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Vancity Investment Management

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 100%

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

We utilize investment screening to eliminate companies from our portfolios who are primarily involved in sectors we consider to be unsustainable: tobacco, alcohol, gaming, pornography, nuclear power, military weapons and fossil fuels. 

From a positive ESG investment process we also prefer to invest in companies with one or more of the following qualities:

1. adherence to a high level of corporate governance

2. commitment to progressive environmental practices and to complying with environmental regulations

3. respect for their employees and the communities in which they do business

4. advocate progressive human rights practices when carrying on business in a repressive regime

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

Our investment process uses a unique synergy of financial analysis in combination with environmental, social and governance (ESG) analysis. Through this process we identify companies that we believe will generate a superior long-term return while minimizing risk. All securities must meet our ESG and financial criteria for selection. Once a company is confirmed as meeting our ESG criteria, a security is selected for the portfolio based on its fundamental merits as a “company” or business and its merits as a “stock” in terms of the share price and valuation. All investment decisions are based on ESG analysis, internal valuation models and our own investment thesis.

We assess companies ESG qualities using qualitative and quantitative analysis. Company performance and policy is evaluated in the following areas: corporate governance, employee relations, environmental performance, diversity, community relations, human rights and product sustainability. Companies that lag their peers are excluded from further analysis and investment. We use in-house expertise supplemented by third party research.

 


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

We eliminate companies from our investible universe who have poor corporate governance practices, human rights records or environmental performance.Companies who derive signifcant revenue from tobacco, military weapons, nuclear energy, pornography, gambling, or fossil fuels are not eligible for investment.

Our ESG screening model was developed in 2003 and is currently used to manage the funds for which we provide sub-advisory services: the IA Clarington Inhance Global Equity SRI Class fund (2009), the IA Clarington Inhance Canadian Equity SRI Class fund (2009), the IA Clarington Inhance Monthly Income SRI Fund (2009) and the IA Clarington Inhance Bond SRI Fund (2017). Prior to 2017, ESG screening was applied to the IA Clarington Bond Fund which was included in the IA Clarington Inhance SRI Portfolio funds until it was replaced by VCIM’s launch of the IA Clarington Inhance SRI Bond Fund. . 

 

Screened by

Description

Within each sector we evaluate company ESG performance to select companies who have good performance in diversity, employee relations, community relations or are introducing environmentally or socially beneficial products.

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

Our screening criteria are established by our integrated investment team and renewed annually. Information on any changes is disseminated through client communications.


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.

05.5. Additional information. [Optional]


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


(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]

Our ESG analysis helps identify new ESG risk which potentially impact our portfolio. We undertake a process to assess and manage our exposure to each of these risks. We start by analyzing each company’s vulnerability and strategy for addressing the particular risk. Then we confirm our assessment by seeking clarification or greater detail on policies and practices from the company, independent third parties and through media monitoring. We review the company’s response, the findings of our analysis and any new information to determine whether further action is required. Such action may include ongoing monitoring of the company’s risk management process, filing a shareholder resolution or divestment.

The shareholder resolution process encourages greater communication between the shareholder and management. In most cases, once a resolution has been filed with the company, conference calls and face to face meetings are held with the shareholder to substantiate the basis for the resolution. This process allows the shareholder to hold detailed, in-depth discussions with management on the company’s approach to a particular issue.

 


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.

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.

09.6. Additional information. [Optional]


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


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