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Boston Trust Walden

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

Exclusionary ESG Screening

While ESG integration is systematically employed across investment strategies, some clients have specific ESG objectives for their portfolios. Boston Trust Walden works with clients to translate their ESG priorities into individually tailored investment portfolios. We have over four decades of experience building portfolios to meet values-based objectives.

We achieve this in three ways:

1. Products & Services Assessment. We exclude companies that generate a certain threshold of revenues from, or are market leaders in, prohibited products and services. 

2. ESG Performance Analysis. One of the core strengths of our in-house team is its ability to assess company performance beyond standard screens. Our analysts seek to understand the company's products and services and evaluate overall performance in four broad categories: corporate governance, human capital management, and environmental and community impacts. Analysts assess performance trends relative to established goals, performance relative to peers, accountability and disclosure, and impacts on stakeholders.

3. Unique Client Guidelines. When meeting with clients, we seek to understand and prioritize their ESG objectives and build a portfolio that meets their criteria. Thoughtful portfolio management is a hallmark of our approach. 

Screened by

Description

See response above. Additional information available on our website at https://www.bostontrustwalden.com/investment-services/impact-investing/.

Screened by

Description

ESG research and analysis at Boston Trust Walden incorporates information on corporate performance relative to internationally accepted/endorsed norms, such as those identified above. Another example is the International Organization for Standardization (ISO Standards), which identifies best practice management standards related to product quality, environmental practices, and corporate responsibility, among other issues.

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

Boston Trust Walden communicates regularly with clients regarding ESG research and screening through periodic written communications (e.g., quarterly reporting, annual impact report) and in-person or telephone meetings. Significant changes are typically made in consultation with clients. Furthermore, we work with our clients to prioritize their ESG objectives and translate them into individually tailored investment guidelines.


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]

Responses to previous questions in the LEI section address many of the points above regarding the assurance of a comprehensive and robust ESG analysis. A few additional points include:

  • Approval of a company on ESG performance requires several steps, with the Director of ESG Investing assuming oversight responsibility. First, recommendations of the ESG analyst incorporate input from consultation with the traditional securities analyst presenting the company for approval. Next, two portfolio managers not directly involved in the ESG research process generally affirm the ESG recommendation, which sometimes leads to additional explanation or research. Finally, companies are approved for purchase, both financially and on ESG characteristics, at weekly meetings of the Investment Committee.
  • The ESG team often communicates directly with companies under consideration for purchase or through engagement with existing portfolio companies on significant ESG matters. In these instances, companies have the opportunity to respond to our ESG assessments.
  • Through internal research, in-house ESG analysts sometimes uncover information inconsistent with representations of independent ESG research providers. In such cases, our ESG analysts usually inform the independent research provider, especially when differences are factual as opposed to judgment calls.
  • The Manager of ESG Integration developed a database, the "ESG Risk Register," that specifically identifies potentially material ESG risks and opportunities for portfolio companies and those reviewed for potential inclusion, enabling systematic review and analysis of the types of risks analysts are identifying across sectors, market cap, etc. 
  • Monitoring ESG practices and performance is ongoing and systematic, including reviews that coincide with a company's financial performance review conducted by traditional securities analysts.

LEI 06. Processes to ensure fund criteria are not breached

06.1. Indicate which processes your organisation uses to ensure fund criteria are not breached.

06.2. If breaches of fund screening criteria are identified, describe the process followed to correct those breaches.

Boston Trust Walden has developed robust compliance procedures to minimize the possibility of breaches in client portfolios. These include both systems-based and manual controls to ensure compliance with portfolio guidelines. Manual controls include weekly team meetings and quarterly formal reviews of strategy by the Investment Committee. Additionally, regular reviews are conducted for prohibited products and services (for clients with screens) and company ESG-related controversies (for all clients). Systems-based controls to assure portfolio conformity to client and strategy guidelines are implemented using Rules Manager (an Advent software product) and trade restrictions.

If a portfolio is found to hold a prohibited security, or if a company's status changed such that it is determined to be an inappropriate holding (e.g., through merger or acquisition), the security is sold in a prudent and timely manner to minimize any potential negative portfolio impact. (Client tax circumstances and specific objectives may override a narrowly-focused investment-based decision to sell.) Furthermore, the situation that led to the breach is analyzed to determine its cause in order to adjust, if necessary, ongoing monitoring and compliance processes. Finally, as appropriate, breaches are disclosed to affected parties.

06.3. Additional information. [Optional]


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