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LGPS Central

PRI reporting framework 2020

You are in Indirect – Manager Selection, Appointment and Monitoring » Outputs and outcomes

Outputs and outcomes

SAM 08. Percentage of externally managed assets managed by PRI signatories (Private)


SAM 09. Examples of ESG issues in selection, appointment and monitoring processes

09.1. Provide examples of how ESG issues have been addressed in the manager selection, appointment and/or monitoring process for your organisation during the reporting year.

Topic or issue
          Due diligence of EM managers
        
Conducted by
Asset class
Scope and process

We assessed two candidate EM equity managers as highly suitable for the proposed mandate. However one manager had a much more compelling approach to ESG integration - including a well-founded proprietary scoring system that suited their investment style - for investing in emerging markets and we decided to award a higher assessment for ESG. 

Outcomes

We invested in the fund manager with a higher score for ESG. 

Topic or issue
          Monitoring global active equities
        
Conducted by
Asset class
Scope and process

An incident occurred at a mining company held in the portfolio. The same day as the news broke the portfolio manager contacted us to alert us about the event, provide us with their understanding of events and how it affects the investment case, the remedial actions taken including speaking directly to company management. We also spoke directly to company management separately. The fund manager's approach to ESG integration is to attempt to identify, assess, and price all relevant ESG risks and document this in their equity notes for discussion with the portfolio construction team. We found that the event risk had been captured and modelled in the investment thesis for the company, and were satisfied that the manager had followed their investment process. We reviewed the manager's response to the issue at the time and subsequently during quarterly performance review. 

Outcomes

We gained more conviction in the manager's ESG integration process owing to their handling of the event and due to their adherence to their investment process.

09.2. Additional information.


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