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Epoch Investment Partners, Inc

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%
95 %
Percentage of active listed equity to which the strategy is applied — you may estimate +/- 5%
05 %
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.

The core tenets of Epoch's ESG Policy are set out below:

PURPOSE:

Should enhance the pursuit of positive, risk-adjusted returns to our clients (i.e., positive information ratio)

BELIEFS:

Cash flow and the effective allocation of free cash flow drives long-term value creation. 
Successful capital allocation requires good corporate governance. Additional factors, including social and environmental issues will increasingly affect return and risk.
Broadening of investment lens ensures consideration of ESG-related factors impacting returns and risk.
Identify and inform management of identifiable ESG issues that may affect returns on capital.

PRINCIPLES:

Relevance, materiality, and timeliness of ESG factors vary by industry and company.
Review ESG factors deemed to be relevant and material to returns or risk.
Integrate ESG assumptions into investment process.
Encourage companies in which we invest to address ESG-related issues believed to impact returns or risk.
Provide evidence of ESG-related factors in investment decision-making.

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

Approximately 5% of assets are managed in line with client requests to screen tobacco and munitions.


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 currently manage restricted portfolios for a number of clients based on their exclusions, which include, for example,Tobacco and/or Cluster Munitions.

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

Changes to screening criteria are typically directed by the client.


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.

          Epoch uses a combination of client lists and S&P GICS sectors.
        

05.5. Additional information. [Optional]

Screening is currently client-directed and refers only to the exclusion of tobacco and cluster munitions in select portfolios. Clients provide lists of cluster munitions-linked securities to avoid. For tobacco, Epoch uses a combination of client lists and GICS industry codes from S&P to screen tobacco-linked securities. Our trading system, Charles River, prevents these securities from being traded in the relevant portfolios. Any attempt to trade these securities generates an alert during a pre-trade compliance check. These alerts can only be overriden by Epoch's Compliance team. 


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]

In the reporting period, Epoch's ESG research focused primarily on governance and climate issues. In the future, it is expected that all material ESG factors will be considered in the investment analysis. 


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]

On a quarterly basis, Epoch assesses key contributors to the carbon footprint of specific portfolios. The ESG team prepares detailed research reports prior to engaging with companies who are key contributors. The research from MSCI (updated on a rolling basis) and other data providers is another input into this process. This research, along with meeting notes, is circulated to PMs/analysts directly and made available through the firm's Research Management System. 


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


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