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Cardano Risk Management

PRI reporting framework 2020

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

Appointment

SAM 04. Appointment processes (listed equity/fixed income)

04.1. Indicate if in the majority of cases and where the structure of the product allows, your organisation does any of the following as part of the manager appointment and/or commitment process

specify

We require all managers to demonstrate ESG integration though ongoing (live) evidence of how ESG factors influence and are taken into account in investment decision making. This can (and does) take place both formally as part of the annual ESG data gathering exercise but also on an ad hoc basis throughout the year as part of Coverage Teams' day-to-day investment monitoring of strategies. 

04.2. Provide an example per asset class of your benchmarks, objectives, incentives/controls and reporting requirements that would typically be included in your managers’ appointment.

Asset class

Benchmark

ESG Objectives

          While we have not specific restrictions in place with managers (outside of those that are set out in the applicable strategy's governing documentation), we do expect all our third party managers to take E, S and G factors into consideration in their investment decision making when financial risk and / or return is (or could be) materially impacted. We make this clear in our rating process and in our guidance that we issue to all invested managers, as part of that rating process. 

We encourage all managers to consider ESG factors in respect of their businesses. However, we acknowledge that there are strategies where financial risk and / or return is impacted more by these factors than others and our approach and expectations for these strategies reflects that difference in impact.
        

Incentives and controls

Reporting requirements

Benchmark

ESG Objectives

          While we have not specific restrictions in place with managers (outside of those that are set out in the applicable strategy's governing documentation), we do expect all our third party managers to take E, S and G factors into consideration in their investment decision making when financial risk and / or return is (or could be) materially impacted. We make this clear in our rating process and in our guidance that we issue to all invested managers, as part of that rating process. 

We encourage all managers to consider ESG factors in respect of their businesses. However, we acknowledge that there are strategies where financial risk and / or return is impacted more by these factors than others and our approach and expectations for these strategies reflects that difference in impact.
        

Incentives and controls

Reporting requirements

Benchmark

ESG Objectives

          While we have not specific restrictions in place with managers (outside of those that are set out in the applicable strategy's governing documentation), we do expect all our third party managers to take E, S and G factors into consideration in their investment decision making when financial risk and / or return is (or could be) materially impacted. We make this clear in our rating process and in our guidance that we issue to all invested managers, as part of that rating process. 

We encourage all managers to consider ESG factors in respect of their businesses. However, we acknowledge that there are strategies where financial risk and / or return is impacted more by these factors than others and our approach and expectations for these strategies reflects that difference in impact.
        

Incentives and controls

Reporting requirements

Benchmark

ESG Objectives

          While we have not specific restrictions in place with managers (outside of those that are set out in the applicable strategy's governing documentation), we do expect all our third party managers to take E, S and G factors into consideration in their investment decision making when financial risk and / or return is (or could be) materially impacted. We make this clear in our rating process and in our guidance that we issue to all invested managers, as part of that rating process. 

We encourage all managers to consider ESG factors in respect of their businesses. However, we acknowledge that there are strategies where financial risk and / or return is impacted more by these factors than others and our approach and expectations for these strategies reflects that difference in impact.
        

Incentives and controls

Reporting requirements

04.3. Indicate which of these actions your organisation might take if any of the requirements are not met

          We encourage all managers to consider ESG factors in respect of their businesses. However, we acknowledge that there are strategies where financial risk and / or return is impacted more by these factors than others and our approach and expectations for these strategies reflects that difference in impact.

We would terminate or take a decision to redeem investments from strategies where there is clear disregard for ESG integration, causing increased risk to returns. Our starting position is one of engagement versus screening / limit based. As such, where we can work with managers to improve their approach we will actively do so. Typically managers with consistently poor ESG scores, who have no willingness to change (Low Momentum Scores) and where there is material risk to financial returns will be placed on a watch list and, with no improvement - we would expect to make a redemption decision.
        

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

          See response for 01.2. All strategies are required to have a rating assigned to them before investment. This is to ensure that the overall risk-return decision encapsulates ESG and forces accountability and robustness of debate around the ESG policies and practices of each manager.
        

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