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Federated Hermes, Inc. (formerly Federated Investors, Inc.)

PRI reporting framework 2020

You are in Direct - Listed Equity Incorporation » Outputs and outcomes


LEI 12. How ESG incorporation has influenced portfolio composition

12.1. 組織のESG組み入れ戦略がポートフォリオや投資ユニバースの構成にどういう影響を与えているかを記載してください。


In our SDG Engagement fund companies are selected based on their financial sustainability and ability to align with SDGs through active engagement.  The investment team believes there are compelling opportunities to create positive social and environmental change and long-term value among small and mid-cap businesses, many of which are not typical engagement targets of either shareholders or NGOs, yet whose operations and supply chains provide a rich potential for improvement and the direct access required for successful engagement.  Each company will typically be held for three-to-five year.  Our experience of investing and engaging with small and mid-cap companies has proven to us that this amount of time is required for the strategic vision and benefits of stewardship to reflected in stock-price performance.  When we judge that a company has fulfilled its performance and impact potential, or if the investment case deteriorates or engagement stalls, we will exit the position and consider more appealing companies.


12.2. 補足情報 [任意]

As an active responsible manager, ESG considerations provide another lens through which to understand a company and provide additional insights into the potential risks and opportunities inherent in the security and its sector.  We believe proactive use of the various ESG tools (ESG Dashboard, QESG score, Portfolio Snapshot, Carbon Tool, Governance Tool) in combination with EOS active engagement results in a more comprehensive fundamental assessment.  By integrating financially material ESG factors most relevant in each industry as a natural extension of their primary research, our teams enhance their judgment of relative sector positioning, stock selection and investment decision-making.

For example, proprietary ESG research has been incorporated into our Federated Hermes Strategic Value Dividend fund's long-standing investment process as a complement to their fundamental cash-flow and balance-sheet focused analysis.  Direct fundamental and ESG engagement with corporate issuers has helped them understand a broader array of the risks a company must navigate in order to sustain its business and dividend stream over the long run.  Advanced Federated Hermes portfolio analytics measure engagement progress based on quantifiable milestones providing a proof statement of forward looking and intentional ESG integration which aids their search for sustainable dividends.

LEI 13. Examples of ESG issues that affected your investment view / performance (Private)