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Railways Pension Trustee Company Limited

PRI reporting framework 2020

You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes » (A) Implementation: Screening

(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

In 2019, we implemented exclusions on certain companies on the grounds of climate risk, cluster munitions and governance and conduct.

As a step to managing climate risk in our portfolios, we have divested from companies which derive greater than 30% of their revenues from the thermal coal and tar sands sectors. We also excluded companies on the grounds of poor governance and conduct from our equity portfolios. Our view of governance risk takes into account local market and sector norms. Companies may be excluded for their conduct in relation to bribery and corruption, human rights, labour relations or environmental issues.

We continue to exclude companies that are involved in the production of cluster munitions and land mines.

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

The exclusion lists are signed off by the Railpen Investments Board. We communicate our approach to exclusions in our annual Sustainable Ownership report, which is published on our website: https://www.rpmirailpen.co.uk/wp-content/uploads/2018/05/Sustainable-Ownership-Report-2019.pdf

A summary of this report is also communicated to members in a newsletter.


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.

05.3. Indicate how frequently third party ESG ratings are updated for screening purposes.

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

05.5. Additional information. [Optional]

We use third-party research for our initial screening for the cluster munitions and land mines, climate and governance and conduct exclusions. We review our ESG research providers at least annually, and receive regular updated data feeds. All exclusion lists are reviewed and updated annually.

For cluster munitions and land mines, all companies identified in the third-party screen were reviewed by a member of the Sustainable Ownership team, and checked by the Head of Sustainable Ownership. In cases where the involvement was not clear, we contacted the data provider to verify, and also cross-check the list against other publicly available exclusion lists. Additional research may also be carried out internally.

For the climate exclusion list, all companies identified in the screening process were notified in writing that they had been identified as deriving more than 30% of their revenues from thermal coal and/or tar sands, and were given time to respond and verify the revenue assessment. Where companies provided information in the public domain that disputed the research provider’s data, we updated the exclusion list.

For governance and conduct, all companies identified in the screen underwent a qualitative review by a member of the Sustainable Ownership team. All qualitative analyses were reviewed within the team and the most significant received a letter asking for dialogue on governance and sustainability practices. Following the engagement, the team identified which companies to place on an exclusion list.

All exclusion lists were reviewed and signed off by the Railpen Investments Board. Following this, the exclusion lists were added to our internal trading platform.


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


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