The screening criteria are proposed by the Head of ESG Investment to the portfolio managers and the Head of Asset Allocation. After they approve it, the criteria is shared with the Investment Committee, which might suggest changes to the criteria.
There is constant dialogue among the analysts, portfolio managers, Head of ESG Investments and the asset allocator to fine tune the process. They get together on a quarterly basis to analyse the funds’ criteria and they are analysing how to expand the ESG criteria into the rest of the mutual funds and portfolios.
The constant dialogue between all participants is really important to have their own conclusions about the impact of negative screening, best-in-class, thematic and ESG integration into the fund and portfolio management. It is a learning process that generates continuos challenges and doubts how to solve specific issues that have no clear answer (such as how much room we have to give to engagement by a fund manager when a company shows little improvement). They review how the funds have performed compared with a predetermined benchmark and may suggest changes to improve ESG integration in the portfolio, as well as performance and risk.
When changes in the fund criteria are made, clients are not able to revoke them but, legally they are given a month to decide whether they remain in the fund or the switch to another one (without any costs in this case).