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Cardano Risk Management

PRI reporting framework 2020

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

Monitoring

SAM 05. Monitoring processes (listed equity/fixed income)

05.1. When monitoring managers, indicate which of the following types of responsible investment information your organisation typically reviews and evaluates

ESG objectives linked to investment strategy (with examples)

Evidence on how the ESG incorporation strategy(ies) affected the investment decisions and financial / ESG performance of the portfolio/fund

Compliance with investment restrictions and any controversial investment decisions

ESG portfolio characteristics

How ESG materiality has been evaluated by the manager in the monitored period

Information on any ESG incidents

Metrics on the real economy influence of the investments

PRI Transparency Reports

PRI Assessment Reports

RI-promotion and engagement with the industry to enhance RI implementation

Changes to the oversight and responsibilities of ESG implementation

Other general RI considerations in investment management agreements; specify

None of the above

LE

FI - Corporate (non-financial)
Private equity
Property
ESG objectives linked to investment strategy (with examples)
Evidence on how the ESG incorporation strategy(ies) affected the investment decisions and financial / ESG performance of the portfolio/fund
Compliance with investment restrictions and any controversial investment decisions
ESG portfolio characteristics
How ESG materiality has been evaluated by the manager in the monitored period
Information on any ESG incidents
Metrics on the real economy influence of the investments
PRI Transparency Reports
PRI Assessment Reports
RI-promotion and engagement with the industry to enhance RI implementation
Changes to the oversight and responsibilities of ESG implementation
Other general RI considerations in investment management agreements; specify
None of the above

If you select any `Other` option(s), specify

We ask all managers whether they have any contractual commitments with investors around ESG requirements (standards or reporting or other). Where ESG incidents cause material changes to the risk-reward of a position or the portfolio outcomes, we would discuss these with managers either as part of our ongoing monitoring or annual review process

05.2. When monitoring external managers, does your organisation set any of the following to measure compliance/progress

ESG score or assessment

ESG weight

ESG performance minimum threshold

Real world economy targets

Other RI considerations

None of the above

LE

FI - Corporate (non-financial)
Private equity
Property
ESG score
ESG weight
ESG performance minimum threshold
Real world economy targets
Other RI considerations
None of the above

05.3. Provide additional information relevant to your organisation`s monitoring processes of external managers. [OPTIONAL]

          Cardano's monitoring process operates as part of its overall investment monitoring process and methodology. The lead analyst on each Coverage Team is responsible for monitoring ESG in respect of each invested manager. ESG is monitored through two core processes: 

1. Day-to-day Investment Monitoring process: we speak and meet with managers regularly, tracking different elements of risk and or return (quantitatively and qualitatively) as part of our overall monitoring process. Part of this will include discussing ESG where required and periodically. These interactions are documented on a central data-base.
 
2. Annually, Cardano's tailored ESG questionnaire is circulated to managers, together with guidance and re-emphasising Cardano's expectations. 

All information generated by these two sources are assessed, with ESG ratings for each position amended (to the extent required), driven by new information. 

Managers with strategies that Cardano deem to have higher financial risk-return impact are designated as High Focus positions. High Focus managers require a higher level of monitoring and focus. Likewise, the rating methodology applied to High Focus is more stringent. Poor ESG ratings from High Focus managers are scrutinised closely and engagement levels are increased. ESG matters are incorporated at an early stage of our new approval process. There is a minimum standard expected and, as discussed earlier, the Manager Research Committee will debate the ESG rating and rationales prior to investment. 

The Manager Research Committee would consider redemption / reducing exposure to a strategy should the risk-adjusted return become unattractive, for ESG reasons.
        

SAM 06. Monitoring on active ownership (listed equity/fixed income)

06.1. When monitoring managers, indicate which of the following active ownership information your organisation typically reviews and evaluates from the investment manager in meetings/calls

Engagement

Report on engagements undertaken (summary with metrics, themes, issues, sectors or similar)

Report on engagement ESG impacts (outcomes, progress made against objectives and examples)

Information on any escalation strategy taken after initial unsuccessful dialogue

Alignment with any eventual engagement programme done internally

Information on the engagement activities’ impact on investment decisions

Other RI considerations relating to engagement in investment management agreements; specify

None of the above

LE

FI - Corporate (non-financial)
Report on engagements undertaken (summary with metrics, themes, issues, sectors or similar)
Report on engagement ESG impacts (outcomes, progress made against objectives and examples)
Information on any escalation strategy taken after initial unsuccessful dialogue
Alignment with any eventual engagement programme done internally
Information on the engagement activities’ impact on investment decisions
Other RI considerations relating to engagement in investment management agreements; specify
None of the above

(Proxy) voting

Report on voting undertaken (with outcomes and examples)

Report on rational of voting decisions taken

Adherence with the agreed upon voting policy

Other RI considerations relating to (proxy) voting in investment management agreements; specify

None of the above

LE

Report on voting undertaken (with outcomes and examples)
Report on voting decisions taken
Adherence with the agreed upon voting policy
Other RI considerations relating to (proxy) voting in investment management agreements; specify
None of the above

If you select any `Other` option(s), specify

We do not agree specific voting policies or practices with invested managers. That said, we do push managers on standards around Stewardship and Stewardships standards bodies. We have pushed managers where stewardship practices have not met expected standards. This has directly led to improved behaviours within the portfolio, as evidenced by an increased ratings from external Stewardship Code ratings. 


SAM 07. Percentage of (proxy) votes

07.1. For the listed equities for which you have given your external managers a (proxy) voting mandate, indicate the approximate percentage (+/- 5%) of votes that were cast during the reporting year.

07.2. For the listed equities for which you have given your external managers a mandate to engage on your behalf, indicate the approximate percentage (+/- 5%) of companies that were engaged with during the reporting year.

Number of companies engaged
Proportion (to the nearest 5%)

07.3. Additional information [OPTIONAL]

          Note that we have ticked the box "do not collect this information" in our response to 07.1. We have done this as we are not confident of capturing the exact number of possible voting opportunities each of our managers have in a given year (which is needed to use as an accurate denominator in the % calculation above). We are able to provide the following accurate breakdown. On average invested discretionary managers voted: (i) 80.7% of the time with management; (ii) 11.24% of the time against; and (iii) 6.66% of the time abstained.
        

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