We believe securities are mispriced by the market due to a variety of factors. ESG factors are among those potentially contributing to the mispricing of companies by the market. We therefore consider ESG issues alongside financial measures in order to develop a more complete view of the risk/return characteristics of companies, specifically property security investments listed on the Australian Stock Exchange.
We developed a proprietary framework (in conjunction with ESG consultant Regnan - Governance Research and Engagement Pty Limited) to assist in highlighting potentially material ESG issues for each security, and allowing us to examine the available evidence in greater detail as part of our bottom up analysis process. This allows us to integrate our assessment of ESG factors into our qualitative risk metrics.
ESG factors are analysed by the two portfolio managers (who are also Directors of Renaissance Property Securities) via engagement with target investment companies and by subscribing to ISS reports containing ESG scores and commentary on individual companies.