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CCLA

PRI reporting framework 2019

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Asset class implementation gateway indicators

OO 10. Active ownership practices for listed assets

10.1. Select the active ownership activities your organisation implemented in the reporting year.

Listed equity – engagement

Listed equity – voting

Fixed income SSA – engagement

Please explain why you do not engage directly and do not require external managers to engage with companies on ESG factors.

          CCLA has a very small weighting to Sovereign, Supranational or Agency Fixed Income Securities. As such, we do not have a formal engagement programme with issuers. However, when assessing the eligibility of an SSA issuer we implement minimum ESG standards and, through our wider corporate engagement programme, we work with a small number of governments to encourage pro-active legislation on a number of ESG issues.
        

Fixed income Corporate (financial) – engagement

Fixed income Corporate (non-financial) – engagement


OO 11. ESG incorporation practices for all assets

11.1. Select the internally managed asset classes in which you addressed ESG incorporation into your investment decisions and/or your active ownership practices (during the reporting year).

Listed equity

Fixed income - SSA

Fixed income - corporate (financial)

Fixed income - corporate (non-financial)

Private equity

Property

Farmland

Cash

Money market instruments

Select the externally managed assets classes in which you and/or your investment consultants address ESG incorporation in your external manager selection, appointment and/or monitoring processes.
Asset class
ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes
Private equity

Private equity - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Property

Property - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Infrastructure

Infrastructure - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Forestry

Forestry - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Inclusive finance

Inclusive finance - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Other (1)

Other (1) - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

11.4. Provide a brief description of how your organisation includes responsible investment considerations in your investment manager selection, appointment and monitoring processes.

Our experience suggests that conventional financial modelling only gives part of the answer as to what makes a company a good investment and we recoginse that most charity trustees are concious that a hard won reputation can be undermined by inappropriate investments. For this reason, all of our assets are managed in accordance with Ethical and Responsible investment criteria.

We seek to manage our clients' assets in a way that delivers the financial returns that they expect through an approach that manages risk to an appropriate level. To do this we invest in a variety of asset classes.

We manage the vast majority of our assets directly as this allows us to implement our responsible investment policies in full. However, as we do not have the neccessary knowledge in house, we use a small number of investment funds managed by third parties to access specialist asset classes like private equity and infrastructure. When investing in this way we have adopted the following strategy:

First, we recognise that alternative assets provide us with an opportunity to invest money in activities that will provide environmental or social benefits as well as financial returns. For this reason, we seek to identify projects - like renewable energy infrastructure, social housing or energy efficency investments - that will maximise our positive impact. One example of this is our investment in Sustainable Development Limited's Energy Efficiency Partnership. This has delivered an 8% return to our investors per annum and enabled the development of energy efficiency projects such as the installation of a new low carbon chilling, heating and power system at St. Bartholomew's Hospital in London.

Second, we recognise that implementing our responsible investment, and our clients' ethical, criteria in funds managed by others is challenging. For this reason, prior to allocating our clients’ capital to a third-party investment vehicle, we seek to establish a legal agreement. These agreements ensure that ESG factors are considered in the management of the mandate and restricts investment in the activities that our clients wish to avoid in their portfolio.

Third, if this is not possible, and there is no alternative route to the investment, we consider the Fund’s responsible investment literature and underlying exposure to the activities restricted by our clients. Should more than 10% of the Fund’s net asset value be exposed, or likely to be exposed in the future, to such activities we would not proceed to investment. We also ensure that considerably less than one percent of the capital in our own funds is exposed to restricted activity in this way.

Finally, once an investment has been made we continue to monitor the manager's approach to responsible investment and exposure to restricted activity. If we have concerns, we engage with the manager and would divest from any fund if the 10% threshold is breached. For instance, in 2018 we exited a legacy position in a 'Geared Income Trust' due to concerns about the underlying holdings within that Fund.


OO 12. Modules and sections required to complete

12.1. Below are all applicable modules or sections you may report on. Those which are mandatory to report (asset classes representing 10% or more of your AUM) are already ticked and read-only. Those which are voluntary to report on can be opted into by ticking the box.

Core modules

RI implementation directly or via service providers

Direct - Listed Equity incorporation

Direct - Listed Equity active ownership

Direct - Fixed Income

Direct - Other asset classes with dedicated modules

RI implementation via external managers

Indirect - Selection, Appointment and Monitoring of External Managers

Closing module

12.2. Additional information. [Optional]


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