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AEGON 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 » (A) Implementation: Screening

(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


Ethical equity/Ethical cautious managed funds:

The Ethical Equity and Ethical Cautious Managed Funds are known to apply some of the broadest and strictest client led exclusions in the UK market. The funds apply client led exclusions relating to: alcohol, gambling, tobacco, adult entertainment, animal welfare, the environment (including excluding fossil fuels), genetic modification, military, nuclear power, human rights, political donations, banks.

Global sustainable equity fund:

The Global Sustainable Equity Fund applies a similar exclusionary screen to our ethical funds at the start of the investment process but due to the significantly larger initial investment universe and the composition of that universe, this results in a smaller proportion of companies being screened out. However, in addition to the exclusions that the fund applies, we also undertake detailed sustainability analysis that reduces the investable universe further. The Global Sustainable Equity Fund applies absolute exclusions relating to: gambling, tobacco, adult entertainment, animal welfare, fossil fuels, genetic modification, military, nuclear power, human rights.

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

Our clients and key intermediaries were involved in determining the screening criteria for our Ethical funds when they were first established. Similarly, client consultation was sought when establishing the criteria for our Global Sustainable Equity Fund, which was launched in 2016.

The ethical fund criteria have seen relatively little change since being established but are reviewed every two years and, again, our clients are always at the centre of the process for any adjustments. This is very much a two way process and in 2018 we conducted a client survey to gauage opinions on screening and ESG investments. In 2019, following feedback from clients, we explicitly excluded oil and gas exploration and production companies from the ethical funds.

The significance of any change to the screening criteria would determine how clients in the funds would be informed. Meaningful changes would require shareholder/investor approval via an EGM. Less significant changes would not require approval, but we would expect to consult investors ahead of making any changes. Any confirmed changes would be communicated via a formal process.

Our most up to date criteria are publically available on our website.

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]

External ESG ratings provide a useful starting point for our ESG integration efforts and screening processes but we firmly believe that they have limitations both in the breath of their coverage and the way they analyse companies. Therefore, we augment this input with our own internal research in order to capture the nuances that external screens miss.

The ESG Research team track company news and commentary and also engage with company management directly. ESG 'incidents' are identified in this manner and may feed into our analysis. Otherwise, company ESG research that we have undertaken in-house, is typically reviewed annually, since companies typically report ESG data on that basis.

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.

We have implemented what we believe to be a robust set of internal controls to prevent breaches in the first place. These controls are tested periodically and improved if they are found to contain weaknesses.

A formal breach would be recorded by the Regulatory and Operational Risk team (R&OR). Processes would be reviewed and amended to ensure a similar breach would be prevented in the future. Holdings in breach would then be sold on a best endeavours basis - typically this would be within one month.

06.3. Additional information. [Optional]