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EDM

PRI reporting framework 2020

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ESG incorporation in actively managed listed equities

Implementation processes

LEI 01. Percentage of each incorporation strategy

01.1. Indicate which ESG incorporation strategy and/or combination of strategies you apply to your actively managed listed equities; and the breakdown of your actively managed listed equities by strategy or combination of strategies.

ESG incorporation strategy (select all that apply)

Percentage of active listed equity to which the strategy is applied — you may estimate +/- 5%
100 %
Total actively managed listed equities 195%

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

Based on the definitions provided for this section of the questionnaire, we have responded with both "screening" and "integrated". EDM takes a risk-based approach to ESG evaluation. EDM's investment process is characterized by in-depth research, analysis and knowledge of target companies. It uses a rigorous approach to identify quality companies that should be capable of generating above average growth on a sustained basis and it is reflected in concentrated portfolios and essentially high risk aversion. 

As long-term and responsible investors we look for quality companies which are able to provide sustainable returns over the long term. EDM equity funds resides in identifying ESG risks and opportunities of investee companies. This approach offers a broader and complementary assessment of companies in addition to information provided by the traditional fundamental financial analysis.

Across all of its strategies the firm examines and weighs environmental, social  and governance challenges which can create undue risk to investor capital. Environmental, Social and Governance (ESG) criteria are based on the concepts of sustainable development and Corporate Social Responsibility (CSR), additionally exclusions are decided on a case-by-case basis in the investment team meetings.

EDM Investment team sets or revises goals for responsible investment and EDM also review performance against its objectives for responsible investment. Chief Investment Officer (CIO), Investment Committee, Portfolio managers, Investment analysts and dedicated responsible investment staff, all of them have oversight and implementation responsibilities for responsible investment to ensure that EDM’s objectives and values are maintained in all its business pursuits.

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

The screening and integration process is implemented on 95% of the Assets under Management. The other 5% is managed by an external agent (Edgewood Management) based in US where it is not mandatory an ESG agreement, although its strategy remains on traditional fundamental financial analysis looking for quality companies based on responsible investment. Edgewood Management corroborates that they do not invest in companies deriving their main revenues from alcohol, tobacco, armament and controversial weapons.


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

Following its commitment to responsible investment and the integration of Environmental, Social and Governance (ESG) factors, Firtsly, EDM has adopted a policy that exclude companies deriving their main revenues from controversial weapons, pornography and gambling. 

However, all exclusions depends on a case-by-case basis:

EDM’s responsible investment policy does not make any a priori exclusions ahead of the definition of investment universes.

EDM’s selection process makes it unlikely that a company whose practices are doubtful in certain regards can satisfy the required standards of quality, visibility and sustainability.

Secondly, EDM has an internal policy that describes our internal methodology. The investment team analyze each company of our Portfolio according to our internal criteria on Environmental (active policy on reducing CO2 emissions, carbon footprint), Social (active policy concerning gender diversity), Governance (board members, % independent members, family/Board ownership) and finally we set an internal rating for each company that we usually compare to Sustainalytics score. According to that, if it is necessary we contact the company in order to obtain more data. So it is fundamental to EDM to practice Engagement, 

Our next step is to improve in-depth analysis and incorporate additional internal criteria.

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

Our responsability towards our clients, our employees, the environment and society has been one of the pillars of our business and it has been integrated within the asset management company's fundamentak analysis. EDM has gradually developed and implemented its own responsible investment philosophy and shall maintain this course over the long term to remain a responsible entity.

Regarding exclusionary screening, new incorporations in the investment universe will be discussed on a case-by-case basis in the investment team meetings. EDM is always ready to consider a solution for clients that will respond to their requirements in this area.

The criteria are reviewed annually and EDM can notify the strategy/criteria to its clients whenever they want despite not being public.


LEI 05. Processes to ensure screening is based on robust analysis

05.1. Indicate which processes your organisation uses to ensure ESG 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.

05.4. Indicate how frequently you review internal research that builds your ESG screens.

05.5. Additional information. [Optional]

We review ESG screens annually, however the internal research is reviewed at each meeting of the investment team.


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


(C) Implementation: Integration of ESG factors

LEI 08. Review ESG issues while researching companies/sectors

08.1. Indicate the proportion of actively managed listed equity portfolios where E, S and G factors are systematically researched as part of your investment 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 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.

09.3. Indicate how frequently third party ESG ratings that inform your ESG integration strategy are updated.

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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