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Orcadia Asset Management

PRI reporting framework 2020

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ESG incorporation in actively managed listed equities

Implementation processes

LEI 01. Percentage of each incorporation strategy

01.1. Indicate which ESG incorporation strategy and/or combination of strategies you apply to your actively managed listed equities; and the breakdown of your actively managed listed equities by strategy or combination of strategies.

ESG incorporation strategy (select all that apply)

Percentage of active listed equity to which the strategy is applied — you may estimate +/- 5%
90 %
Percentage of active listed equity to which the strategy is applied — you may estimate +/- 5%
010 %
Total actively managed listed equities 100%

01.2. Describe your organisation’s approach to ESG incorporation and the reasons for choosing the particular strategy/strategies.

Orcadia AM wants to meet our clients’ needs for a risk/return profile similar to the one offered by so called “traditional” (= non responsible) asset managers using a responsible investment approach. As such we exclude the “impact first” approach unless the client specifically demands to have it included.

We use a holistic approach in the investment process including certain economic sectors which can be considered as inherently unsustainable or ESG-unfriendly, such as metals, mining energy to name a few. Not only are those sectors often necessary for economic development but we also strongly believe that through his investments an investor can nudge companies and countries to make efforts. This explains the choice for the “best in class” approach since it is a positive approach by selecting the leaders versus the laggards both sector and country wise. This pushes countries and companies to improve in order to become (or stay) investable. In our view exclusion of complete sectors would take away the carrot for improvement (why improve if independently of your efforts you will not become investable anyway).

Nevertheless, some subsectors, which are widely considered to be controversial, are automatically excluded. Being majoritarian active in one of these subsectors is a reason for automatic exclusion from the investable universe and thus the investment manager is not allowed to invest in these companies.

Additionally, to the subsector exclusion factors we have a negative screening on companies which are considered to be involved in (very) severe controversies. While for equities and corporate bonds we can – at least for part of the universe – rely on external sources in order to assess the extra-financial ESG-criteria, this is not the case in sovereign bonds. As such we have developed an in-house ESG-methodology for this kind of investments.

 

In order to attribute a sustainability rating for a country we start from the notion that “sustainable development is a development that meets the need of the present without compromising the ability of future generations to meet their own needs”. In our view this is not limited to the protection of the environment but should also allow the population to thrive and advance both socially (i.e. education) and governance wise (i.e. freedom of speech). We attribute to each of those elements (E, S & G) a similar weight.

01.3. If assets are managed using a combination of ESG incorporation strategies, briefly describe how these combinations are used. [Optional]


LEI 02. Type of ESG information used in investment decision (Private)


LEI 03. Information from engagement and/or voting used in investment decision-making (Private)


(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

Combination of exclusion lists (black lists on controversies) and sector exclusions

Screened by

Description

Best in class ESG approach (50% best in class versus sector or 25% best in class)

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

Through trimestrial reporting and or client meetings


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]


LEI 06. Processes to ensure fund criteria are not breached (Private)


(C) Implementation: Integration of ESG factors

LEI 08. Review ESG issues while researching companies/sectors

08.1. Indicate the proportion of actively managed listed equity portfolios where E, S and G factors are systematically researched as part of your investment analysis.

ESG issues

Proportion impacted by analysis
Environmental

Environmental

Social

Social

Corporate Governance

Corporate Governance

08.2. Additional information. [Optional]


LEI 09. Processes to ensure integration is based on robust analysis

09.1. Indicate which processes your organisation uses to ensure ESG integration is based on robust analysis.

09.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your integration strategy.

09.3. Indicate how frequently third party ESG ratings that inform your ESG integration strategy are updated.

09.4. Indicate how frequently you review internal research that builds your ESG integration strategy.

09.5. Describe how ESG information is held and used by your portfolio managers.

09.6. Additional information. [Optional]


LEI 10. Aspects of analysis ESG information is integrated into (Private)


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