ESG issues in strategic asset allocation and/or allocation of assets between sectors or geographic markets.

We do the following

13.3. Additional information. [OPTIONAL]

An example is the impact of the scenario mentioned in SG 13.1, i.e. incorporating the scenario if SA is downgraded to junk status (Sovereign Governance and Social Scenario Analysis) into our asset allocation decision, as well as the choice of underlying securities and weightings.


SG 13 CC.


SG 14. Long term investment risks and opportunity

14.1. Some investment risks and opportunities arise as a result of long term trends. Indicate which of the following are considered.

14.2. Indicate which of the following activities you have undertaken to respond to climate change risk and opportunity

14.3. Indicate which of the following tools the organisation uses to manage climate-related risks and opportunities.

14.4. If you selected disclosure on emissions risks, list any specific climate related disclosure tools or frameworks that you used.

Carbon Disclosure Project

14.5. Additional information [Optional]


SG 14 CC.


SG 15. Allocation of assets to environmental and social themed areas

15.1. Indicate if your organisation allocates assets to, or manages, funds based on specific environmental and social themed areas.

15.2. Indicate the percentage of your total AUM invested in environmental and social themed areas.

20 %

15.3. Specify which thematic area(s) you invest in, indicate the percentage of your AUM in the particular asset class and provide a brief description.

Area

Asset class invested

2 % of AUM

Brief description and measures of investment

Concentrated Photo Voltaic (CPV) bond CPV01 - re. solar energy project supplying into SA's national grid managed by Eskom (SA state electricity utility)

Asset class invested

20 % of AUM

Brief description and measures of investment

SA-based Resource and Energy companies. Material engagements over the years re. water access, cost, responsibility and cost of decontamination. In our opinion, the cost of water for these companies will become material as did electricity costs over the last decade, which Element flagged in October 2007 as a material future environmental cost for SA Resource and Energy companies.

SA is placed in top 30-35 of most arid countries on the planet.  Water is a material issue for certain SA companies and has become a material issue for the City of Cape Town during 2017 and 2018 to date.

          Shari'ah compliant investments.  Islamic-law based funds which screen out non-compliant investments.
        

Asset class invested

20 % of AUM
3 % of AUM

Brief description and measures of investment

Shari'ah compliant investments cannot invest in vanilla interest-bearing securities.

Element approached Nedbank and in 2005 created jointly the first Shari'ah compliant investment cash equivalent product that complied with Islamic law principles ("Sukuk product").

Utilise sukuks from all the major banks now.

15.4. Please attach any supporting information you wish to include. [OPTIONAL]



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