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Lennox Capital Partners

PRI reporting framework 2019

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
100 %
Total actively managed listed equities 300%

01.2. Describe your organisation’s approach to incorporation and the reasons for choosing the particular ESG incorporation strategy/strategies.

Lennox recognises that ESG encompasses a broad range of issues which may have material impact on the risk and return of our investments. As such, Lennox believes that ESG considerations are integral to the investment decision process in order to manage investments for the long term. ESG is explicitly considered and assessed as part of Lennox’s investment decision-making process.

All companies that Lennox considers for in-depth fundamental research must first pass a qualitative screening process that specifically measures and assesses a company’s governance structure and the Environmental and Social consequences of its business.

Lennox recognises that ESG issues are not necessarily static and are likely to change over time. Lennox aims to integrate the following material ESG issues into its qualitative assessment of a company:

  • Environmental factors: Impact on local environment and risk management, carbon intensity andconsequent exposure to carbon pricing, climate change, water supply and management, wastedisposal, pollution and contamination, natural resource use and degradation, and energy use andrenewal energy generation.
  • Social factors: Corporate culture and conduct, occupational health and safety, human rights andchild labour, workplace relations and working conditions, community impact and engagement,workplace diversity and supply chain management.
  • Governance structure: Board independence and diversity, employee remuneration, bribery andcorruption, shareholder’s rights, conflicts of interest, corporate accountability and compliance.

Lennox’s investment focus is not confined to the short term financial performance of a company. We believe over the long term a company’s operations are unsustainable if they cause irreparable damage to the environment, workplace or end consumers, and will not knowingly invest in such companies.

It is the responsibility for all Lennox employees to consider whether a company and the industry in which it operates passes the ESG qualitative screening before presenting the idea to the Investment Committee.  At the Investment Committee meeting, ESG factors are discussed in detail and the portfolio managers have to unanimously agree that the prospective investment passes the ESG qualitative screening process before the investment is made.

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


LEI 02. Type of ESG information used in investment decision (Private)


LEI 03. Information from engagement and/or voting used in investment decision-making (Private)


(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

Lennox screens prospective investments using an internally generated process.  A company has to pass both the management and ESG screens in order to be considered investment grade and before the portfolio manager or investment analyst conducts financial analysis on the company.  If a company is not considered investment grade, then Lennox will not invest in that company even if it looks compelling on a financial basis.  Our management and ESG screens gathers information on the following questions:

Management:

  1. Are management suitably experienced and skilled?
  2. Do management understand their business and industry and can they articulate their strategy clearly?
  3. Does the remuneration structure align senior management with minority shareholders?

ESG:

  1. Is the business structure overly complex or opaque?
  2. Does the business have materially negative environmental consequences that may result in regulatory change?
  3. Does the bsuiness have materially negative social consequences that may result in regulatory change?
  4. Is the board independent?
  5. What is female representation on the board?
  6. What is the experience of the board?

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

As our screening forms an integral part of our investment process, we won't make material changes to our screening criteria.  If we enhance or add to our screening criteria, we will notify clients in our monthly correspondence.


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.

05.5. Additional information. [Optional]


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


(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.

09.5. 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 (Private)


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