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CenterSquare Investment Management LLC

PRI reporting framework 2020

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

ESG incorporation in actively managed listed equities

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%
90.0 %
Percentage of active listed equity to which the strategy is applied — you may estimate +/- 5%
10.0 %
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.

CenterSquare’s commitment to evaluating ESG principals is based upon the belief that they make good business sense and can represent a strong source of return for investors. Governance is the most material of the three primary categories, followed by Environmental factors, with Social factors being the least germane as a result of the nature of the real estate industry. Our process begins with a ranking framework that assesses a company’s ESG score along ten equally-weighted factors (each scored 0 to 10) measuring environmental stewardship, social responsibility, and corporate governance to provide an expanded analysis. The sum of these ten scores generates the REIT’s overall ESG score. Environmental factors account for 40% of CenterSquare’s overall ESG score. These factors capture the robustness of the company’s environmental sustainability policies addressing energy efficiency, conservation, and carbon footprint reduction as well as the execution and disclosure of those policies. As the company develops additional assets, we identify brown-field development and mass transit-oriented development as environmentally friendly. We also analyze the company’s real estate portfolio for heightened sustainability standards, such as attaining LEED2 and GRESB3 certification. Companies receive superior scores for being leaders and advocates within the environmental sustainability space. Social factors account for 20% of the overall ESG score. These factors capture the company’s quality of employee engagement and extent of community involvement. We consider policies regarding ethics, conduct, anti-corruption, and anti-bribery for employees and contractors as well as the company’s commitment to community involvement, civic service, and philanthropic efforts. Governance factors account for the remaining 40% of the overall ESG score. Shareholder alignment and board independence measure the shareholders’ influence over the company and the board’s ability to carry out its fiduciary responsibility as the steward of shareholder capital. We also measure the extent to which strategic efforts have been clearly identified and implemented to enhance governance of shareholder capital and the quality of governance disclosures. 

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

The screening and integration process applies to a mandate with a custom ESG focused Index. That index is constructed using the following methodolog - Companies in the representative index are initially screened on a scorecard that requires an assessment of domicile country, property type, occupancy, and leverage. Companies can also be excluded at the PM’s discretion if they demonstrate non-core real estate characteristics or illiquidity. If compliant with these screens, companies are then excluded if they screen in the bottom quartile of CenterSquare’s proprietary quality and/or ESG scores. The remaining companies are then grossed up to generate 100% of the index.  


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

Description

We do not invest in prison REITs 

Screened by

Description

Our ESG mandate is based on a custom index. Companies in the representative index are initially screened on a scorecard that requires an assessment of domicile country, property type, occupancy, and leverage. Companies can also be excluded at the PM’s discretion if they demonstrate non-core real estate characteristics or illiquidity. If compliant with these screens, companies are then excluded if they screen in the bottom quartile of CenterSquare’s proprietary quality and/or ESG scores. The remaining best-in-class companies are part of the investible universe. 

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

Clients receive regular reporting.


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.

05.5. Additional information. [Optional]


LEI 06. Processes to ensure fund criteria are not breached (Not Completed)


(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]


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]


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


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