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Redpoint Investment Management

PRI reporting framework 2020

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

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%
15 %
Percentage of active listed equity to which the strategy is applied — you may estimate +/- 5%
69 %
Percentage of active listed equity to which the strategy is applied — you may estimate +/- 5%
16 %
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.

Client preference.  Redpoint advocates screening + integration, integration alone and screening in conjunction with integration of non-ESG signals or factors as preferred approaches, with the choice dependent on the selected benchmark, the client's (relative) risk tolerance, sustinability focus, focus on longer or shorter horizon outcomes and turnover objectives.

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

02.1. Indicate what ESG information you use in your ESG incorporation strategies and who provides this information.

Type of ESG information

Indicate who provides this information  

Indicate who provides this information 

Indicate who provides this information 

Indicate who provides this information 

02.2. Indicate whether you incentivise brokers to provide ESG research.

02.4. Additional information. [Optional]


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

Redpoint uses two approaches to exclusionary screening, based on client requirements.

The first approach uses our proprietary rating, which draws on all three domains of ES and G information and integrates that with long-horizon quantitative financial signals.

  • We apply the screening globally, eliminating between 10% and 60% of a benchmark universe (benchmark dependent).
  • We hold all stocks to the same standard rather than apply a best of sector approach.
  • Any country and/or industry and sector biases, introduced by the screening, are managed in the portfolio construction process.

The outcome is a portoflio, with above average ESG scores.

The second approach screens on product, activity and/or sector-membership, driven by each client's own policies.

Either approach can be used standalone, or as a base for an enhanced strategy that uses alpha metrics that integrate ESG considerations.

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

Redpoint's proprietary rating has been developed using a combination of:

  • individual experience - our Chairman (and former CIO) has been involved in incorporating ESG issues in investment strategies since 2001
  • organisational experience - Redpoint has been incorporating ESG issues in investment strategies since its inception in 2011 and our current CIO has been with the firm since inception
  • establishing a priori expectations for the influence of individual indicators
  • applying rigorous quantitative analysis to the historical investment performance response to candidate indicators.

Attribution analysis is an ongoing process that provides feedback on the efficacy of the rating.  However, as with all quantitative processes, there is a balance between needing time (multiple years of data) to raise confidence levels and evolution of the underlying investment drivers.   Accordingly, we review the composition of the rating annually, but with a less than 50% probability of changing the rating's specification.

If a change in the specification leads to a significant change in the ratings behaviour, or the nature of the information it comprises, we would inform client's prior to implementing any changes to their strategies.


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

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.

Any position outside guidelines is corrected as soon as practicable.  Any breach of a mandate constraint is dealt with in accordance with the mandate requirements and internal policies on breach reproting.

06.3. Additional information. [Optional]


(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

New selection options have been added to this indicator. Please review your prefilled responses carefully.

10.1. Indicate which aspects of investment analysis you integrate material ESG information into.

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

10.2. Indicate which methods are part of your process to integrate ESG information into fair value/fundamental analysis.

10.3. Describe how you integrate ESG information into portfolio weighting.

Redpoint uses prorietary alpha forecasts - combining multiple metrics, including our internally developed ESG rating - to construct return-seeking, risk effiicient portoflios using third party risk models and optimisers.  Benchmark relative weights reflect the tradeoff between our return forecasts and model risk forecasts.

10.4. Describe the methods you have used to adjust the income forecast/valuation tool.

Redpoint uses prorietary alpha forecasts - combining multiple metrics, including our internally developed ESG rating - to determine the relative value of each stock within our investment universe.  These reflect current valuation relative to each stocks historical metrics and cross-sectional industry metrics.

10.6. Additional information. [OPTIONAL]


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