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Troy Asset Management Limited

PRI reporting framework 2020

You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes

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%
97 %
Percentage of active listed equity to which the strategy is applied — you may estimate +/- 5%
3 %
Total actively managed listed equities 100%

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

All of Troy’s investment strategies follow the same investment philosophy. Our aim is to protect investors’ capital and to increase its value year on year. The principle of first preserving investors’ wealth means that Troy is first committed to properly assessing the risks of any potential investment, even before trying to quantify the potential return.

A significant part of this process is to understand and assess the significant factors that may impact the long-term returns from a particular business.  It is within this context that our research team seeks to assess non-financial ESG factors. This is an integrated part of our wider analysis process, which includes, amongst other items, an assessment of the relevant business’ strategy, financial performance and capital structure.  Troy defines incorporation of an assessment of ESG factors within its investment research process as the fundamental analysis of non-financial ESG factors that materially influence the potential long-term returns received by investors.  We consider long-term to mean more than 5 years.  For such a risk/opportunity to be material, both the probability of a detrimental/positive impact on the value of an investment and the magnitude of that impact must be non-de minimis.

We do not seek to narrowly define or limit the factor categories but rather appreciate that such analysis must necessarily take place in the context of the wider assessment of risk and reward.  

It is our aim to ensure ESG factors are incorporated into the analysis process from the outset and as such it should be the responsibility of all members of the investment team to contribute to this process.  All Troy’s mandates are populated from a collectively created investment universe of researched stocks that analysis has shown meet our quality and risk criteria and therefore the ESG factors are equally incorporated into all of Troy’s mandates.

The only vehicles to combine incorporation strategies are the Trojan Ethical Income Fund and the Trojan Ethical Fund.  These funds apply a negative screen in accordance with the published ethical investment criteria in addition integrating ESG factors into at the stock specific research level.

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

The only mandates to combine equity ESG incorporation strategies are the Trojan Ethical Income Fund and the Trojan Ethical Fund.  These vehicle seeks to combine the analysis of ESG factors with a negative screen.

Troy maintains an investment universe of stocks that have been researched and analysed (including the integration of ESG factors) and meet Troy's stringent quality standards.  All Troy's portfolios, including the screened Ethical mandates, are populated from this same universe.

As a separate and subsequent step, Troy's Ethical Screening Criteria are then applied to the universe, excluding additional stocks prior to constructing Troy's ethical funds. The criteria are based on exposure to certain revenue streams including those relating to fossil fuels, armaments, alcoholic beverages, high interest rate lending, gambling, pornography and tobacco.

NB.  The Trojan Ethical Fund's ethical investment criteria also addresses investment in government & public securities and precious metals.

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


The Trojan Ethical Income Fund and Trojan Ethical Fund screen equities on the basis of a set of ethical investment criteria.  Following a refinement of the criteria in July 2017 the exclusions are based on the percentage of revenue exposures to certain activities and products.  In select cases in relation to particular munitions, exclusions are made in relation to breaches of certain conventions.  VigeoEiris support this screening process.

Screened by

          Conventions relating to cluster munitions and anti-personnel mines.


Two convention watch screens on cluster munitions and anti-personnel mines are used to support the armaments criteria.

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

The Trojan Ethical Income Fund's ethical investment criteria were established as a result of consultation with the fund’s seed investor and other potential investors prior to launch.  The ethical criteria have been reviewed and adjusted twice since launch in January 2016.  It is anticipated that they will be reviewed on an ad hoc basis in future.  However we do not anticipate further material change due to the public nature of the fund and the diverse investor base.  Any changes made to the criteria will be notified to investors in accordance with the relevant regulatory requirements.

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]

Troy's screening process is supported by VigeoEiris who provide information on a percentage of revenue basis that is updated at least annually.  In the rare instances that VigeoEiris cannot cover certain stocks our own internal assessment of the breakdown of revenues in conducted and this research is normally updated bi-annually but in some cases this can be annually.

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




Corporate Governance

Corporate Governance

08.2. Additional information. [Optional]

Changes to the research process mean that social and environmental factors have been systemically integrated from 2019.

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.

09.6. Additional information. [Optional]

ESG research is available to analysts in multiple forms.  Troy’s agreement with VigeoEiris provides ESG research coverage of some, but not all, of our holdings and ISS provides norms based research with relation to the UN Global Compact and on governance matters in relation to proxy voting research. Troy subscribes to MSCI's comprehensive ESG research product. ESG data is also accessed via Bloomberg. Troy’s own internal research template has a standard section for governance risk and environmental & social risks.

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