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BT Financial Group

PRI reporting framework 2020

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Asset class implementation gateway indicators

OO 10. Active ownership practices for listed assets

10.1. Select the active ownership activities your organisation implemented in the reporting year.

Listed equity – engagement

Listed equity – voting

Fixed income SSA – engagement

Please explain why you do not engage directly and do not require external managers to engage with companies on ESG factors. 

          We do not engage directly on SSA securities, however our engagement provider EOS at Federated Hermes is involved in policy engagement. Refer to SG 11.4 for more detail.

Fixed income Corporate (financial) – engagement

Fixed income Corporate (non-financial) – engagement

Fixed income Corporate (securitised) – engagement

Please explain why you do not engage directly and do not require external managers to engage with companies on ESG factors. 

          Engagement for securitised fixed income is limited given the nature of the issuers.

OO 11. ESG incorporation practices for all assets

Select the externally managed assets classes in which you and/or your investment consultants address ESG incorporation in your external manager selection, appointment and/or monitoring processes.
Asset class
ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes
Listed equity

Listed equity - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Fixed income - SSA

Fixed income - SSA - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Fixed income - corporate (financial)

Fixed income - corporate (financial) - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Fixed income - corporate (non-financial)

Fixed income - corporate (non-financial) - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Fixed income - securitised

Fixed income - securitised - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Property

Property - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Infrastructure

Infrastructure - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Commodities

Commodities - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Hedge funds

Hedge funds - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Cash

Cash - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

11.3b. If your organisation does not integrate ESG factors into investment decisions on your externally managed assets, explain why not.

BT's sustainable investment approach is focussed on asset classes where it has significant investments and the ability to effectively implement sustainable investment practices. 

During the reporting period, the BTIS Investment team undertook external manager selection and appointment within Infrastructure. Our sustainable investment approach for Infrastructure will continue to evolve over time and may incorporate additional areas.

For asset classes where BT does not have significant investments (for example Hedge Funds  and Commodities) or where there is limited ability to integrate ESG factors into investment decisions (for example Cash) we are limited in our approach to Sustainable investment. 

11.4. Provide a brief description of how your organisation includes responsible investment considerations in your investment manager selection, appointment and monitoring processes.

Within the BTIS Investment team the level of ESG integration and an individual investment manager’s capabilities form an important part of our investment manager selection process. During the manager selection process and on an ongoing basis, we undertake a formal assessment of an investment manager’s level of ESG integration and resourcing and how that might influence investment outcomes by undertaking desk-based research and meeting with key investment and ESG personnel.

Investment managers are assessed on their:

  • Approach to ESG including associated policies;
  • People and resources, including ESG research sources;
  • Integration of ESG into the investment process, including examples of how ESG matters have impacted or are likely to impact the management of the portfolio;
  • Their engagement with companies and proxy voting; and
  • Transparency, reporting and advocacy.

This formal assessment has a direct bearing on the final assessment of an investment manager’s suitability for the portfolio.

We encourage our investment managers to include ESG factors in their investment processes, in addition to having ongoing dialogue around ESG issues.

Once appointed, where relevant, specific terms regarding ESG practices are included in the investment mandates. This includes:

  • Endeavouring to act consistently with the Principles for Responsible Investment (PRI);
  • Acknowledging that ESG issues have the potential to impact investment risks and returns;
  • Acknowledging that considering these issues alongside traditional factors in investment decision-making can improve long-term risk-adjusted returns; and
  • A requirement for ESG specific reporting.

We monitor investment managers on ESG integration on a regular basis, along with ad hoc engagement where there is a material ESG risk, such as a controversy in a security held in the portfolio.

OO 12. Modules and sections required to complete

12.1. Below are all applicable modules or sections you may report on. Those which are mandatory to report (asset classes representing 10% or more of your AUM) are already ticked and read-only. Those which are voluntary to report on can be opted into by ticking the box.

Core modules

RI implementation directly or via service providers

Direct - Listed Equity active ownership

RI implementation via external managers

Indirect - Selection, Appointment and Monitoring of External Managers

Closing module

12.2. Additional information. [Optional]

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