Our approach to ESG integration impacts upon portfolio weightings in a number of ways, including but not limited to, the following:
First, our responsible investment screening approach removes prospective investee companies from our universe. For instance, our climate change and investment policy precludes investments such as BHP and Anglo American due to the revenue that they currently derive from the extraction of thermal coal.
Second, our integration policy identifies companies with the poorest standards of corporate governance and/or the highest levels of unmitigated ESG risks. These companies require the approval of the Chief Investment Officer and the Head of Ethical and Responsible Investment. Again, this acts as a preventative barrier to stop them entering our clients' portfolios.
Third, our climate change and investment policy, informed by routine scenario analysis, identifies sectors and companies that are most at risk from the low carbon transition and has set a maximum portfolio carbon footprint. For this reason, CCLA continues to be significantly underweight the oil and gas sector and other carbon intensive industries.
Finally, the ESG standards of our portfolios are monitored by our bi-annual Ethical and Responsible Investment Committee.