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Letko, Brosseau & Associates Inc.

PRI reporting framework 2020

You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes

Implementation processes

LEI 01. Percentage of each incorporation strategy

01.1. Indicate which ESG incorporation strategy and/or combination of strategies you apply to your actively managed listed equities; and the breakdown of your actively managed listed equities by strategy or combination of strategies.

ESG incorporation strategy (select all that apply)

Percentage of active listed equity to which the strategy is applied — you may estimate +/- 5%
100 %
Total actively managed listed equities 200%

01.2. Describe your organisation’s approach to ESG incorporation and the reasons for choosing the particular strategy/strategies.

ESG considerations are integrated throughout our investment selection process as part of the fundamental analysis we conduct on all potential investments. Many factors enter into our decision to invest in a company, including the firm's ESG credentials. We believe that companies with sound business practices, including strong corporate governance and responsible management of material environmental and social issues, will have better success and deliver stronger financial performance over time. Conversely, companies that have poor environmental, social or corporate governance practices present risks and controversies that may hinder their financial performance. When considering a company for potential inclusion in our portfolios, our research considers many factors, including the firm's financial position, the competitive environment in which it operates, how it differentiates itself from its competitors and how it may be positioned to satisfy evolving ESG trends.Through our in-house research process, our industry experts evaluate the company's material ESG risks and opportunities, complemented by independent third-party research. Our conclusions, including in the areas of ESG, are integrated into the investment decision-making process.

01.3. If assets are managed using a combination of ESG incorporation strategies, briefly describe how these combinations are used. [Optional]

Firstly, the company-wide screening policy is applied to all potential investments, removing tobacco, gaming and thermal coal mining companies from potential investment opportunities. ESG considerations are then integrated throughout the investment process. Additionally, LBA manages an ESG Balanced Fund which adheres to a more restrictive investment policy, which precludes investments in companies for which ESG risks are determined to be excessive, and further applies a number of ESG filters in evaluating potential investments. An ESG Fossil Fuel Free Equity Fund is expected to launch in 2020.


LEI 02. Type of ESG information used in investment decision (Private)


LEI 03. Information from engagement and/or voting used in investment decision-making (Private)


(A) Implementation: Screening

LEI 04. Types of screening applied

04.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by

Description

LBA has identified specific industries that it chooses not to be exposed to or profit from, which can be characterized as presenting abnormal risks or benefitting some stakeholders at the expense of others.  Accordingly, its global investment universe has been adjusted to exclude tobacco, gaming and thermal coal mining companies.

04.2. Describe how you notify clients and/or beneficiaries when changes are made to your screening criteria.

Clients will be informed by email or mail if any changes to our screening criteria were to be made. 


LEI 05. Processes to ensure screening is based on robust analysis

05.1. Indicate which processes your organisation uses to ensure ESG screening is based on robust analysis.

05.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your ESG screening strategy.

05.3. Indicate how frequently third party ESG ratings are updated for screening purposes.

05.4. Indicate how frequently you review internal research that builds your ESG screens.

05.5. Additional information. [Optional]


LEI 06. Processes to ensure fund criteria are not breached (Private)


(B) Implementation: Thematic

LEI 07. Types of sustainability thematic funds/mandates

07.1. Indicate the type of sustainability thematic funds or mandates your organisation manages.

07.2. Describe your organisation’s processes relating to sustainability themed funds. [Optional]

The LBA ESG Balanced Fund has been specifically earmarked as a responsible investment product and adheres to a more restrictive investment policy, which precludes investments in companies for which ESG information is deemed insufficient, and further applies most commonly requested ESG filters. This Fund also follows specific proxy voting guidelines. Companies in this Fund must first be deemed as suitable investments by the investment committee. The investment committee has discretion to override specific ESG criteria depending on context. Such decisions are documented and reported to clients of this Fund as described in the Fund’s Statement of Investment Policy and Guidelines. Additionally, a Fossil Free Fund is ready to launch, with funds expected to move in 2020. 


(C) Implementation: Integration of ESG factors

LEI 08. Review ESG issues while researching companies/sectors

08.1. Indicate the proportion of actively managed listed equity portfolios where E, S and G factors are systematically researched as part of your investment analysis.

ESG issues

Proportion impacted by analysis
Environmental

Environmental

Social

Social

Corporate Governance

Corporate Governance

08.2. Additional information. [Optional]

ESG considerations are integrated throughout our investment selection process as part of the fundamental analysis we conduct on all potential investments and, thereafter, on an ongoing basis for companies included in our portfolios.


LEI 09. Processes to ensure integration is based on robust analysis

09.1. Indicate which processes your organisation uses to ensure ESG integration is based on robust analysis.

          ESG issues are discussed at investment committee meetings.
        

09.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your integration strategy.

09.3. Indicate how frequently third party ESG ratings that inform your ESG integration strategy are updated.

09.4. Indicate how frequently you review internal research that builds your ESG integration strategy.

09.5. Describe how ESG information is held and used by your portfolio managers.

          Analysts and portfolio managers include ESG factors in their investment analyses and are expected to review this information when making investment recommendations.
        

09.6. Additional information. [Optional]


LEI 10. Aspects of analysis ESG information is integrated into (Private)


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