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First Sentier Investors (including First State Investments)

PRI reporting framework 2020

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Communication

INF 19. Approach to disclosing ESG incidents

19.1. Describe your organisation’s approach to disclosing ESG incidents in infrastructure investments to your investor clients.

Our approach to disclosing ESG incidents is underpinned by three main principles:

  • Full transparency. ESG incidents (e.g. accidents, pollutions) do occasionally occur and we believe it is in everyone’s interest to openly discuss the issues and address them in full transparency.  
  • Focusing on root causes. The most effective way of preventing ESG incidents to occur again is by ensuring that the root causes of the problems have been fixed rather than merely dealing with the symptoms.
  • Regular communication updates. We believe it is important to keep our investors updated very egularly about issues and progresses. We describe below the multiple regular and ad-hoc communications we use to update our investors.   

We have three regular methods for communicating and disclosing to our clients around ESG issues, initiatives and incidents.

  • Firstly, our regular quarterly fund reports always include ESG issues and progress on SDGs.  We also review initiatives in the relevant asset section or fund section of the report.
  • Secondly, the team also produces an annual ESG Report, based around the investee companies in the portfolios of its co-mingled funds. This ESG Report provides an update on our general approach to managing ESG issues, and then goes into more detail on specific ESG issues, outcomes and case studies for each of the portfolio companies.
  • Thirdly, during our Annual Investor Meetings ("AIM") we report on a regular basis on our approach to ESG and the progress being made in the implementation of all our initiatives on a portfolio company level. The AIMs will include a dedicated ESG section, as well as ESG highlights for each investee company.

In addition to scheduled communications, there are many ad hoc communications with investors

  • Any ESG incidents at an investee company that have a material impact on the investment performance of a particular company are reported to clients immediately if they are significantly material, otherwise they are reported within the normal quarterly reporting cycle. If the particular issue has the potential to involve media attention or significant community or regulatory attention (even if it has low financial impact) then the shareholders and investors will be notified. As Board members we are also included into the incident reporting procedures of the respective companies.  Shareholders are provided with a brief overview of the issue as it arises and this is then followed up with a more detailed analysis (including any impact on the financial performance of the asset) when that detail is made available from the management team of the company. Full coverage of the issue is then provided in the next quarterly report to ensure investors are fully aware of the issue, the reasons it arose and the impact it has had on the business (financially and otherwise) and measures undertaken to mitigate or prevent reoccurrences of the incident.
  • Many of our investee companies also publish reports on sustainability, environmental performance and other relevant issues. These reports are available publicly on the corporate websites. These may include standalone sustainability reporting, as well integrated financial reporting.
  • Investors also occasionally request briefings on issues that arise on a case by case basis and we also prepare specific topical briefing papers on issues, even if they won't have a material impact on the business.
  • We provide regular specific responses to investor questionnaires on ESG
  • We also provide regular firm-wide specific ESG reporting to our investor clients, such as the firm-wide global Responsible Investment & Stewardship Report, to which the Infrastructure Investments team contributes:

https://www.firstsentierinvestors.com.au/au/en/institutional/responsible-investment/responsible-investment-reports-and-policies.html


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