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Joseph Rowntree Charitable Trust

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

08.1. Describe how you ensure that best RI practice is applied to managing your assets

Measures

          We will only appoint fund managers who can demonstrate sound responsible and sustainable investment practices, including effective ESG integration, to begin with, and will only retain them if they continue to do so.
        
          We regularly monitor our fund managers' integration of ESG issues into their investment processes. We do not prescribe how this should be done but we do expect their approaches to be sound, logical and effective.
        

Measures

          We regularly ask each of our managers to explain how they integrate ESG issues into their investment processes and will challenge them if we have any concerns. If we did not think that the integration was strong enough and did not see improvement, we would move to another manager.
        

08.2. Additional information. [Optional]


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
          Selection of additional global fund managers.
        
Conducted by
Asset class
Scope and process

Following Investment Committee's decision to review the market for additional global fund managers, our Independent Investment Advisor surveyed the market to identify which funds would be a good match for our own investment objectives (including to invest responsibly) and were managed by managers who properly understood ESG integrated investment. She long listed a number of funds which were considered by the committee and we met with a short list. We discussed in further detail the objectives of the funds, how investment decisions are made and how ESG is integrated into that decision making process. This included  in depth discussions about their engagement processes. We also examined closely how compatible our own investment objectives would be to those of the fund.

Outcomes

A number of fund managers were not able to give us the assurances we required and were removed from the list of possible candidates.

Topic or issue
          Monitoring the engagement by our fund managers on ESG issues of interest to us.
        
Conducted by
Asset class
Scope and process

At our May 2019 ESG meetings with our fund managers, we asked them:

  • How they were redressing the gender imbalance in the investment management sector within their own firms.
  • How they approach engagement with companies on corporate tax.
  • Whether they had engaged in the last year on issues around technology.

This process represented part of our ongoing, long term, engagement with our managers on these issues.

Outcomes

We  started having discussions with our fund managers about  the fund manager/analyst gender imbalance within their own firms in 2016.  Progress since then has been mixed although interestingly we have seen a correlation between positive performance and those doing well in this area.  Sometimes improvement has been hindered by a low turnover of staff but, in other cases, senior management still needs to fully grasp the structural changes needed.  Although gender balance will not dominate our manager retention and appointment decisions, it will influence them.

Discussions around, corporate tax, were also challenging.  While all our fund managers identify corporate tax avoidance as a risk issue, it is clearly difficult to engage on this issue on a company by company basis given the complexity of corporate tax and different regimes in different countries. Our hope is that things may become easier on this front as the OECD progresses its work around international tax cooperation.

We began discussing technology with our managers in 2018 and built on those discussions this year.  Although not all our managers are invested directly in the big technology, their investee companies will be exposed to the issues affecting these companies and the topic remains critical to us.

Topic or issue
          Monitoring our fund managers involvement in collaborative engagement.
        
Conducted by
Asset class
Scope and process

At our May 2019 ESG meetings with our fund managers, we asked them about the collaborative engagements they had undertaken in the last year.  We believe collaborative engagement is a very effective way of engaging with companies and others and have, for a number of years, encouraged our fund managers to participate in it.

Outcomes

We have noticed a mix of enthusiasm among our fund managers for collaborative engagements. At one end of the spectrum we have fund managers who lead on collaborative engagements and at the others who have minimal involvement with it.  Although involvement in collaborative engagement will not dominate our manager retention and appointment decisions, it will influence them.

Topic or issue
          Monitoring how our fund managers follow up on engagement with companies of concern to us.
        
Conducted by
Asset class
Scope and process

We were concerned that the merger of Informa and UBM meant that we had become part owners in an arm exhibition company. Although this represents only a very small part of the group's activities, we regard any level of this kind of activity as being unacceptable. We therefore engaged with two of our fund manager who hold the stock in their portfolio about our concerns.

Outcomes

This monitoring is ongoing.  Potentially it could lead to the suspension of the relationship with the fund managers concerned if insufficent progress is made.

09.2. Additional information.


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