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Ninety One

PRI reporting framework 2020

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You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes » (A) Implementation: Screening

(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

Ninety One has an exclusion policy for manufacturers of cluster munitions, anti-personnel mines, chemical and biological weapons.

We recognise that some clients have strong positions on investing in particular sectors and/or individual companies based on broad social issues, and we are able to apply screening to prevent investment in these areas. We are able to exclude specific stocks or sectors, based on a set of business activities, in line with client requirements. These portfolios are managed following the same process as similar mandates without ethical considerations; specific exclusions are loaded on to our trade order and deal management system thinkFolio. This prevents any excluded stocks being purchased for the portfolio.

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

Most often any changes are client driven and if not, clients would be informed via fund reporting or regular investment report backs.


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]

We use a number of data sources, both internal and external, to support integration of ESG into the investment processes. The selection process and reviews of these service providers is managed by the ESG team and approved with the investment teams and the CIO office. The providers are evaluated for their research quality and its relevance to our integration processes. The team also considers other factors such as coverage of research across regions and asset classes, suitability for client’s mandates, and applicability for ESG products.


LEI 06. Processes to ensure fund criteria are not breached

06.1. Indicate which processes your organisation uses to ensure fund criteria are not breached.

          For our dedicated sustainability solutions we have sustainable investment advisory committee which is responsible for ensuring that the impact and sustainability mandate is met.
        

06.2. If breaches of fund screening criteria are identified, describe the process followed to correct those breaches.

Automated restriction monitoring is a key part of the risk control framework and is monitored Ninety One’s Investment Guideline Management (IGM) whose members are experienced operations staff (therefore they are independent of the investment teams). Portfolio guidelines and clients’ investment restrictions (for discretionary mandates) are recorded by IGM on the trade order management system, thinkFolio. ThinkFolio allows portfolio investment restrictions, where possible, to be ‘coded’ into the system and aims to ensure that, before any deals are completed, portfolio limits are identified and breaches avoided. Investment restrictions are checked automatically both pre and post trade execution. 

Pre-trade messages warn portfolio managers of potential breaches. According to the nature of the rule that has been coded into thinkFolio (e.g. absolute prohibition of a particular security, or limit as to how much of a security may be held in relation to total portfolio market value), the portfolio manager is then either prevented from taking the transaction any further, or asked to annotate a reason for proceeding with the trade. Post-trade reports are monitored daily by IGM.

Any breaches that do occur are forwarded to the Compliance and Operational Risk teams for review and a decision on the action required to rectify and also for inclusion in the central breach register. The IGM, Compliance and Operational Risk teams liaise closely to ensure any breaches and errors are resolved as soon as possible. They will also liaise with relevant key individuals from other teams (e.g. client relationship individuals). It is Ninety One’s policy to ensure that clients are not disadvantaged as a direct result of an error or omission on Ninety One’s part.

Our investment teams also attend Structured Report Back which is a quarterly forum whereby senior management (including the Co-Chief Executive Officers, Co-Chief Investment Officers and Head of Investment Risk & Performance) meet with the investment teams to discuss and challenge on the investment process, focusing on performance, portfolio construction, investment philosophy and process.

06.3. Additional information. [Optional]


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