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C WorldWide Asset Management

PRI reporting framework 2020

You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

Since 1986, investing in sustainable companies has been the essence of our active long-term investment philosophy. As a focused investment manager we have always focused on and invested in sustainable and well-run high-quality businesses.  Our experience is that sustainable companies often make a good stock resulting in higher returns at a lower risk and therefore outperforming over the longer term.

Integrating ESG factors in our fundamental company analysis is consistent with our fiduciary duty to consider all relevant information and material risks in investment analysis and the portfolio decision making process. We address our fiduciary responsibility through a holistic approach – a holistic analysis where a longer-term investment horizon is a key dimension. Our approach is holistic because focusing on what is material to all stakeholders over the long-term matters.

From a practical perspective this holistic approach means that ESG factors are carefully considered and monitored in conjunction with other factors such as company strategy, management and financial and non-financial performance. Since ESG issues can be very complex in nature, our fiduciary responsibility is to continuously and carefully balance the different factors in a nuanced manner, ultimately resulting in a rational analysis of risks and opportunities over the long term.

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

Although there are no exceptions to our responsible investment approach, there are variations and nuances from a regional/geographic perspective. The corporate world and its approach to ESG and sustainability is not homogenous across countries and regions. In particular there continue to be differences between developed market listed companies and emerging market listed companies. As well there remain differences between large and mega cap listed companies and small cap listed companies around the world.

01.6. Additional information [Optional].

          
        

SG 01 CC. Climate risk

01.6 CC. Indicate whether your organisation has identified transition and physical climate-related risks and opportunities and factored this into the investment strategies and products, within the organisation’s investment time horizon.

Describe the identified transition and physical climate-related risks and opportunities and how they have been factored into the investment strategies/products.

In our view, climate change and the energy transition are some of the most important long-term structural trends to understand both from a single stock and portfolio construction perspective. On the company level the focus on carbon footprints and pressure on companies to improve energy efficiency are issues that are important and have implications across all industries and companies. Regardless if it is the energy use of the big technology companies' data centres or the packaged foods companies facing operational challenges or higher cost from potential water scarcity.

It is also worth highlighting that while ESG issues including climate change to many companies are a potential risk that needs be mitigated it also offers significant long-term opportunities to other companies providing solutions addressing the problem.

We have actively been engaging with the energy companies in our portfolios, discussing the strategic implications of the energy transition and how the companies’ position themselves. In addition, addressing several other issues including climate engagement, increased disclosure and transparency on emissions, as well as initiatives to offset emissions such as investments in carbon capture and storage technology.

01.7 CC. Indicate whether the organisation has assessed the likelihood and impact of these climate risks?

Describe the associated timescales linked to these risks and opportunities.

The associated timescales linked to these risks and opportunities are mostly long-term in nature. Therefore, our overall long-term view on the energy transition is very clear and relatively straight forward - that solar and wind will take over from fossil fuels and that the future belongs to alternative energy. However, the shorter- to mid-term perspective is more uncertain as energy transitions usually take decades to unfold.

Modern renewables are increasing in importance, but the only way to get to a short-term explosion in penetration rates is by revolutionary innovation. Alongside the increase in renewables we are still in a fossil fuel dependent world economy, where large users of fossil fuels in the steel, cement, plastics industries still are dependent on oil - therefore demand for oil will continue for years to come. That said, there are several dynamics at play besides demand, including the potential impact from carbon taxation, and changes in cost of capital as investors increasingly exclude fossil fuel investments - all factors that are important to take into consideration.

01.8 CC. Indicate whether the organisation publicly supports the TCFD?

Explain the rationale

In general, we see the TCFD as valuable recommendations that make sense to adhere to. Nevertheless, we are currently in the process of assessing the TCFD and implications the recommendation will have for us as an organisation before we publicly can support the TCFD. We expect this assessment process to be resolved in 2020.

01.9 CC. Indicate whether there is an organisation-wide strategy in place to identify and manage material climate-related risks and opportunities.

Describe how and over what time frame the organisation will implement an organisation-wide strategy that manages climate-related risks and opportunities.

Climate related risks and opportunities are discussed in the organisation on both management and board level on an ongoing basis. We have initiated a number of corporate/organisational initiatives which have been implemented and which also will be implemented going forward to manage climate-related risks. Our strategic efforts are being continuously updated and more formally in our annual CSR Report.

1.10 CC. Indicate the documents and/or communications the organisation uses to publish TCFD disclosures.


SG 02. Publicly available RI policy or guidance documents

 

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

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02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

02.3. Additional information [Optional].


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

The policy sets out the general principles of identifying and handling conflicts of interest and a general description of the major areas where conflicts of interest may arise, in particular if the company or any person employed in the company:

  • Is likely to make a financial gain, or avoid a financial loss, at the expense of a client or an investor in a fund advised or managed by CWW AM.
  • Has an interest in the outcome of a service or an activity provided to a client or an investor in a fund advised or managed by CWW AM, or of a transaction carried out on behalf of one of these persons, which is distinct from their interest in that outcome.
  • Has a financial or other incentive to favour the interests of another client or fund over the interests of a client or fund; or the interest of one investor in a fund advised or managed by CWW AM over the interest of another investor in the same fund.
  • Carries out the same activities as a client or carries on the same activities for a fund advised or managed by CWW AM and for another client which is not a fund.

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios

04.1. Indicate if your organisation has a process for identifying and managing incidents that occur within investee entities.

04.2. Describe your process on managing incidents

There is an ongoing and thorough screening process for violations of international conventions and norms for all our portfolios. We receive immediate notice if potential incidents are identified and how these are assessed and evolve.

Sustainalytics conducts engagement to resolve incidents. In addition to the engagement services from Sustainalytics we interact and engage on an ongoing basis directly with the companies we invest in.

The decision to engage an investee company in relation to a specific matter and the method of engagement is based on a proportionality of consideration of a number of factors, including the size of the shareholding in the investee company, the importance of the matter, the reliability of the data, the possibility of effecting the behaviour of the investee company, and the resources required to conduct the engagement.


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