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.