CI Investments incorporates ESG factors into our investment strategies through ESG integration and exclusionary screening (in the case of anti-personnel landmines and cluster munitions).
Each quarter, CI Investments' third-party ESG research and data provider, Sustainalytics, provides a list of companies who participate in activities that are deemed to be essential to the proper manufacturing, functioning and use of anti-personnel landmines and cluster munitions. This list is provided to all in-house portfolio management teams as well as external sub-advisors by CI Investments' Compliance Department. These companies are also hardwired into CI Investments' pre-trade system, Charles River, meaning that any trades of these securities are restricted. CI Investments' external subadvisors are required to hard wire the companies into their pre-trades systems. Any security holdings on this list, if held, are required to be divested immediately.
Anti-personnel landmines and cluster munitions were specifically selected as investment exclusions in recognition of the prohibitions contained within the United Nations Anti-Personnel Landmines Convention and the United Nations Convention on Cluster Munitions.
CI Investments' in-house portfolio management teams - Signature Global Asset Management, Cambridge Global Asset Management, Harbour Advisors, Sentry Investments, CI First Asset Investment Management and CI Multi-Asset Management - consider ESG factors alongside financial factors in their decision-making processes. We have established set of minimum ESG ranking criteria to guide our portfolio managers in this process; these are based on Sustainalytics' company ESG risk ratings:
- Company is involved in severe and/or very severe controversies
- Company is assessed as having a high or severe degree of ESG risk
- Company is ranked within the bottom 25th percentile in terms of ESG risk
CI Investments views these criteria as indicative of material factors for an investment decision. Controversies can be a strong indicator of a company's performance and preparedness in a given area. The combination of the degree of ESG risk and a company's percentile score provides an indication provides an indication of the ESG performance of a company, both from an absolute and relative perspective.
CI Investments' Responsible Investment Team has also worked collaboratively with each in-house Portfolio Management Team to establish materiality thresholds, based on the weighting of a particular security or issuer within a given fund.
Each quarter, CI Investments' Responsible Investment Analyst provides each in-house portfolio manager with a customized ESG portfolio screen of their managed funds. The screens include the following information:
- Security holding names
- Holdings' overall ESG risk rating
- Holdings' ESG risk percentile score
- Holding's highest controversy level
- Security weighting in the fund
Any holdings that do not meet the minimum ESG ranking criteria listed above are flagged for each portfolio manager by the Responsible Investment Analyst. If the holding is deemed to be material, as identified by the pre-determined materiality thresholds of each Portfolio Management Team, a review and documentation process is triggeredwhere the portfolio manager is required to review material companies' ESG performance, risks and opportunities using Sustainalytics' online research platform. Following review, each portfolio manager must document their findings and conclusions and share this with his or her portfolio management team through Bloomberg. There is no sharing across different portfolio management teams. The review and documentation process is monitored by CI's Responsible Investment Team and Compliance Department.
To support the ongoing integration of ESG factors into the investment decision-making process, overall ESG risk ratings, ESG risk percentile scores and highest controversy levels are available for all in-house portfolio management teams through Bloomberg so that they may view ESG data in conjunction with financial metrics. In addition, CI Investments' Responsible Investment Analyst is available to all in-house portfolio managers and analysts for on-demand support and guidance.
CI Investments elected to incorporate ESG factors by way of integration alongside financial factors due to the belief that this method offers the greatest ability to reduce risk and better asses growth potential and future stock performance. This is aligned with CI Investments' objectives of achieving the best risk-adjusted returns for our funds.