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Orbis Investments

PRI reporting framework 2020

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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%
85 %
Percentage of active listed equity to which the strategy is applied — you may estimate +/- 5%
15 %
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.

Our purpose is to empower our clients by enhancing their savings and wealth. In seeking superior risk-adjusted returns for our clients, we aim to invest in securities of companies that trade at a significant discount to our assessment of their intrinsic value, being the price that a prudent business person would pay for the business.

We have designed our investment process to maximise the chances that we can successfully implement our fundamental, long-term and contrarian investment philosophy. Our analysts use a structured research process to eliminate unattractive ideas in the early stages so that they can concentrate their efforts on only the most promising ideas.

As part of this bottom-up research process, our analysts consider a range of factors that might affect a company’s intrinsic value, which can include environmental, social and governance (ESG) issues. For example, if a company makes money in a manner that is not sustainable from an environmental or social perspective, the analyst will not gain conviction in the sustainability of its current level of profits. Similarly the consideration of governance issues is a critical part of an analyst’s assessment of a company’s intrinsic value.

Our analysts’ research of ESG factors informs decisions not to invest in a company as much as it informs decisions to invest, although there is no ESG issue that would automatically prevent us from investing in a company unless otherwise restricted by a Fund’s investment mandate. Approximately 15% of Orbis' assets under management are invested in an Australia-registered Fund that will not invest in companies directly involved in the production of tobacco or controversial weapons.

Just as there is scope for different views on the sustainability of a company’s competitive advantage, there is scope for investors (and individual Orbis analysts) to have different views on ESG matters. We believe that by performing rigorous, fact-based research on ESG matters, we may from time to time form a divergent view from the consensus that may alert us to the opportunity to buy a security at a discount to its intrinsic value.

All “Phase Three” fundamental research reports that are submitted to a Policy Group Meeting – a forum for rigorous peer review – include a section on relevant ESG matters.

01.3. If assets are managed using a combination of ESG incorporation strategies, briefly describe how these combinations are used. [Optional]

See LEI 01.2


LEI 02. Type of ESG information used in investment decision (Private)


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

Approximately 15% of Orbis' assets under management are invested in an Australia-registered Fund that will not invest in companies that fall into the following categories:

  1. Companies classified by either MSCI or FTSE as being a tobacco company or those regarded by Orbis as directly involved with the production of tobacco.
  2. Companies actively involved in the production of nuclear weapons, anti-personnel, cluster munitions or depleted uranium weapons (together controversial weapons).

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

Orbis undertakes a screening process semi-annually to determine whether a company produces controversial weapons and uses third-party research provided by ISS/Ethix to assist in this screening process. Orbis will provide investors with at least 30 days prior notice before it makes any changes to the exclusion categories.


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.

05.5. Additional information. [Optional]


LEI 06. Processes to ensure fund criteria are not breached (Private)


(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]

All “Phase Three” fundamental research reports that investment analysts submit to a Policy Group Meeting – a forum for rigorous peer review – include a section on relevant ESG matters

 


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.

          Engagement with company management and/or directors may provide our investment analysts with an opportunity to discuss any questions or concerns that they may have.
        

09.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your integration strategy.

09.4. 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 (Private)


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