This report shows public data only. Is this your organisation? If so, login here to view your full report.

Lombard Odier

PRI reporting framework 2020

Export Public Responses
Pdf-img

You are in Direct - Listed Equity Incorporation » Outputs and outcomes

Outputs and outcomes

LEI 12. How ESG incorporation has influenced portfolio composition

12.1. Indicate how your ESG incorporation strategies have influenced the composition of your portfolio(s) or investment universe.

Describe any reduction in your starting investment universe or other effects.

We have three levels of negative screening – as described in LEI 01.2 above. We implement some exclusions across our listed equities portfolios as a matter of policy, which have a limited impact on the investable universe. Where individual funds or clients impose additional values-based screens, the impact can be more varied. 

  1. Group-level exclusions: Controversial Weapons & Essential Food exclusion. This typically results in 1% or less universe reduction.
  2. SRI restrictions: Companies in the tobacco, thermal coal, and unconventional oil & gas sectors are subject to thresholds to determine whether they are excluded. Companies subject to severe controversies are also typically restricted in our actively managed strategies. These restrictions are implemented on a comply or explain basis. This typically results in 5% or less universe reduction.

Specify the percentage reduction (+/- 5%)

5 %

Describe any alteration to your investment universe or other effects.

For our internally managed sustainability-themed strategies, sustainability is the main driver of alpha. In these strategies our sustainable investment framework can be used for positive selection of a universe of companies that are providing solutions to sustainability-related challenges (such as climate change), and/or those that are transition leaders within their sector or industry. 

In the case of climate transition, for example, this process is used to narrow the initial investment universe from around 2500 companies to roughly 750 companies.

Our high-conviction managers then use this Climate Transition Universe as the starting point for further fundamental analysis and stock selection. The investment teams continuously work in close collaboration with our dedicated sustainability teams during this process, and on an ongoing basis, to inform investment decisions and engagement activity.

Select which of these effects followed your ESG integration.

12.2. Additional information.[Optional]

This information is reflective of our asset management activities.


LEI 13. Examples of ESG issues that affected your investment view / performance

13.1. Provide examples of ESG factors that affected your investment view and/or performance during the reporting year.

ESG factor and explanation

Assessing the WHAT - business model and activities: analysing exposure of different sectors/industries to risks & opportunities arising from sustainability.

Our sustainable investment framework is used to inform our engagement activity by identifying material issues affecting the sustainability of business models and activities in a specific sector, industry or company. We use this information to engage for information to inform our investment decisions.

ESG incorporation strategy applied Thematic|Integration

Impact on investment decision or performance

During 2019, for example, we analysed the exposure of certain consumer goods companies to changing dynamics associated with plastics and packaging. This led to productive proactive dialogue with one large consumer good producer regarding their susceptibility to this issue. The information provided by the initial analysis, and the subsequent discussion with company management increased the conviction of the portfolio management team in that particular stock. Our dialogue with this particular company will continue as part of our ongoing active ownership approach.

ESG factor and explanation

Assessing the HOW - business practices: disclosure and reporting on sustainability metrics. 

We use the data and analysis provided by our sustainable investment framework to inform our proactive engagement for change to encourage companies to transition to more sustainable practices and models. This can include improving disclosure, which, in turn, helps us better assess the sustainability of a company.

ESG incorporation strategy applied Integration

Impact on investment decision or performance

After assessing sustainability reports of several companies listed in Hong Kong, and identifying areas of poor disclosure, we engaged with these companies to encourage them to change their reporting. Several companies committed to improve their disclosures and to devote more resources internally to sustainability reporting. We will continue to monitor their progress in improving disclosure.

ESG factor and explanation

Assessing the WHAT - business models and activities: analysing exposure of different sectors/industries to risks & opportunities arising from sustainability.

Our sustainable investment framework is used to inform our engagement activity by identifying material issues affecting a specific sector, industry or company. We use this information to engage for information to inform our investment decisions.

ESG incorporation strategy applied Screening

Impact on investment decision or performance

We engaged with a company that produces products allowing connectivity to the digital world to better understand their plastics' supply chain and overall use. We were satisfied with their approach, which is indeed best-in-class. This increased our conviction in this company, and we will continue to engage with them to monitor the development of their approach. 

13.2. Additional information.[Optional]

This information is reflective of our asset management activities.


Top