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Acadian Asset Management

PRI reporting framework 2020

You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes

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%
59 %
Percentage of active listed equity to which the strategy is applied — you may estimate +/- 5%
35 %
Percentage of active listed equity to which the strategy is applied — you may estimate +/- 5%
6 %
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.

Responsible investing issues are embedded in our process in the context of our quantitative frameworks for security and peer group valuation. At our core, Acadian seeks investments that are likely to generate the best risk-adjusted returns, inclusive of ESG considerations. We believe that such investments are characterized by strong financial health, solid business prospects, effective corporate governance, and upside potential – traits that are likely to be embodied by sustainable and responsible businesses. 

Given this method, our base approach to ESG investing is via integration. Approximately 40% of our assets also use an additional SRI screen, and an additional 1% use both screens and thematic tilts.

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

Approximately 41% of Acadian's assets are managed with some type of client- or fund-mandated responsible investing exclusionary screen in place. In addition, the underlying investment process that Acadian utilizes to produce all equity portfolios, regardless of whether an exclusionary screen is mandated, incorporates ESG-related signals along with a host of other predictive factors to ensure that all stocks are evaluated on the full range of factors.


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

At client direction, Acadian can apply exclusionary screens which may encompass one or more of the criteria listed above. Acadian also screens on socially responsible characteristics for various funds we manage such as: investing only in companies exhibiting prudent management behavior with respect to external transparency, internal controls, and compliance with international norms on environment, human rights, labor rights, corruption and inhumane weapons.

Screened by

          Acadian's policy is to implement ESG considerations that add value to portfolios and are applied as requested by clients.
        

Description

Acadian incorporates ESG investing in all parts of our investment process, through ESG factors in our bottom-up and top-down forecasting frameworks, client-mandated portfolio exclusions, and/or proxy voting direction, if desired by a client. In addition we also use the UN Global Compact for some client directed accounts.

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

Screening criteria are established in collaboration with the client and various third-parties if necessary. All screens are communicated, reviewed and agreed upon with Acadian prior to being established. 


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.

05.3. 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)


(B) Implementation: Thematic

LEI 07. Types of sustainability thematic funds/mandates

07.1. Indicate the type of sustainability thematic funds or mandates your organisation manages.

07.2. Describe your organisation’s processes relating to sustainability themed funds. [Optional]

Acadian manages strategies that account for environmental risk.


(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]

As a quantitative manager, we inherently take a systematic approach to factor analysis. As examples, we include a Corruption-Adjustment in our top-down forecasting model, and we utilize governance signals in our bottom-up valuation framework.


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.

09.3. 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]

As a quantitative manager, we rely on large amounts of data that we manage using an extensive proprietary database. The database, which is maintained in-house and monitored by a data analysis team, uses a number of external feeds that are updated up to several times daily, enabling us to continually refresh our alpha (stock) forecasts. ESG information is contained in our stock research pages during our research analysis generated by the investment team.  This widely available information is kept on an internal platform as record. 


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


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