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Lombard Odier

PRI reporting framework 2020

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You are in Indirect – Manager Selection, Appointment and Monitoring » Selection

Selection

SAM 02. Selection processes (LE and FI)

02.1. Indicate what RI-related information your organisation typically covers in the majority of selection documentation for your external managers

Your organisation’s investment strategy and how ESG objectives relate to it

ESG incorporation requirements

ESG reporting requirements

Other

No RI information covered in the selection documentation

LE

FI - SSA
FI - Corporate (financial)
FI - Corporate (non-financial)
Your organisation’s investment strategy and how ESG objectives relate to it
ESG incorporation requirements
ESG reporting requirements
Other
No RI information covered in the selection documentation

02.2. Explain how your organisation evaluates the investment manager’s ability to align between your investment strategy and their investment approach

Strategy

Assess the time horizon of the investment manager’s offering vs. your/beneficiaries’ requirements

Assess the quality of investment policy and its references to ESG

Assess the investment approach and how ESG objectives are implemented in the investment process

Review the manager’s firm-level vs. product-level approach to RI

Assess the ESG definitions to be used

Other

None of the above

LE

FI - SSA
FI - Corporate (financial)
FI - Corporate (non-financial)
Assess the time horizon of the investment manager’s offering vs. your/beneficiaries’ requirements
Assess the quality of investment policy and its reference to ESG
Assess the investment approach and how ESG objectives are implemented in the investment process
Review the manager’s firm-level vs. product-level approach to RI
Assess the ESG definitions to be used
Other
None of the above

ESG people/oversight

Assess ESG expertise of investment teams

Review the oversight and responsibilities of ESG implementation

Review how ESG implementation is incentivised

Review the manager’s RI-promotion efforts and engagement with the industry

Other

None of the above

LE

FI - SSA
FI - Corporate (financial)
FI - Corporate (non-financial)
Assess ESG expertise of investment teams
Review the oversight and responsibilities of ESG implementation
Review how is ESG implementation enforced /ensured
Review the manager’s RI-promotion efforts and engagement with the industry
Other
None of the above

Process/portfolio construction/investment valuation

Review the process for ensuring the quality of the ESG data used

Review and agree the use of ESG data in the investment decision making process

Review and agree the impact of ESG analysis on investment decisions

Review and agree ESG objectives (e.g. risk reduction, return seeking, real-world impact)

Review and agree manager’s ESG risk framework

Review and agree ESG risk limits at athe portfolio level (portfolio construction) and other ESG objectives

Review how ESG materiality is evaluated by the manager

Review process for defining and communicating on ESG incidents

Review and agree ESG reporting frequency and detail

Other, specify

None of the above

LE

FI - SSA
FI - Corporate (financial)
FI - Corporate (non-financial)
Review the process for ensuring the quality of the ESG data used
Review and agree the use of ESG data in the investment decision making process
Review and agree the impact of ESG analysis on investment decisions
Review and agree ESG objectives (e.g. risk reduction, return seeking, real-world impact)
Review and agree manager’s ESG risk framework
Review and agree ESG risk limits at athe portfolio level (portfolio construction) and other ESG objectives
Review how ESG materiality is evaluated by the manager
Review process for defining and communicating on ESG incidents
Review and agree ESG reporting frequency and detail
Other, specify
None of the above

02.3. Indicate the selection process and its ESG/RI components

02.4. When selecting external managers does your organisation set any of the following:

ESG performance development targets

ESG score

ESG weight

Real economy influence

Other RI considerations

None of the above

LE

FI - SSA
FI - Corporate (financial)
FI - Corporate (non-financial)
ESG performance development targets
ESG score
ESG weight
Real world economy targets
Other RI considerations
None of the above

You selected an `Other` option in table SAM 02.4 above, please specify

We regularly look for sustainability thematic and impact investment offerings. We ask external managers to adhere to sustainability-related exclusions, which may vary depending on the manager / solution in question. Further details are provided in SAM 04.1.

02.5. Describe how the ESG information reviewed and discussed affects the selection decision making process.[OPTIONAL]

          When appointing all new managers, we look for partners who are aligned with our philosophy. As part of our extensive due diligence process, we carry out in-depth analysis of their approach, both through publicly available material, and in detailed discussion and site visits during the selection process. We review external managers’ investment strategy and ESG philosophy, as well as their approach to integration. We assess the quality of their policies and how their ESG approach is implemented in their portfolio management process. We look for robust governance and oversight of their investment approach, including ESG incorporation, as well as risk management. 
We seek to ensure our partners are focused on the ESG issues that are most material to the investments they are making. We also look to ensure they have the appropriate level of expertise on their team, and that these resources are adequately integrated with their investment teams. We also asses the data they are using to ensure it is both robust and of high quality. We also look at how our external managers share their knowledge with the wider community through their promotion of responsible investment and industry engagement. 
We assess all of this at the firm level, and we also look in detail at how their approach is integrated into the specific products that we select for our clients. We aim to agree with managers how ESG data will be used in their investment process, and understand the likely impact that will have on the decision making process and portfolio outcomes. 
We assess their approach to exclusions and SRI restrictions and, as far as possible, we ask them to respect our two Group-level exclusions: controversial weapons and essential food commodities.
We also expect to see best-in-class transparency when it comes to reporting.
In addition to broad integration of ESG and sustainability into investment products, we also look for managers with a particular edge in providing thematic and impact investment solutions. Our clients are increasingly demanding investment solutions that are positioned to mitigate risks and capture opportunities created by the transition to a sustainable economic model. Many of our clients also aim to use their capital as a means of fostering economic and social progress, and to combine financial return with social impact.
        

SAM 03. Evaluating engagement and voting practices in manager selection (listed equity/fixed income) (Not Applicable)


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