We have joined regular calls with each of our units to share our ESG Strategy, Vision and expectations of all analysts and portfolio managers. We are systematically asking all analysts and portfolio managers to create sector specific research frameworks informed by but not limited to SASB.

In parallel, on a fund by fund basis we are rolling out our ESG Integration Process whereby analysts and portfolio managers systematically screen all holdings for ESG considerations, document the highest risk holdings and escalate as appropriate. Our ESG Integration process is designed by the Investment Group for the Investment Group, sponsored by Vice Chairman Robert W. Lovelace, and co-led by an Equity Analyst and Fixed Income Analyst. We have 15 ESG Captains representing each of the investment units in the rollout, playing an active role by encouraging participation, providing supports and guidance on calibration/data input, as well as contributing ESG research views.

In addition, we hosted a "New Energy" day in London to engage with energy firms, data providers, and industry observers. Our analysts and portfolio managers were gathered to explore different perspectives on the energy transition and emerging trends in renewables.

Our analysts and portfolio managers often meet company management as part of their fundamental research process. The meetings provide them with insights into management quality, business drivers and the strategies of the companies in which they invest in. These meetings also allow analysts and portfolio managers to assess the ESG risks and opportunities exposed by the companies. The ESG team and/or Governance and Proxy team may also participate in company meetings alongside the analysts and portfolio managers. Training on ESG engagement may be provided prior to company meetings.

While our integrated approach to ESG is not new, we formally established a dedicated ESG Team in September 2019, bringing together our internal expertise to form a dedicated unit focused on the integration of ESG issues into our investment process and communicating effectively with stakeholders. We are actively expanding the team to include dedicated analysts, data scientists, software engineers – as we build out a systematized ESG integration process.

The ESG team organizes bi-monthly ESG calls, focused on specific sectors and themes, in which analysts can confront their forward-looking views and share examples of ESG integration with members of Distribution, Legal, and Governance and Proxy team. The team also conducted several ESG Explained sessions for the investment group and different business units to help them better understand the main ESG-specific terms, the purpose of ESG-related bodies and the complexity of ESG data.

An internal platform has been built to share educational research articles on ESG-related topics, with the aim to further develop ESG competency across groups over time.

ESG is integrated into our client facing materials and is a consistent and natural part of client conversations. We conduct bi monthly sector based analyst discussions on ESG issues and publish quarterly ESG insights to our clients.  We support greater disclosure of environmental-related information, as such information can help us better assess the long-term value of a company. We also support governance proposals that protect the shareholder rights of our clients. Capital is an Alliance member of the Sustainability Accounting Standards Board (SASB), with participation in the Investment Advisory Group (IAG). One of our senior PMs is the Vice Chairman of the ACGA. We support efforts by these and many other organisations to set standards for governance and reporting of ESG information.

We have successfully piloted and expanded our norms-based screening process in fixed income. Our ‘screen and engage’ pilot screens our entire corporate universe against the ten principles set out in the UN Global Compact, flagging any companies that were in breach of, or are considered to be in danger of breaching one of the principles. This data is integrated into our compliance and risk management systems including Aladdin. Analysts responsible for securities within our Luxembourg-domiciled global, US and Europe corporate bond funds, are now able to systematically access this data point, alongside traditional financial data points. These additional data points are analysed, evaluated and interrogated, like any other, in order to form a forward-looking view on the outlook of the company in question, and help guide conversation with management.

The screen uses reported and historical-looking data, meaning that usually analysts are already fully aware of the issue and have often already had extensive discussions with management.

While we use one data source (MSCI) to screen the universe, we also use other research providers (e.g. ISS) to inform our ESG perspective on an issuer. We are using these insights to inform our ESG Integration Process being rolled out in 2020.

An in-house corporate access team was established in early 2019. The team has developed tools for capturing and tracking engagement activities more systematically and effectively.

Ongoing

Ongoing

We hosted the SASB IAG semi-annual in person meeting in London. We also attended the following conferences and shared takeaways within the organisation:

• PRI in Person in Paris
• the PRI sustainable finance policy summit in DC
• ICGN Fall Conference in Miami
• CII Fall Conference in Minneapolis

We are active participants in many organisations and contribute by speaking at and attending events as detailed later on.

Update clients on best practices as illustrated by analysts engagement activities with companies.

We distribute a quarterly integration and engagement report to our clients detailing activity undertaken that quarter by our investment analysts to show them how we integrate ESG/RI into our investment approach.

We have started building a centralized database of case studies, which could increase visibility and allow us to better demonstrate our commitment to ESG integration and engagement.