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RBC Global Asset Management

PRI reporting framework 2019

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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 Our individual investment teams may integrate ESG factors into their modelling and scenario analysis. For instance, our Global Equity team may consider base-case, ESG asset (upside) scenarios, and ESG liability (downside) scenarios in their DCF modelling. In addition, the team has conducted carbon tax/assessment modelling on individual stocks.
Describe Our individual investment teams are at varying stages of considering climate-related scenario analysis in their investments. For instance, our North American Equity team has done some preliminary work and our Global Equity team has embedded climate scenario analysis into its bottom up analysis.

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]

Our strategic asset allocation process is not designed to incorporate granular factors such as ESG issues, and tends to focus on macro shifts in market conditions over the short and medium-term. As such we consider ESG factors to be most relevant to individual companies, and in some instances, for certain sub-sectors.

Accordingly, individual investment teams' ESG integration processes may result in changes in the allocation between geographic markets and sector weightings. For instance, our Emerging Markets Sovereign Bond team incorporates ESG factors in a quantitative manner in the sovereign bond selection process, considering factors including corruption, inequality, human development, ease of doing business and environmental considerations, including climate change. Additionally, our Canadian Investment Grade Corporate Bond team considers ESG risks including environmental, political and regulatory risks in the context of geographical and sector allocation (ex: coal and nuclear involvement). As another example, our European Equity team is generally underweight carbon-intensive sectors due to its view on the sectors' climate-related risks.

Our individual investment teams may integrate ESG factors into their modelling and/or scenario analysis. For instance, our North American Equity team's overall fundamental analysis includes ESG factors, which contribute to the overall model and buy/sell recommendations.

 


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.

other description (1)

          BlueBay also focuses on governance/corruption trends and cyber security.
        

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

Specify the AUM invested in low carbon and climate resilient portfolios, funds, strategies or asset classes.

Total AUM
trillions billions millions thousands hundreds
Currency
Assets in USD
trillions billions millions thousands hundreds

Specify the framework or taxonomy used.

Please note that only thematic low carbon or climate-resilient strategies are included in the AUM calculation for SG 14.2. Our Global Equity Fossil Fuel Free strategies, for instance, exclude investments in companies involved in extracting, processing or transporting coal, oil or natural gas or those included in ‘The Carbon Underground 200’. In addition, the RBC Impact Bond strategy, offered to U.S. investors, considers the net environmental and social impacts of its investments, including climate change considerations. 

As part of their ESG integration processes, several of our investment teams consider the carbon intensity of investee companies for non-thematic strategies. For instance, our Global Equity team expects its strategies to generally have below average carbon intensity levels compared to relevant benchmarks as a secondary outcome from its consideration of emissions risks.

In addition, many of our investment teams consider investee companies' contributions to sustainability solutions in their analysis. As a result, the strategy may not be categorized thematically as low carbon or climate resilient, but the investment teams invest in companies viewed as low carbon or climate resilient due to their lines of business or solutions they provide to climate-related risks.

other description

          We have also exercised our proxy voting rights in favour of companies improving their disclosure of emissions data.
        

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

other description

          Numerous investment teams engage with companies on emission risks and we regularly engage with companies on the impacts and disclosure of climate-related issues.
        

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

We provide carbon footprint analysis of several strategies to clients on request. Disclosure is aligned with the TCFD recommendations, using TCFD-recommended metrics. The analysis includes the portfolio's exposure to carbon-related assets and conducts an attribution of emissions intensity compared to the strategy's benchmark.

14.5. Additional information [Optional]

Managed by RBC GAM’s Global Equity team, the RBC Vision Fossil Fuel Free Global Equity strategy is designed for investors that are concerned about climate change and policy response, business models that may be considered unsustainable, allocating capital to extractive industries, and the potential financial risks of stranded assets. Available to investors in Canada, the strategy invests primarily in equity securities of companies that operate in different countries around the world while avoiding companies that are directly involved in extracting, processing or transporting coal, oil or natural gas or those included in ‘The Carbon Underground 200’ – a list of the “top global 200 publicly-owned coal, oil, and gas reserve owners ranked by the carbon emissions embedded in their reserves.”[1]

A similar fossil fuel free global equity strategy is also available in the U.S. on a segregated basis and to European investors with additional SRI-based exclusionary screens. Lastly, we manage climate-related strategies on a segregated basis for clients in Canada.

Although a formal target may not be in place, we do expect some strategies to be less carbon-intensive than the benchmark. The RBC Impact Bond strategy, available to U.S. investors, incorporates climate-related targets.

At the sector and issuer level, BlueBay has adopted qualitative metrics to evaluate companies where climate is considered a material risk (these are contained in its sector ESG briefing documents). 

[1] Fossil Free Indexes™. The Carbon Underground 200™. http://fossilfreeindexes.com/research/the-carbon-underground/. 


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.

0.4 %

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

0.3 % of AUM

Brief description and measures of investment

RBC GAM's Access Capital Community Investment strategy is offered through our U.S. operations to clients in the U.S. Access Capital aids underserved communities while seeking to earn a market rate of return through the support of low and moderate income home buyers, affordable rental housing units, small business administration loans and economic development projects.

Investments must serve a low to moderate income family or community; home owners who earn 80% or less of the area-median income or multi-family rental housing that is 51% or more subsidized; nursing homes that serve a high percentage of medicare patients; small business loans in low to moderate income census tracks; or taxable municipal bonds that serve low to moderate income communities or populations.

Asset class invested

0.3 % of AUM

Brief description and measures of investment

RBC GAM's Access Capital Community Investment strategy is offered through our U.S. operations to clients in the U.S. Access Capital aids underserved communities while seeking to earn a market rate of return through the support of low and moderate income home buyers, affordable rental housing units, small business administration loans and economic development projects.

Investments must serve a low to moderate income family or community; home owners who earn 80% or less of the area-median income or multi-family rental housing that is 51% or more subsidized; nursing homes that serve a high percentage of medicare patients; small business loans in low to moderate income census tracks; or taxable municipal bonds that serve low to moderate income communities or populations.

Asset class invested

0.3 % of AUM

Brief description and measures of investment

RBC GAM's Access Capital Community Investment strategy is offered through our U.S. operations to clients in the U.S. Access Capital aids underserved communities while seeking to earn a market rate of return through the support of low and moderate income home buyers, affordable rental housing units, small business administration loans and economic development projects.

Investments must serve a low to moderate income family or community; home owners who earn 80% or less of the area-median income or multi-family rental housing that is 51% or more subsidized; nursing homes that serve a high percentage of medicare patients; small business loans in low to moderate income census tracks; or taxable municipal bonds that serve low to moderate income communities or populations.

          Fossil fuel free global equity strategy
        

Asset class invested

0.1 % of AUM

Brief description and measures of investment

RBC GAM offers a fossil fuel free global equity strategy in the U.S. and the RBC Vision Fossil Fuel Free Global Equity strategy in Canada. The strategies do not invest in issuers or vehicles that include issuers that are directly involved in extracting, processing or transporting coal, oil or natural gas, or issuers included in the Carbon Underground 200.

In addition, in 2018, we launched the RBC Vision Global Horizon Equity strategy, available to European investors, which applies the same fossil fuel-based screens as our other fossil fuel free strategies. However, the RBC Vision Global Horizon Equity strategy also excludes investments in companies whose primary business is in adult entertainment, alcohol, armaments, or gambling.

Lastly, we manage segregated fossil fuel free strategies for our clients.

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



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