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PRI reporting framework 2020

You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes


LEI 01. Percentage of each incorporation strategy

01.1. 以下を記載してください。(1)組織でのアクティブ運用上場株式にどのESG組み入れ戦略や組み合わせを使用しているか(2)アクティブ運用している上場株式の戦略または戦略の組み合わせ別内訳

ESG組み入れ戦略 (当てはまるものをすべてお選びください)
アクティブ運用される上場株式に戦略が適用される割合 (推定 +/- 5%)
100 %
アクティブ運用している上場株式の合計 300%

01.2. 組織が実施しているESG組み入れアプローチ、および、特定のESG組み入れ戦略を選択している場合はその理由を説明してください。

Our analysts perform their own proprietary ESG research. This includes information from conversations with management, and from a company’s annual and sustainability/CSR reports.  Our most critical ESG information comes from our on-the-ground immersions research, and from the ethnographers with whom we collaborate.  We also receive governance information and recommendations from Institutional Shareholder Services Inc. (ISS).

Before an analyst proceed to detail analysis, they will screen out any companies that they believe their ESG risks are not quantifiable

We believe that investors should be compensated for all risks and not just operational risk. Therefore, ESG integration is critical to any methodology which aims to measure risk-adjusted returns.

All risks are given a qualitative score which is translated into a proprietary forward-looking beta. The beta feeds into a cost of equity calculation, which determines risk-adjusted returns.

The team uses a pre-mortem process to identify and quantify the risks that the company faces. The team imaginatively projects itself three years into the future and assumes that the company has had no growth in earnings. We work backwards to identify the risks that could have caused this future event. Every risk is rated from 1-10 based on 3 factors:

1.  How much is the risk priced in?

2.  How materially can the risk affect earnings?

3.  What is the probability that the risk materialises?

The top 10 risks are then classified into 4 different categories (Strategic, Operational, Financial, ESG). The weighting is therefore not fixed across the universe of stocks, but rather is driven by the size and number of ESG risks that we perceive in each company. When considering ESG from a risk perspective, it is the risk score that dictates the impact on expected risk-adjusted returns more than the timing.

We engage with management on the strategic, operational, financial and ESG risks that the company faces. During our discussions we try to ascertain whether our estimates of probability and materiality for each risk concurs with those of management. We try to understand whether the company's own Internal Audit function has identified these risks, as well as any processes that they have put in place to monitor and control them. We use this opportunity to ask management to bring to their Internal Audit's attention risks that we believe should be included in their risk assessment.

We have adopted this strategy because failure to monitor and control risks increases the overall level of risk, and therefore the cost of equity of a company, reducing risk-adjusted returns to our clients. If we believe that risk-adjusted returns can be improved through better risk management, we are prepared to escalate our action.  We explain to management what the impact will be in terms of improvement in their cost of equity if they address specific ESG risks. We highlight to management whose ESG risk control is better than for their peers the positive impact in terms of reduced cost of equity.

Investment decisions also follow the rationale of higher risk scores leading to higher cost of equity, which in turn leads to lower expected risk-adjusted returns. This is at the core of our philosophy. 

01.3. ESG組み入れ戦略の組み合わせを使用して資産を運用している場合、ESG戦略の組み合わせをどのように使用しているかを簡単に説明してください。 [任意]

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) 実施:スクリーニング

LEI 04. Types of screening applied

04.1. 組織内でアクティブ運用している上場株式に適用するスクリーニングの種類を記載し、説明してください。



          We will screen out companies that are engaging in practices we cannot assess the likelihood and impact of the ESG risk materialising


Every company before Bottom up work can commence has to be able to assess if all the ESG risks are quantifiable in as such they are able to assess the likelihood and impact of a risk materialising. 

04.2. スクリーニング基準が変更された場合に顧客や受益者に通知する方法について説明してください。

This process is disclosed in our prospectus for the fund and a change in this process would require a prospectus change.

LEI 05. Processes to ensure screening is based on robust analysis

05.1. スクリーニングが徹底した分析に基づいていることを確実にするために、組織が使用しているプロセスを選択してください。

05.2. ESGスクリーニング戦略の一環で包括的なESG調査の対象となるアクティブ上場株式ポートフォリオの割合を示してください。

05.5. 補足情報 [任意]

LEI 06. Processes to ensure fund criteria are not breached (Private)

B) 実施:テーマ

LEI 07. Types of sustainability thematic funds/mandates

07.1. 組織が運用している、サステナビリティをテーマとするファンドやマンデートの種類を記載してください。

07.2. 組織でのサステナビリティをテーマとしたファンドのプロセスについて説明してください。 [任意]

We run a single investment strategy, and sustainability is an explicitly prominent consideration within the strategy.  The strategy's starting point is Immersions research, or ethnographic studies.  We aim to use the research to identify and refine a number of themes that we believe will face long-term growth, and can provide opportunities for sustainable investment.

Before every Immersions visit in a country we try to understand a range of commonly-held beliefs about that country. When we are on the ground we try to either prove them or debunk them. Debunking myths that apply to EMs allows us to identify investable themes that are not fully priced in. There are 7 themes in the portfolio that aim to solve social and/or environmental problems faced by consumers in EMs and which will have a positive impact in their lives:

Next Billion

There are 5 billion people at the bottom of the social pyramid. Some of them are the most driven and aspirational consumers, who despite having a higher rate of income growth than their middle-class counterparts, remain largely underserved. Companies that produce great value-for-money products, that can capture these demanding consumers at the bottom of the pyramid, can disrupt the whole pyramid above them.


These are among the most driven consumers who are willing to uproot themselves, striving for a better future for themselves and for their families.

Shifting Values

Values have predictive and explanatory potential at both the individual and societal levels, as they influence the speed and direction of social change. When values shift, consumption patterns change, creating investment opportunities.

Women Effect

Patriarchal societies are fading in EMs. Electrification is driving a quiet revolution, where women are moving to the centre of the family. They still take care of the family, but also earn an income which allows for upgrading of the family living standards. Women think more long-term and focus on education, savings, and insurance.

One Youth

When we started Immersions six years ago, youth was segmented by social class. Knowledge and trend-sharing through smartphones and social media are now making the process more inclusive, and are turning youth into a homogeneous group


Although life is our most precious commodity, many view longer life spans as a key demographic headwind. In contrast, we believe that longevity is a tailwind as countries capture the economic payback to societies from extending the productive life of individuals. This is particularly true in EMs where limited social safety nets push people to extend their healthy productive lives.

Health & Wellness

Health trends are accelerating in EM as health is viewed as a symbol of progress and an enabler of achievement – the need to stay healthy to cope with a highly competitive environment. 

C) 実施: 統合

LEI 08. Review ESG issues while researching companies/sectors

08.1. E・S・Gの各要因が投資分析の一環として体系的に調査されている、アクティブ運用の上場株式ポートフォリオの割合を記載してください。








08.2. 補足情報 [任意]

ESG factors are thoroughly considered and definitively incorporated into the investment decision for each investment that we make.

LEI 09. Processes to ensure integration is based on robust analysis

09.1. ESG統合が徹底した分析に基づいていることを確実にするために、組織が使用しているプロセスを記載してください。

          ESG is crucial to our risk-scoring process, feeding into cost of capital, hence valuation decisions. We ensure we are paid to take risk.

09.2. 組織の統合戦略の一環で包括的ESG調査の対象になるアクティブ運用上場株式の割合を記載してください。

09.4. ESG統合戦略に使われる組織内調査を見直す頻度を示してください。

09.5. ポートフォリオ・マネージャーがどのようにしてESG情報を保有し、使っているのか説明してください。

09.6. 補足情報 [任意]

The following is a summary of the process whereby ESG and other risks are assessed and quantified by the analysts and the team.

  1. The analyst considers the top 10 risk out of all possible risks, scoring each risk (out of 10) for 3 parameters: probability, materiality, and the extent to which the potential impact is priced into the stock price.  The risks are colour-coded according to 4 categories: financial; ESG (environmental, social and governance); operational; and strategic.)
  2. During the stock review, half of which is devoted to discussion of risk, each team member independently scores his or her own top 10 risks.
  3. The team comes together, lead by the analyst, to discuss each risk, placing Post-it notes on a wall-drawn matrix corresponding to the assigned scores, discussing score differences.
  4. The analyst considers new risk ideas to replace his or her preconceived ones, and chooses whether to adjust scores for other risks based on feedback from colleagues.
  5. The revised risk score, equivalent to a beta, drives a cost of capital calculation (Ke) which intern drives a risk-adjusted return calculation (IRR-Ke)

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