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Capital Group

PRI reporting framework 2020

You are in Strategy and Governance » Governance and human resources

Governance and human resources

SG 07. RI roles and responsibilities

07.1. Indicate the internal and/or external roles used by your organisation, and indicate for each whether they have oversight and/or implementation responsibilities for responsible investment.

Roles

Select from the below internal roles

          Legal Counsel, Head of ESG
        

Other description (1)

          Investment Specialists
        

07.2. For the roles for which you have RI oversight/accountability or implementation responsibilities, indicate how you execute these responsibilities.

ESG Oversight Group (previously named as ESG Strategy Group): comprises of 10 senior leaders, including the Global Head of ESG, Chairman of the Investment Group, senior Portfolio Managers and Analysts, Legal, Quantitative Research, Government Relations, Product Development and Distribution teams. This group, which reports directly to the Capital Group Management Committee and meets on a monthly basis, sets strategic direction and oversight for Capital Group's ESG agenda and key ESG priorities. Three members of the ESG Oversight Group are also the board members of Capital and two are members of the Capital Group Management Committee.

Investment Group: Capital Group’s approach is to incorporate ESG risks and opportunities into investment decisions. Our team of more than 200 in-house equity and fixed income analysts and 100 portfolio managers are responsible for evaluating all relevant financial and non-financial factors – including ESG issues – as part of their fundamental research in order to generate long-term value, weighing risks in the context of the sector and geographical focus of their investments.

To develop a holistic long-term perspective, our analysts and portfolio managers make 12,000+ company visits each year. These regular meetings with management allow engagement and discussion on issues relevant to the long-term value of a company. ESG issues are an important and natural part of this ongoing dialogue; management's understanding of environmental, social and governance issues is a vital aspect of our analytical process. A firm's efforts to both minimize risks and also seize new business opportunities related to society's changing expectations help shape our investment decisions. We believe management's ESG policies can affect a firm's reputation and license to operate, its ability to attract and retain talent, its prospects for working effectively with stakeholders and regulators, and its long-term growth outlook.

We also take a thoughtful approach to proxy voting in this context. When evaluating proposals relating to ESG issues, we assess the specific circumstances at each firm, the company’s current policies, and the long-term impact.

Our research analysts provide the voting recommendations to the proxy committees. Their experience and in-depth knowledge of each company and their sectors enables them to factor in particular relevant circumstances and any idiosyncratic characteristics into the voting recommendations. This ensures that our voting decisions are in line with our overall long-term investment thesis and forms part of our ongoing engagement and interaction with the company. The intimate involvement of the investment group in the voting process enables them to explain and discuss our voting position with company management and the non-executive board, this access broadens our understanding of the business ensures our voting decisions are integrated closely with our wider company engagement.

The proxy voting committee is comprised primarily of investment professionals and Legal, bringing a wide range of experience and views to bear on each voting decision. Our proxy voting committees, delineated by geographical region, are responsible for overseeing proxy voting, globally. 

RI staff: Our investment group is assisted and supported by:

  • ESG team: is responsible for driving the implementation of ESG initiatives across Capital. The global ESG Team works with our investment professionals and supports the integration of ESG factors into our investment process. ESG Team members have expertise in research, sustainable investing and issuer engagement.
  • Governance and Proxy team: assists our investment professionals in executing our stewardship activities. Its main duties include: voting at company meetings in every market on behalf of our clients, monitoring and assisting our investment professionals with engagement work on governance or proxy voting-related issues and developing – in conjunction with the proxy committees – our voting guidelines.

07.3. Indicate the number of dedicated responsible investment staff your organisation has.

36 Number

07.4. Additional information. [Optional]


SG 07 CC. Climate-issues roles and responsibilities

07.5 CC. Indicate the roles in the organisation that have oversight, accountability and/or management responsibilities for climate-related issues.

Board members or trustees

Chief Executive Officer (CEO), Chief Investment Officer (CIO), Chief Risk Officer (CRO), Investment Committee

Other Chief-level staff or heads of departments

Portfolio managers

Investment analysts

Dedicated responsible investment staff

External managers or service providers

Other role, specify (1)

          Investment Specialists
        

07.6 CC. For board-level roles that have climate-related issue oversight/accountability or implementation responsibilities, indicate how these responsibilities are executed.

Capital Group has a well-established governance structure that is led by the board of directors. The board provides general oversights of the company, reviews financial results and progress against our business objectives. Members of the Capital Group Management Committee serve as permanent directors and are joined by senior associates who serve on a rotational basis. The Management Committee is responsible for setting and communicating Capital’s overall business strategy.

The ESG Oversight Group, reporting to the Management Committee, sets strategic direction and oversight for ESG agenda and key ESG priorities including climate-related issues. Three board members are on the ESG Oversight Group. The board gets updates on ESG strategy and implementation including climate related matters at its regular board meetings.

Capital's Vice Chairman, Robert W. Lovelace is a member of the SASB's Investor Advisory Group that comprises leading asset owners and asset managers who recognize the need for consistent, comparable and reliable disclosure of material and decision-useful ESG information. TCFD's Implementation Guide extensively references the SASB Standards as a tool for implementing TCFD Recommendations.

07.7 CC. For management-level roles that assess and manage climate-related issues, provide further information on the structure and processes involved.

Ten senior leaders comprise the ESG Oversight Group that reports regularly to the Management Committee on ESG matters and policy evolution including climate related issues/ policies.

All members of the ESG Oversight Group are participants on the ESG knowledge sharing distribution list and take part in the bi-monthly ESG sector calls with investment analysts.


SG 08. RI in performance management, reward and/or personal development

08.1. Indicate if your organisation’s performance management, reward and/or personal development processes have a responsible investment element.

Board members/Board of trustees

08.1b. RI in personal development and/or training plan

08.2. Describe any activities undertaken during the reporting year to develop and maintain Board members’ skills and knowledge in relation to responsible investment.

The Capital Group Management Committee defines the Capital’s long-term strategy which specifically identifies ESG as a key tenet of our long-term strategy. This was approved by the board, who is now partnering with the Management Committee to ensure effective execution of this strategy. This naturally requires periodical updates and engagement on topic of ESG.

Three board members of Capital are also on the ESG Oversight Group and have been actively involved in setting  strategic direction and oversight for ESG agenda and key ESG priorities.  

Chief Executive Officer (CEO), Chief Investment Officer (CIO), Chief Operating Officer (COO), Investment Committee

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Other C-level staff or head of department

          Legal Counsel, Head of ESG
        

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Portfolio managers

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Investment analysts

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Dedicated responsible investment staff

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Other role (1) [from SG 07]

          Investment Specialists
        

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

08.3. Provide any additional information on your organisation’s performance management, reward and/or personal development processes in relation to responsible investment.

Performance assessment reflects all areas of the investment process and stewardship. We do not separate responsible investing into an isolated category.


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