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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 » (C) Implementation: Integration of ESG factors

(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 internal ESG integration framework enables us to apply a consistent approach to integration analysis, and allows our investment teams to develop their own unique approach to ESG.

  1. Universe screening: We use a number of external ESG screening tools from a third party provider to help us define the investment universe, where appropriate. These tools provide the option to include specific ESG options for strategies that invest in a restricted universe.
  2. Fundamental analysis: Investment teams more frequently consider ESG issues at this stage, by using a combination of external ESG ratings and controversy assessments, as well as internally developed ESG toolkits.Active ownership:
  3. Active ownership: including engagement and proxy voting (where relevant), is key to our investment process. It is a powerful tool, particularly for long-term holdings. Outcomes are factored into the investment research.

  4. Portfolio construction and monitoring: This stage depends on how the investment team implement risk management and monitor for ESG developments. Some strategies may limit exposure to poorly rated companies whilst others may consider ESG risks relative to a benchmark.


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.

          In some investment teams, there is a systematic process in place for using and storing ESG ratings and other information.
        

09.6. Additional information. [Optional]

The implementation of ESG is monitored in a number of ways:

Integration programme

We have developed an integration programme whereby the ESG team work closely with each of the investment team heads to establish outcomes and goals for development. The programme is based around six important topics which are thought to be significantly beneficial to improving awareness and understanding of ESG issues. The six focus areas are:

  • Leadership and team awareness
  • Training and education
  • Effective use of research and data
  • Research efforts
  • Participation in external initiatives
  • Active ownership responsibilities

Best practice framework

The ESG team have developed a best practice framework for ESG integration. An assessment in line with this framework allows us to understand how the investment teams are currently positioned, the quality and consistency of integration, and any gaps that need to be addressed. The aim of this approach is to understand the stages of the investment process that need to improve, allowing teams to focus on areas that will add the most value.

Leadership oversight

Alongside the ESG team, the co-Chief Investment Officers also keep a close check on progress on integration.The Investment Governance Committee (IGC) meets quarterly to review activities related to stewardship.


LEI 10. Aspects of analysis ESG information is integrated into

New selection options have been added to this indicator. Please review your prefilled responses carefully.

10.1. Indicate which aspects of investment analysis you integrate material ESG information into.

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

10.2. Indicate which methods are part of your process to integrate ESG information into fair value/fundamental analysis.

          Assessment of ESG risk and footprint.
        

10.4. Describe the methods you have used to adjust the income forecast/valuation tool.

This varies by investment team and strategy. For example, the portfolio manager/analyst understanding of the companies' governance, including the management of material environmental and social risks, may lead to an adjustment of the discount rate applied for valuation purposes. Where the E, S or G financial /earnings impact is known, or can reasonably be estimated, the analyst will consider the impact on the valuation of the company. Where there is no or limited information available to help the consideration and implications of company, there is a materiality framework available to focus research.

10.6. Additional information. [OPTIONAL]


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