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Mercy

PRI reporting framework 2020

You are in Strategy and Governance » Objectives and strategies

Objectives and strategies

SG 05. RI goals and objectives

05.1. Indicate if and how frequently your organisation sets and reviews objectives for its responsible investment activities.

05.2. Additional information. [Optional]

Mercy's Socially Responsible Investment Committee (as a sub-committee of the Investment Committee) has the responsibility for reviewing and updating the critical concerns and Mercy's SRI Policy, monitoring the social impact made by the portfolio, reviewing proxy voting, and providing guidance to the Mercy Investment Team on best execution. 

The Socially Responsible Investment Committee meets on a quarterly basis to update progress made, address any issues, and update priorities. The formal policy objectives are reviewed and approved annually. 


SG 06. Main goals/objectives this year

06.1. List the main responsible investment objectives that your organisation set for the reporting year.

Responsible investment processes

Key performance indicator

          Training on ESG incorporation through engaging with peers, managers, our SRI Committee and our Investment Committee
        

Progress achieved

We continuously update the SRI Committee on our ESG incorporation on a quarterly basis and provide information on how other institutions approach it. Also, over the past year we shared numerous manager-level case studies of how ESG impacted their investment process, including both public and private managers. 

Key performance indicator

          Research ESG topics and educate internal staff and SRI Committee
        

Progress achieved

The Mercy Investment Team has done research on ESG topics specifically regarding non-violence. After the Mercy Investment Team researched a PRI collaboration on signing an open letter to index providers on excluding controversial weapons from major indices, the Mercy Investment Team presented the information to the SRI Committee members during our most recent SRI Committee Meeting to provide training within Mercy on ESG engagement. Although we did not sign the open letter during the time the collaboration window was open, we were still able to raise the awareness around controversial weapons being included in the major indices.

Additionally, over the past year we shared numerous manager-level case studies of engagement and how engagement impacted their investment process, including both public and private managers. We actively encourage managers to share case studies and provide reporting on their engagements with companies. 

Key performance indicator

          We continue to communicate our SRI activities to our Investment Committee and have shared updates in our Mercy newsletter on various SRI-related topics.
        

Progress achieved

The Mercy Investment Team provided communication of ESG activities within the organization by updating the SRI Committee on a quarterly basis. In addition, we have submitted multiple ESG-related activities to Mercy's internal newsletter. We have updates on ESG on a quarterly basis during our Investment Committee meetings as well. We also met with Mercy's Diversity Director to brainstorm and educate the team on more ways to integrate diversity initiatives into our Investment Department.

Key performance indicator

          Internally created ESG due diligence questionnaire is required in new manager searches; have improved the reporting and use of that questionnaire in investment memos.
        

Progress achieved

Improving ESG incorporation into investment decision-making processes through creating and utilizing the ESG due diligence questionnaire:

  • During the recent China equities manager search, Mercy Investment Team tailored the ESG due diligence questionnaire to include some specific questions addressing the topics of China's Ecological Civilization, Chinese government's Guidelines for Establishment of a Green Financial System and their impact on the manager's portfolio; Managers were given UNPRI materials on ESG in Asia and asked to read and comment - trying to promote both the UNPRI and ESG with managers who may not be as familiar.
  • The ESG questionnaire results are now included in investment recommendation memos and utilized in the final manager diligence meetings as a discussion point.
  • We have shared this questionnaire with numerous peers to help in their ESG incorporation efforts. 

 

          Improving ESG incorporation into investment decision making processes through tracking how many existing managers are UNPRI signatories and have ESG policy in place.
        

Key performance indicator

          Annually, we ask all of our managers whether they are (still are) UNPRI Signatory and whether they have a SRI policy in place.
        

Progress achieved

Progress towards improving ESG incorporation into investment decision making processes through tracking and advocating for an ESG policy and UNPRI signatory:

As of September 2019, 67% of Mercy's managers have an ESG policy in place, compared to last year's 68%.
As of September 2019, 26% of Mercy's managers are UNPRI signatories, compared to last year's 28%.
Mercy Investment Team will continue to keep track of these on an annual basis and to engage with existing and potential managers on the importance of having an ESG policy.

other description (2)

          Mercy's 4 Critical Concerns
        

Key performance indicator

          Mercy has a Personal Formation Plan where the team has set a goal to promote the 4 Critical Concerns within the management of our team
        

Progress achieved

Human Dignity

McAuley Portfolio:

  • Negative Screening: abortion providers, contraceptives, stem cell research, adult entertainment

Investment Team Personal Formation:

  • Investment team volunteered in January at St Patrick's Shelter
  • Investment team organizes annual pie social fundraiser to  benefit various Mercy Ministries
  • Public Speaking Engagements to encourage others to consider ESG, especially opportunities to publicly support Diversity & Inclusion
  • Signed up to host (2) interns through Girls Who Invest in 2020

Non-Violence:

McAuley Portfolio:

  • Negative Screening: cluster bombs, landmine manufacturer, biological/chemical weapons, conventional weapons, nuclear weapons, weapons support services

Investment Team Personal Formation:

  • Research and provide education around shareholder advocacy collaborations related to non-violence

Stewarding the Earth's Resources:

McAuley Portfolio:

  • Impact Funds: About 5% of the Energy portfolio is in renewable investments

Investment Team Personal Formation:

  • Reducing printing for internal meetings; using iPads more

Advancing Quality Healthcare:

McAuley Portfolio:

  • Negative Screening: tobacco
  • Impact Funds: Approximately 20% of recent committed capital to PE is in dedicated healthcare or life science funds; not all these investments are necessarily advancing quality healthcare, however, many are increasing efficiency or quality of patient outcomes.

Investment Team Personal Formation:

  • Currently, planning a team healthy activity challenge

Financial performance of investments

Key performance indicator

          Risk management through considering ESG factors
        

Progress achieved

We think that we are improving the performance of portfolio by engaging in conversations with managers that apply ESG factors in their DDR process – prudent risk management system. 

ESG characteristics of investments

Other activities

Key performance indicator

          Senior management and the SRI committee to approve participating in an initiative.
        

Progress achieved

Mercy signed on to the PRI's SEC shareholder resolution letter voicing concerns over new SEC proposals in early 2020, approved by both our senior management and the SRI committee. 

Key performance indicator

          Publicly speaking on RI initiatives and recruiting other allocators on an individual networking basis to join.
        

Progress achieved

During the SEC resolution process, Mercy's Mission team shared the SEC issue and Mercy's stance with other catholic systems and successfully recruited/encouraged more than one other system to voice their concerns publicly. 

Additionally, Mercy's investment department participated in multiple conference panels encouraging others to consider ESG and join the UNPRI. We have shared our ESG questionairre with numerous peers and actively share our experience with others to help in their intiatives. 

Key performance indicator

          We continue to learn from other UNPRI signatories and participated in a case study for the first ESG text book for academia.
        

Progress achieved

Mercy Investment Team's approach to ESG investing was featured in the case study section of the newly published "Responsible Investing: An Introduction to Environmental, Social, and Governance Investments" by Matthew W. Sherwood and Julia Pollard. This book is significant because it is the first ESG textbook for both undergraduate and graduate programs and among the few industry handbooks for the field of ESG investing. 

The case study focused on Mercy's efforts in establishing a new portfolio governance structure with ESG implementation in mind, as well as Mercy's ESG integration and negative screening approach. Mercy currently uses ISS to vote proxies in accordance with Catholic standards and MSCI to screen long-only traditional equity and fixed-income separate accounts. 

06.2. Additional information.


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