We recognise that we need to consider how best we can take account of governance, social and environmental issues within our owned asset and our investment portfolios, and how we can incorporate them into our investment analysis and decision-making processes. We also recognise that these issues are becoming more prominent for a number of our stakeholders.
As required by principle 1, we expect our asset managers to incorporate ESG into the core investment processes via the equity and fixed interest teams, which support the Sanlam Investment businesses with model portfolio building blocks.
In the equities team, ESG scoring is incorporated into both the equities research and portfolio construction processes. We have developed our own ESG scores and are in the process of incorporating them into our equity research process. Our internal scores are compared with those of the external service provider for interpretation and analysis. Interpretation is required because, for example, the materiality of ESG factors varies between sectors. ESG scoring highlights areas for further analysis and enhances the research process. Scores are used implicitly as screening tools in the construction process, to mitigate risk. The investment horizon is broadened and extended as a result.
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