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Christian Brothers Investment Services, Inc.

PRI reporting framework 2020

You are in Strategy and Governance » ESG issues in asset allocation

ESG issues in asset allocation

SG 13. ESG issues in strategic asset allocation

13.1. Indicate whether the organisation carries out scenario analysis and/or modelling, and if it does, provide a description of the scenario analysis (by asset class, sector, strategic asset allocation, etc.).

Describe CBIS undertook climate scenario analysis for several of our funds in 2019. We also discuss climate risk and scenario analysis issues with our managers, and what abilities they may have to perform such analysis across our fund offerings.

13.2. Indicate if your organisation considers ESG issues in strategic asset allocation and/or allocation of assets between sectors or geographic markets.

We do the following

13.3. Additional information. [OPTIONAL]


SG 13 CC.

13.4 CC. Describe how your organisation is using scenario analysis to manage climate-related risks and opportunities, including how the analysis has been interpreted, its results, and any future plans.

Describe

CBIS has completed carbon footprinting and climate scenario analysis across several but not all funds. We reviewed the results with the manager, which did shed light on where carbon exposure was currently, and in which sectors, and highlighted policy risks related to climate change from large weightings within the selected funds. 

Describe

Several companies in the footprinting assessment were already on our climate focus list for engagement. However, it was interesting to see small positions of some companies produce outsized carbon impacts, so it gave us additional information, when combined with the scenario assessment, on whether any targeted action in subsectors might be warranted in the future if emissions are not driven down by technology or business model shifts. It also gave us insights into international climate policy initiatives that we may want to focus on, for particular geographies (like physical risks and impacts to emerging markets).

13.5 CC. Indicate who uses this analysis.

13.6 CC. Indicate whether your organisation has evaluated the potential impact of climate-related risks, beyond the investment time horizon, on its investment strategy.

Describe

We have evaluated climate risk impacts for certain sub-sectors, but not yet the portfolio as a whole. We have engaged major fossil fuel companies and auto makers for over 20 years on climate risk and strategy, and the scenarios checked in SG 13.7 CC below are the ones we discuss with them, and our managers, to better understand the trajectory and risk for the whole industry, and industries and asset classes dependent on them.

Other than sector specific risks, climate change impacts all asset classes and securities, and asset allocation and portfolio construction. As a manager of managers, it has been difficult to understand future climate risks to the overall portfolio because we are not selecting the securities for each fund. We have, however, begun the methodology and data provider scoping to rate each of our corporate securities across a spectrum of environmental, ethical, and human rights criteria, which will be provided to managers when completed in 2021 (the Catholic Score). All things being equal, we are encouraging our managers to select the securities with the higher-rated human rights and environmental scores. Once that exercise is commonplace across our funds, we will be in a better position to understand some climate risks and opportunities across the portfolio, and individual funds themselves.

13.7 CC. Indicate whether a range of climate scenarios is used.

13.8 CC. Indicate the climate scenarios your organisation uses.

Provider
Scenario used
IEA
IEA
IEA
IEA
IEA
IRENA
Greenpeace
Institute for Sustainable Development
Bloomberg
IPCC
IPCC
IPCC
IPCC
Other
Other
Other

SG 14. Long term investment risks and opportunity

14.1. Some investment risks and opportunities arise as a result of long term trends. Indicate which of the following are considered.

other description (1)

          Energy transition and job training versus job loss.
        

other description (2)

          Global health impacts and ICT industry user privacy and safety.
        

14.2. Indicate which of the following activities you have undertaken to respond to climate change risk and opportunity

other description

          Used climate data and risk analysis in our engagement and proxy voting actions.
        

14.3. Indicate which of the following tools the organisation uses to manage climate-related risks and opportunities.

other description

          We engage high-risk companies we own to stress-test their portfolios against a 2-degree or less scenario and to support robust public policy.
        

14.5. Additional information [Optional]


SG 14 CC.

14.6 CC. Provide further details on the key metric(s) used to assess climate-related risks and opportunities.

Metric Type
Coverage
Purpose
Metric Unit
Metric Methodology
Carbon footprint (scope 1 and 2)
          Better understanding of fund risk.
        
          
        
          
        
Exposure to carbon-related assets
          Better understanding of fund risk.
        
          
        
          
        

14.8 CC. Indicate whether climate-related risks are integrated into overall risk management and explain the risk management processes used for identifying, assessing and managing climate-related risks.

Please describe

We are currently assessing how our manager-of-managers structure, with a multi-manager strategy for most of our funds, can systematically and consistently apply a climate risk process and risk methodology for the entire portfolio, which is difficult. We have started the process of querying managers on their climate capabilities, to better determine what can happen across our assets on a consistently-applied basis.

14.9 CC. Indicate whether your organisation, and/or external investment manager or service providers acting on your behalf, undertake active ownership activities to encourage TCFD adoption.

Please describe

We focus on engaging top fossil fuel producers and auto makers in our climate engagements--both through the CA 100+ initiative, and as stand-alone discussions. We ask every company engaged on climate risk to support the TCFD and to report in alignment with it. We make space in our dialogues to review with companies any challenges presented by the TCFD, and we have taken the time in 2018-2019 to have more in-depth conversations with companies about the expectations placed on investors, and not just themselves, to more accurately report on climate related risks, actions, and response. That has typically changed the conversation, when companies know that we as investors are also being held to account for climate performance, and that those reporting and accountability expectations are growing for the company's investor base.


SG 15. Allocation of assets to environmental and social themed areas

15.1. Indicate if your organisation allocates assets to, or manages, funds based on specific environmental and social themed areas.

15.4. Please attach any supporting information you wish to include. [OPTIONAL]



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