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CBRE Investment Management

PRI reporting framework 2020

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ESG incorporation in actively managed listed equities

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%
98.7 %
Percentage of active listed equity to which the strategy is applied — you may estimate +/- 5%
1.3 %
Total actively managed listed equities 102.3%

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

CBRE Clarion believes that ESG issues are relevant and can be material in evaluating management teams of listed property companies. More specifically, we believe that management teams which articulate, enact and measure ESG issues are generally more likely to make superior business decisions. CBRE Clarion employs a large team of securities analysts responsible for fundamental analysis of the companies in which we invest client assets. Our analysts evaluate ESG issues as part of their research process, which includes: asset tours, management and director engagement, financial modeling and analysis of public documents. ESG issues are incorporated into our assessment of a company’s exposure to and ability to manage risk.  While some factors are similar, the real estate and infrastructure sectors have unique sets of fundamental and ESG factors, given different drivers and regulatory environments.  For both real estate and infrastructure, the aggregated ESG data, comprised of internal and external data, is incorporated into the “Quality” factor of the respective factor-based investment tools.

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

While our ESG approach is primarily through integration, we also manage an account for a client who desired screening on top of our traditional integration process.  


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 have one client where we apply screening to their account.  This is a client directive, where the client provides the list of securities to be screened.  The client uses 3rd party data to determine the list.

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

Our client has a list on their website of all excluded companies and they notify us when it has been updated.  We then use this list to cross reference the client portfolio holdings to make changes.


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.

05.4. 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)


(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]

Analysts are responsible for the systematic analysis of the impact of environmental, social and governance factors on the companies they cover and are expected to take all such factors into account when formulating “quality” inputs into our relative value analysis (RVA) model, which provides a framework for investment decision-making, as well as when recommending transactions to the portfolio managers.  Analysts use internal and external resources to evaluate a company's ESG factors.  CBRE Clarion subscribes to Sustainalytics and to GRESB, which the analysts have access to, as well as any public information provided by the company through public filings or on the company's website.  Sustainalytics is a well known ESG data provider, and CBRE Clarion uses several Sustainalytics raw data factors in our evaluation of a company's ESG practices.  GRESB is an ESG benchmark, which real estate and infrastructure companies voluntarily report to.  GRESB captures data specifically related to the real assets sector.


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.

          Scores are developed via internal and external research. Sustainalytics data is downloaded monthly, GRESB annually. Scores are reviewed monthly, follow up takes place if needed.
        

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.

          External ESG data and internal management scores are maintained in the Firm's RVA database, for investment staff to use in their analyses of companies.
        

09.6. Additional information. [Optional]

Sustainalytics data and GRESB ratings are maintained in the Firm's RVA database so therefore are accessible by all investment staff to use in their analyses of companies.  Management scores and the sub-components of the management score are also accessible to analysts to update, and PM's to view and monitor. Quality control measures are in place when indicated a large change in data or outliers, for further follow up.  CBRE Clarion's Quantitative Investment Research team analyzes the risk and return characteristics of the ESG factors on the portfolio.

CBRE Clarion's Head of ESG and senior members of the investment team are responsible for determining relevant factors to assess, aggregating such information and enabling analysts to understand the ESG issues. They work together in conducting engagement and making proxy voting decisions.  CBRE Clarion's Analytics team and Quantitative Investment Research team are instrumental in aggregating ESG information so that it is useful to the Investment team.  Engagement activities are tracked on our shared network drive for all members of the team to access.  We also use email to communicate engagement outcomes.  Our proxy voting reports are shared among our investment team and the voting record is accessible to members of the investment team.


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


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