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Jupiter Asset Management

PRI reporting framework 2020

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You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes » (C) Implementation: Integration of ESG factors

(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]

Our fund managers and analysts carefully consider ESG risk factors pertaining to a company prior to making an investment decision. This process considers potential investee companies on a case-by-case basis, with due regard to the sectors in which they operate. Our environmental, social and governance analysis covers a broad range of factors developed over many years of engaging with investee companies on stewardship matters across a broad range of markets. This framework draws on the expertise of our individual fund managers and their individual stewardship approaches with input from Jupiter’s GS team. These factors are also informed by our engagements with industry partners and standard setting bodies, such as the UN PRI and the Financial Reporting Council, and third-party data and research providers. The CIO plays an oversight role in assessing how our fund managers integrate ESG within their investment process. Further oversight is provided by the Stewardship Committee which provides a forum for considering material ESG risks and assessing the outcomes and efficacy of our engagement around these risks.

 

 

  


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]

To strengthen our capabilities, Jupiter has invested in third-party ESG research and  data to help fund managers with security selection, monitoring, and engagement activities. The data is deployed in two ways: i) to augment day-to-day investee company monitoring, engagement and voting assessment at portfolio level and ii) CIO Office analysis of the ESG risk profile of our total assets under management. The current primary ESG rating providers are Sustainalytics and RepRisk. The fund managers and the GS team use third party ESG ratings and data to help inform the decision making / monitoring process, but we are not beholden to external scores or ratings. The construction of our portfolios at any given time reflects the fund manager’s broader investment process, consistent with his views and the stated objectives of the fund.


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

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.

Consistent with our fund manager led approach to ESG integration, each investment team has their own process with regards to integrating ESG information into portfolio weighting, with due regard to the materiality of the risks identified and their confidence in the investment thesis. Once investments have been selected, ESG factors pertaining to each issuer inform position sizing, underpinning our views on whether our confidence in an investment decision grows or reduces over time. The input of the GS Team is available and utilised at any stage in this process, for example by undertaking pre-investment research or identifying and collaborating on areas for potential engagement to gain further insights. It is the responsibility of the fund managers to reflect material changes in ESG risk profile of companies in portfolio weightings. ESG factors are not viewed in isolation, rather the fund manager concentrates on trying to understand how these factors impact potential medium- and long-term investment performance, with reference to a company’s valuation, and identify which, in our view, are relevant and material to investment decisions.

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

Consistent with our fund manager led approach to ESG integration, each investment team has their own process with regards to integrating ESG information into company earnings forecasts and valuations, with due regard to the materiality of the risks identified and their confidence in the investment thesis. Once investments have been selected, ESG factors which may affect the valuation multiple and future earnings potential of companies are incorporated into the analysis, underpinning our views on whether our confidence in an investment decision grows or reduces over time. The input of the GS Team is available and utilised at any stage in this process, for example by undertaking pre-investment research or identifying and collaborating on areas for potential engagement to gain further insights. It is the responsibility of the fund managers to reflect material changes in ESG risk profile of companies into price targets and financial forecasts where these are part of the analysis. ESG factors are not viewed in isolation, rather the fund manager concentrates on trying to understand how these factors impact potential medium- and long-term investment performance, with reference to a company’s valuation, and identify which, in our view, are relevant and material to investment decisions.

10.5. Describe how you apply sensitivity and /or scenario analysis to security valuations.

Our use of climate scenarios for our investment products is at an early stage. We have focused our scenario modelling so far on three areas: 1. Global Sustainable Equity Fund: A number of published transition scenarios and associated target pathways were reviewed, including six different IEA scenarios, four IPCC scenarios, the International Renewable Energy Agency (IRENA) REmap, the Greenpeace Advanced Energy [R]evolution, and the Deep Decarbonization Pathways Project. The main focus of these scenarios is on future energy mixes. The scenarios provide limited analysis of a cross-sector approach that is needed for decarbonisation, such as the role of efficient buildings, electric vehicles, sustainable transport, efficient industrial processes and heating and cooling. 2. In our fixed income team, the consideration of demographic factors influences the allocation of government debt purchases. 3. At the stock-specific level, we have used and particularly value the methodology provided by Transition Pathway Initiative (TPI), a global, asset-owner led initiative, as a forward-looking tool to assess the preparedness of carbon intensive companies for the transition to a low carbon economy.

10.6. Additional information. [OPTIONAL]

 

 


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