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PT Batavia Prosperindo Aset Manajemen

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%
100 %
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.

Our Environmental, Social and Corporate Governance (ESG) policy stems from the growing awareness in world markets of the value in responsible investing and our commitment to work towards global standards. We believe there is a link between ESG factors and the financial performance of listed companies and as such considers ESG criteria throughout our investment management approaches.

We integrate ESG factors in selection and management of our stock universe. Our approach includes screening of companies operating in sectors on our exclusions list and for companies operating in sectors we have determined to be high risk. High-risk companies are then evaluated to identify any additional monitoring requirements/needs through a series of due diligence questions covering Environmental, Social and corporate Governance factors.

Our exclusion list defines the sectors/companies in which we will not invest. The exclusion list is applicable to all classes of IDX publically listed shares and all classes of IDX listed companies issued debt.

ESG analysis will initially be addressed when decisions are made on our stock universe. On-going monitoring and engagement, through voting, on companies will be conducted to ensure ESG risks and opportunities haven’t changed over time.

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


LEI 02. Type of ESG information used in investment decision (Private)


LEI 03. Information from engagement and/or voting used in investment decision-making (Not Applicable)


(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 integrate ESG factors in selection and management of our investment universe. Our approach includes screening of companies operating in sectors on our exclusions list and for companies operating in sectors we have determined to be high risk. High-risk companies are then evaluated to identify any additional monitoring requirements/needs through a series of due diligence questions covering Environmental, Social and corporate Governance factors.

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

We integrate ESG factors in selection and management of our investment universe. Our approach includes screening of companies operating in sectors on our exclusions list and for companies operating in sectors we have determined to be high risk. High-risk companies are then evaluated to identify any additional monitoring requirements/needs through a series of due diligence questions covering Environmental, Social and corporate Governance factors.

Our exclusion list defines the sectors/companies in which we will not invest. The exclusion list is applicable to all classes of IDX publically listed shares and all classes of IDX listed companies issued debt.

We have identified sectors/activities that are considered high risk for environmental, social or corporate governance reasons and requires companies operating in these areas to be assessed for their ESG practices. The high-risk sectors by factor are the following:

1) Environmental

Sectors engaged in:

- Construction of dams or reservoirs 
- Forestry/Logging,
- Agro-industries
- Industrial plants
- Industrial and residential property development
- Extractive industries, and supporting infrastructure
- Port, harbor and sea defense construction
- Infrastructure projects (roads/railways)
- Power station construction (including thermal, and hydro)
- Manufacture, use, or disposal of large quantities of pesticides and herbicides
- Manufacture, transportation and use of hazardous and/or toxic chemicals
- Domestic and hazardous waste disposal operations
- Cement manufacture Municipal waste water treatment plants, and solid waste processing plants
- Institutional lenders[1]

2) Social

Sectors engaged in:

- Construction of dams or reservoirs
- Agro-industries
- Industrial operations/manufacturing
- Extractive industries
- Human resettlement with impacts on local communities
- Industries that affect customary/tribal populations/lands
- Manufacture, use or disposal of environmentally significant quantities of pesticides and herbicides
- Manufacture, transportation and use of hazardous and/or toxic materials
- Domestic and hazardous waste disposal
- Any projects which pose serious health and safety risks
- Any projects which pose serious socio-economic concerns
- Production or activities that impinge on the lands owned, or claimed under adjudication as Adat Lands, by local communities, and or subject to ongoing significant conflict without full documented consent of such peoples
- Institutional lenders

3) Corporate Governance

Sectors engaged in:

- Contracts, including with public sector entities or the government, such as: Construction, Public works, Real estate and property development, Oil and gas, and/or Mining

- Companies with significant state ownership interests
- Privatizations; and/or investments which involve Politically Exposed Persons (PEPs)
- Institutional lenders

** The Indonesia Corporate Governance Manual. 1st Edition 2014, as issued by the Otoritas Jasa Keuangan (OJK) Indonesia.

 

Due diligence questions used to assess the viability of high risk investments are broad based and dependent on each particular context. At a minimum we check for the following:

- Non-compliance with applicable local laws and International conventions for which Indonesia is a signatory;
- Overarching policy noting commitment to improvements with respect to management of the Environment, Social factors and Governance; and
- Have identified management strategies which address ESG risks and realize ESG opportunities as part of the company’s policy.

ESG analysis will initially be addressed when decisions are made on our investment universe. On-going monitoring and engagement, through voting, on companies will be conducted to ensure ESG risks and opportunities haven’t changed over time.

Notes: [1] Institutional lenders shall have lending policies evaluated to determine if Environment, Social and or Governance matters are integrated in to risk management for loan portfolio management, and origination. 


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.

05.4. Indicate how frequently you review internal research that builds your ESG screens.

05.5. Additional information. [Optional]


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
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.

09.4. 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

New selection options have been added to this indicator. Please review your prefilled responses carefully.

10.1. Indicate which aspects of investment analysis you integrate material ESG information into.

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

10.2. Indicate which methods are part of your process to integrate ESG information into fair value/fundamental analysis.

          We allocate and evaluate higher/lower valuation multiple on each company.
        

10.3. Describe how you integrate ESG information into portfolio weighting.

ESG analysis will initially be addressed when decisions are made on our investment universe. Therefore, our portfolio managers are only allowed to construct the portfolios around this investment universe.

10.4. Describe the methods you have used to adjust the income forecast/valuation tool.

We appreciate companies that have better ESG compliance by giving higher valuation multiple.

10.6. Additional information. [OPTIONAL]

We have our macro indicator estimates (inflation, currency, GDP growth, interest rate, forex reserve) as fundamental benchmark to assess current market risk. Any significant movement of the macro indicators from their fundamentals becomes a trigger for Portfolio Managers to conduct sector and portfolio rebalancing.

In addition, on a daily basis we monitor any movement in commodity price, currency, NDF, Indonesian ETF movement, CDS, etc. We also monitor valuation matrix on weekly basis for all stocks in our universe.

We do stress test and/or scenario analysis on currency and oil price movement.


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