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Kagiso Asset Management

PRI reporting framework 2020

You are in Direct - Listed Equity Active Ownership » Engagement

Engagement

LEA 02. Reasoning for interaction on ESG issues

Indicate the method of engagement, giving reasons for the interaction.

Type of engagement

Reason for interaction

Individual / Internal staff engagements
Collaborative engagements
Service provider engagements

02.4. Additional information. [Optional]


LEA 03. Process for identifying and prioritising engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.

03.1. Indicate whether your organisation has a formal process for identifying and prioritising engagements.

Indicate the criteria used to identify and prioritise engagements for each type of engagement.
Type of engagement
Criteria used to identify/prioritise engagements
Individual / Internal staff engagements

Individual / Internal staff engagements

Collaborative engagements

Collaborative engagements

03.3. Additional information. [Optional]

We do not have a formal engagement policy and at this stage, believe we do not require a seperate policy given our current investment philosophy requires significant engagement with company management, stakeholders and we collaborate with other shareholders to ensure we create long term value for our clients.


LEA 04. Objectives for engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.
Indicate whether you define specific objectives for your organisation’s engagement activities.
Individual / Internal staff engagements
Collaborative engagements

04.2. Additional information. [Optional]

Our objective is always to create long term value for our clients in all the engagement activities. 


LEA 05. Process for identifying and prioritising collaborative engagement

Indicate whether you monitor and/or review engagement outcomes.
Individual / Internal staff engagements
Collaborative engagements
Indicate whether you do any of the following to monitor and/or review the progress of engagement activities.
Individual / Internal staff engagements
Collaborative engagements

05.3. Additional information. [Optional]

Our objectives are always to create long term value for our clients, and we work to im pr0ve the ESG performance and sustainability of our investee companies with a clear objective to unlock value for our clients.


LEA 06. Role in engagement process

06.1. Indicate whether your organisation has an escalation strategy when engagements are unsuccessful.

06.2. Indicate the escalation strategies used at your organisation following unsuccessful engagements.

06.3. Additional information. [Optional]

ESG considerations are an important part of our overall investment process. ESG integration into the investment process includes quantitative analysis of material ESG factors and inclusion of those in the valuation process. Incorporating ESG is a dynamic process that often requires a different approach for each company. We therefore spend a lot of time understanding the specific ESG issues a company faces and how we can best incorporate it into our investment thesis.

Once we own a company we become active owners by voting responsibly and engaging with companies on material ESG risk factors that impact valuation where we can have the most impact for our clients.

We typically do this in three phases:

Research

  • We conduct detailed fundamental research with a strong focus on cash flows and risks related to those cash flows, and we would incorporate ESG risks in that process. We evaluated material ESG risks through in house designed ESG scorecards and our management scorecards.

Activism

  • Once we hold a company on behalf of our clients we become active shareholders by voting on our proxies and actively engaging on material ESG issues, we leverage off our expertise and where we can deliver the most value for our clients

Portfolio construction

  • ESG considerations is one of several factors that we consider during portfolio construction. Under portfolio construction we manage specific risks through limiting our ownership in each company and we diversify across key drivers, sectors and companies.

Engagement escalation:

We use various techniques to escalate our engagement efforts, from voting against certain board members or reconstitution of the board to collaborating with our peers to make a better impact or create a large voting pool.

We have previously called for proxy meetings to put ceratin ESG matters up for a vote, which requires collaborating or engaging with our peers.


LEA 07. Share insights from engagements with internal/external managers

07.1. Indicate whether insights gained from your organisation`s engagements are shared with investment decision-makers.

Type of engagement

Insights shared

Individual / Internal staff engagements

Collaborative engagements

07.2. Indicate the practices used to ensure that information and insights gained through engagements are shared with investment decision-makers.

07.3. Indicate whether insights gained from your organisation’s engagements are shared with your clients/beneficiaries.

Type of engagement

Insights shared

Individual/Internal staff engagements

Collaborative engagements

07.4. Additional information. [Optional]

Our analysts are the investment decision makers and they also are the owners of our investment process and participate and initiate all engagements including those of an ESG nature.

In order for us to initiate engagements our analysts identify the criteria for engagement and these issues are first raised with the investment committee of decisions makers that is composed of the covering analyst as well as the portfolio managers.

Our portfolio managers are invited to all engagements and participate in these engagements as these interactions could have material impacts the portfolio.

Information is then shared via email or at our monthly meetings with other members of the investment team and also to our clients on a quarterly basis or upon request.


LEA 08. Tracking number of engagements

08.1. Indicate whether you track the number of your engagement activities.

Type of engagement
Tracking engagements
Individual/Internal staff engagements​

Collaborative engagements

08.2. Additional information. [Optional]

We track engagements through our monthly ESG meetings and we have developed a proxy voting tool that requires engagement data for every vote that is either an abstention or an against vote as per our proxy voting policy.

We further require monthly disclosure of engagements from our analysts as we have clients that require monthly disclosure of engagement activities.

We have a dedicated ESG champion that monitors and records this disclosure.


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