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Bridges Fund Management

PRI reporting framework 2020

You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage

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

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

          Impact investment framework
        

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

Please see here our Responsible Investment Policy

https://www.bridgesfundmanagement.com/wp-content/uploads/2019/10/Bridges-Fund-Management_Responsible-Investment-Policy.pdf

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

Please see here our Responsible Investment Policy

https://www.bridgesfundmanagement.com/wp-content/uploads/2019/10/Bridges-Fund-Management_Responsible-Investment-Policy.pdf

01.6. Additional information [Optional].

          
        

SG 01 CC. Climate risk

01.6 CC. Indicate whether your organisation has identified transition and physical climate-related risks and opportunities and factored this into the investment strategies and products, within the organisation’s investment time horizon.

Describe the identified transition and physical climate-related risks and opportunities and how they have been factored into the investment strategies/products.

Across our funds, under our Sustainable Planet theme we've invested in businesses that divert waste from landfill, promote a more sustainable approach to food and farming and we've refurbished buildings to make them more energy-efficient. We analyse risks and opportunities for every investment. In particular, in our property funds we have a dedicated environmental engineer and we carry out climate change risk assessments regularly and assess both physical and transition risks as well as opportunities for mitigation or adaptation. 

Example of risks:

  • Avoid areas with high risk of flooding without mitigation measures / food defences (physical risks)
  • Assess the risk of overheating and structural stability in new developments (physical risks)
  • Assess the impact of climate change on biodiversity and select climate resilient planting (physical risks)
  • Assess the impact of regulatory risks. For example, requiring EPC rating of B as a minimum in all our new developments well above the current minimum requirement now of E  (transition risks)

Example of opportunities:

  • Incorporate renewable and energy efficiency reducing dependency on fossil fuels (adaptation) whilst reducing carbon dioxide emissions (mitigation)
  • Resource efficiency, materials and embodied carbon for example using Cross Laminated Timber from sustainably growth forest in low rise construction (adaptation) to reduce programme, costs and energy consumption in operation, as timber has higher insulated properties than concrete or steel, and therefore contributing to climate change mitigation 
  • Planting trees in new developments, as well as providing shade, trees are an important feature in landscape to increase biodiversity, contribute to the reduction of water run-off and flooding (adaptation), whilst also improve air quality and thus contribute to climate change mitigation
  • Using thermal mass minimising energy consumption (adaptation) and might prevent future retrofit of air conditioning (mitigation)

01.7 CC. Indicate whether the organisation has assessed the likelihood and impact of these climate risks?

Describe the associated timescales linked to these risks and opportunities.

In our property funds, physical risks that have been assessed in new developments usually cover a long-term period. Drainage assessments usually take into consideration level of risk of storm events up to 1 in 100 years, with an increase in rainfall intensity for climate change of 40%. Overheating assessments usually take different scenarios, a year with moderately warm summer, a year with more intense single warm spell and a year with a long period of persistent warmth and/or use future weather data following UK Met office climate change projections for 2020s, 2050s, 2080s high, medium and low emissions scenarios. However, timescales models vary with regard to each investment and fund.

01.8 CC. Indicate whether the organisation publicly supports the TCFD?

01.9 CC. Indicate whether there is an organisation-wide strategy in place to identify and manage material climate-related risks and opportunities.

Describe

In March 2020, we publicly supported the Financial Stability Board’s (FSB) Task Force on Climate-related Financial Disclosures (TCFD) on its effort to develop recommendations for voluntary climate-related financial disclosures that are consistent, comparable, reliable, clear, and efficient, and provide decision-useful information to lenders, insurers, and investors.

We believe that better access to data will enhance how climate-related risks are assessed, priced, and managed. Investors will make better informed decisions on where and how they want to allocate their capital. Lenders, insurers and underwriters will be better able to evaluate their risks and exposures over the short, medium, and long-term. This is expected to make the financial system more resilient to climate-related risks.

As outlined in our Responsible Investment Policy and Ethical Charter, we endeavour to protect and preserve the environment in which we and our portfolio companies operate. In particular, we are committed to:

  • Continuing to improve energy efficiency and reducing carbon dioxide emissions in our activities and investments;
  • increasing our investment in sectors and activities that contribute to a more sustainable planet or to climate change adaptation;
  • reducing waste, including the proportion of waste going to landfill, and reduce water usage.

Supporting the TCFD has been a natural step for Bridges. We are keen to collaborate with the Task Force and help developing meaningful and useful climate-risk related disclosures that can support decision-making also of small and medium businesses. We are following the TCFD recommendations and worked to incorporate climate risks and opportunities into our governance, strategy, risk management, and metrics and targets.

 

1.10 CC. Indicate the documents and/or communications the organisation uses to publish TCFD disclosures.


SG 02. Publicly available RI policy or guidance documents

 

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

Other, specify (1) description

          Impact investment framework
        

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

02.3. Additional information [Optional].

We also have:

A Sustainable Property Policy: http://dev.bridgesfundmanagement.com/wp-content/uploads/2017/03/Bridges-Sustainable-Property-Policy-2017.pdf

An ethical charter: https://www.bridgesfundmanagement.com/wp-content/uploads/2019/10/Bridges-Fund-Management_Ethical-Charter.pdf

 


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

Bridges has implemented a number of procedures and controls designed where possible to ensure that conflicts of interest do not arise. In the event that conflicts of interests do arise, Bridges has in place policies to detect, record and manage these. For example, in relation to the management of investments, any conflicted party must declare that conflict and excuse itself from decision-making on the relevant point wherever possible. If a conflict of interest arises in an Investment Committee, it will be documented in the Investment Committee papers along with mitigating actions and will be advised to and discussed with the Investors’ Committee for the fund in question. Similarly, any conflict identified between funds managed by Bridges will be notified to and mitigating actions discussed with the relevant investors’ committees.

Further procedures and controls monitor the effectiveness of the management arrangements for such conflicts. All personnel receive a copy of our Compliance Manual containing our conflict arrangements and are required to give an annual undertaking of adherence to the policy.

 

 

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios

04.1. Indicate if your organisation has a process for identifying and managing incidents that occur within investee entities.

04.2. Describe your process on managing incidents

Bridges monitors portfolio companies in 2 ways: Across the majority of our investments Bridges is the main investor and holds a majority share. Bridges will generally have two board seats and is able to support the identification and management of incidents through this forum. We also collect management information on a monthly basis from across all our portfolio companies. This data includes financial as well as operational KPIs that relate to impact. The information is reviewed in monthly portfolio meetings by the investment teams. For each portfolio company, bi-annual deep-dive sessions are held with the management team once a year, where a detailed review of operational, ESG and management performance is undertaken. Bridges will then work closely with management to resolve any incidents identified, through attendance at Board meetings and ad-hoc engagement with management teams.


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