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Christian Brothers Investment Services, Inc.

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

          Alignment with USCCB Guidelines.
        
          PRI Principles Alignment summary
        

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

Other description (1) Catholic social teaching forms the basis for our work at CBIS. Our Catholic Responsible Investments (CRI) approach centers on three key principles: human dignity, economic justice and environmental stewardship. Our Investment Policy outlines our CRI approach and methodologies and incorporation of Catholic social teaching.

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.

PRINCIPLES: Catholic Social Teaching forms the basis for our Catholic Responsible Investments (CRI) approach, which centers on three key principles: human dignity, economic justice and environmental stewardship. Our approach to ESG is specialized for our Catholic fund investors, yet is compatible with many global norms and UN Sustainable Development Goals, like environmental protection, human rights, community impacts, and ethical governance.

INVESTMENT STRATEGY: In order to deliver a broadly diversified set of solutions for Catholic institutions, CBIS employs a manager-of-managers approach to portfolio development and management. Through extensive research and analysis, we hire quality asset managers to sub-advise our funds and we work closely with them on portfolio development. Our managers choose investments that provide balance to those we have excluded, based on our Catholic screens, and that offer similar return profiles. Through ongoing monitoring, we oversee our sub-advisers’ securities selection to ensure they continue to meet our CRI objectives. 

REAL-WORLD IMPACT: We use screening, active ownership, proxy voting, investor education, and policy and sub-adviser engagement to highlight the real-world impacts of certain corporate activities in our portfolio and to change them for the better.

Visit: http://cbisonline.com/us/catholic-socially-responsible-esg-investing/cri-progress-report/ for issue-by-issue activities we undertake on these concerns.

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]

CBIS is a leader in applying Catholic social teaching to the investment decision process. CRI is embedded in CBIS’ culture and provides the basis for management of the investment portfolio. Our Investment Policy outlining our CRI approach, investment convictions and CRI methodologies can be found here: http://cbisonline.com/us/wp-content/uploads/sites/2/2014/06/CRI_POSITIONING_JAN_14_16.pdf

This approach involves screening across all funds, engagement at the company/security, regulatory, trade association, and industry level, proxy voting, collaboration, and investor education. We began developing engagement strategies within Fixed Income starting in 2016 and are building on those efforts over time. We have been engaging companies on ESG issues for well over 35 years and filed our first shareholder resolution on an ESG topic in 1986.

CBIS was invited to participate in the development of the US Conference of Catholic Bishops (USCCB) guidelines in 2003 and is one of the few Catholic fund firms to consider all three strategies suggested by the Bishops.

Our approach integrates faith-based values into the investment process through disciplined management that includes the following strategies:

Diversified Portfolio - We offer a variety of options to access our Catholic Responsible Investments strategies, including institutional funds and separate accounts, with investments in equities and fixed income. By pooling investment assets, we can invest larger amounts and work with sub-advisers who might not otherwise be available to institutional investors with smaller portfolios.

Ethical Screening - We develop the criteria for our Catholic investing screens and active ownership efforts by examining Church teachings and various Conference of Catholic Bishops' investment guidelines, by conducting research and surveys, and assessing the potential financial impacts of our program.

Active Ownership - CBIS’ active ownership program is shaped by a variety of tools to address issues related to human dignity, economic justice and environmental stewardship:

  • Shareholder Resolutions - CBIS files resolutions that are voted on by shareholders to demonstrate widespread support for addressing Catholic beliefs.
  • Corporate Dialogues - CBIS meets with companies in our portfolios to advise them and hold them accountable as responsible corporate citizens whose activities may have global impacts.
  • Proxy Voting - We vote more than 3,000 proxy ballots each year, covering over 30,000 unique management and shareholder proposals throughout the world, to inform companies of Catholic beliefs on important investing issues.
  • Regulatory and Policy Advocacy - We engage policy makers and regulators regarding issues of market transparency, systemic risk, shareholder rights, and consistent industry or market expectations around our core issues.

Strategic Partnerships - We take our strategic partnerships and involvement in investor networks and coalitions very seriously, and spend much of our engagement resources on collaborative efforts that utilize these partnerships effectively. This includes our role on the boards of many critical organizations, like the Interfaith Center on Corporate Responsibility or the Child Dignity Alliance; it also means having an active role in the working groups of various entities critical to our work, from the PRI and ICCR, to Ceres' INCR, SICS and Water Hub, to the Climate Action 100+, FAIRR, the Child Exploitation Working Group, and the Investor Alliance for Human Rights, among others.

 

 

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.

ateCBIS has identified some climate risks and opportunities across the portfolio of Funds, but because of our structure as a manager-of-managers with existing requirements already in place for those manager contracts, we have opted at this time to focus more on understanding what our external managers are doing on climate-related issues through ongoing meetings and surveys, and share our findings on risk or opportunity to given securities, sectors, or business lines. We also regularly update our managers on our climate-related engagement efforts and the companies we focus on. We now query our managers on their support for the TCFD, or reporting that aligns with it.

While we have done carbon footprinting for several of our funds, climate scenario testing for those same funds using data from Carbon Delta, and analyzed some short-, medium- and long-term risks from climate change to the portfolio, specific sectors, and some individual securities, we have not incorporated those risks into security selection because all investments are made by the sub-advisers (external managers). We work with our sub-advisers to determine what is possible from a manager-of-managers structure in better incorporating and sharing climate change risks/opportunities.  We are preparing to rate/rank the environmental, social and ethical performance of the companies that we own across all funds, so that managers have access to that data and can choose (with other factors being equal) the securities with higher Environmental Stewardship, Human Dignity, Human Rights or Economic Justice performance records.

CBIS additionally engages with companies and regulators on climate change, climate risk, and climate policy and shares pertinent learnings with our managers where appropriate. We have engaged companies on climate change for over 20 years. We ask our managers for information on how they voted on ESG proxy ballots for other clients, to get an indication of how they are supporting and changing their views on particular climate-related issues (as CBIS votes all of its own ballots in-house, and has its own proxy voting guidelines).

Climate-related risks identified and discussed internally by CBIS include:
1. Specific extreme weather events impacting geographic regions, supply chains, natural resources, and specific business types.
2. Litigation risks to certain sectors or business lines.
3. Risks to a company's or industry's license to operate from not taking climate change into account, or not adapting quickly.
4. Regulatory risks to specific industries from slow rate of response, adaptation, or mitigation.
5. Dislocation of people caused by weather disasters, natural resource shortages, and related issues, and accompanying human rights and social risks to them from dislocation.

6. Biodiversity impacts and species losses stemming from climate change.
7. Just Transition workplace equity issues.

Opportunities:
1. Technologies that can benefit companies or industries if implemented, but may be costly short-term.
2. First-mover advantage in certain sectors.
3. Opportunities to avoid costly infrastructure build-out by deploying decentralized low-carbon technologies.
4. Health, mobility, and related benefits from low-carbon, lower pollution, and changing business models that incorporate significant climate emissions reductions.
5. Business model evolution away from high-carbon or high-emissions strategies.

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.

Our Voting and Engagement staff are assessing risks out for approximately one year, 5 years, 10 years, and some out to 2040, but only at the level of individual securities or clusters of securities, and not the entire portfolio at this time. We study macroeconomic data and trend reports, industry level trends, company benchmarking reports, and the confluence of multiple sets of trends in our assessments. License to operate, physical risk, adaptability of the business model, regulatory backlash, technological costs and progress, and impacts to vulnerable populations are considered in our overall assessment.

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

CBIS has been sharing climate engagement priorities and risks with sub-advisers, while encouraging them in similar efforts where possible. We currently manage climate-related risks to the portfolio through:

  • Engagement with select sectors and securities, including some fixed income assets
  • Engagement with our sub-advisers on their own climate efforts, and their ability to report back to us on climate issues and performance impacting our managed funds
  • Proxy voting in support of climate related proposals and candidates for boards
  • Support for consistent public policy on climate change (like a uniform price on carbon)
  • Supporting improved reporting by companies and debt-providers on climate risks, transition strategies, and opportunities.

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

specify

          Our website and quarterly newsletters. Questionnaires and RFPs.
        

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

          Alignment with USCCB Guidelines.
        

Other, specify (2) description

          PRI Principles Alignment summary
        

URL/Attachment

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

URL/Attachment

Other description (1) Catholic social teaching forms the basis for our work at CBIS. Our Catholic Responsible Investments (CRI) approach centers on three key principles: human dignity, economic justice and environmental stewardship. Our Investment Policy outlines our CRI approach and methodologies and incorporation of Catholic social teaching.

02.3. Additional information [Optional].

Impact & Justice Newsletters--Active Ownership Progress Reports:

https://cbisonline.com/us/literature/

 

CBIS POLICIES:

Our policies covering CBIS US Funds can be found within the CUIT 2019 Offering Memorandum: https://cbisonline.com/us/wp-content/uploads/sites/2/2019/12/CUIT-Fund-Offering-Memorandum-dated-December-2019.pdf

 

CBIS' fund strategies and list of fund sub-advisers can be found here: 

https://cbisonline.com/us/strategies/

 

Our unique approach to Catholic Responsible Investments is described here:

http://cbisonline.com/us/catholic-socially-responsible-esg-investing/

 

CRI Strategy Development Process (summary of process, plus link to locked document for our investors):

http://cbisonline.com/us/catholic-socially-responsible-esg-investing/

 

Indexing Solutions with CRI:

https://cbisonline.com/us/wp-content/uploads/sites/2/2015/07/INDEX_OPTION_2_WP.pdf

 

PRI Principles Implementation and Alignment:

https://cbisonline.com/us/wp-content/uploads/sites/2/2017/02/CBIS_PRI_BRIEFv5.6.1.pdf

 

Screening Overview:

https://cbisonline.com/us/wp-content/uploads/sites/2/2015/05/SCREENING_CASE_STUDY_YELLOW2017.pdf

 

VOTING:

We have publicly disclosed our proxy votes in real time since the technology was available and well before most funds were required to do so. Our proxy voting guidelines are publicly available on our website, along with summary graphics to highlight key themes in our voting. CBIS was one of the first investors in the US to publicly disclose its voting guidelines and votes almost 20 years ago.

 

Proxy Voting Dashboard, Summary Graphics, and Vote Look-up Online:

http://cbisonline.com/us/catholic-socially-responsible-esg-investing/proxy-voting/

 

Proxy Voting Guidelines:

https://cbisonline.com/us/wp-content/uploads/sites/2/2017/03/CBIS_Proxy-spreads_final_links.pdf

 

ENGAGEMENT:

Engagement updates, by quarter and year and issue, can be found through various links on our website. Please see our Literature webpage for more information: https://cbisonline.com/us/literature/

 

Active Ownership Policy & Overview:

https://cbisonline.com/us/wp-content/uploads/sites/2/2015/07/ACTIVE_OWNERSHIP_BRIEF_v2.pdf

 

ESG/CRI ISSUE REPORTS:  (found on our Literature webpage: https://cbisonline.com/us/literature/)

Human Trafficking: https://cbisonline.com/us/wp-content/uploads/sites/2/2014/06/HUMAN_TRAFFIC_IR_UPDATE_v3.4.1.pdf

Supply Chains and Human Rights: https://cbisonline.com/us/wp-content/uploads/sites/2/2015/06/eff-supply-chain-accountability_logo.pdf

Human Trafficking Linked to Major Sporting Events: https://cbisonline.com/us/wp-content/uploads/sites/2/2015/06/CBIS-REPORT-Corporate-Strategies-to-Address-Human-Trafficking-For-London-Olympic-Sponsors-and-Hospitality-Companies_logo.pdf

BP Engagement Case Study: http://cbisonline.com/us/wp-content/uploads/sites/2/2015/02/CBIS_CASE_STUDY_BP_v4.2.pdf

Climate Change Issue Brief: http://cbisonline.com/us/wp-content/uploads/sites/2/2014/06/CLIMATE_CHANGE_IR.pdf

We also feature blogs, podcasts, news articles, key ESG events, and engagement victories on our website on a very regular basis. We occasionally feature recorded plenary sessions and speeches on ESG topics as well.


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.

It has been the long-standing policy of CBIS to conduct our business in accordance with the highest ethical and moral standards. Our success has been due not only to the efforts and skills of our employees, but also to the high standards of business ethics that we have maintained over the years.

Because of the importance of these considerations, CBIS has adopted a Policy on Conflicts of Interest, which is designed to avoid conflicts of interest and prevent even the appearance of a conflict of interest between CBIS and any of its officers, directors and employees ("Covered Persons"). The policy requires employees to report any potential conflicts of interest and if those are determined to be conflicts then steps are taken to mitigate those conflicts. CBIS also requires leadership to complete an annual conflicts questionnaire each year. Conflicts of interest are reported in the firm's ADV Part 2.

03.3. Additional information. [Optional]

CBIS has additional policies designed to promote transparency and prevent unduly internal/external influences:

  • Gifts and Entertainment Policy
  • Insider Trading Policy
  • Code of Ethics and Personal Trading Policy

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

Typically, we focus on incidents that align with issues we have worked on before, such as re-engaging companies where a similar controversy emerges but where we have ended the previous engagement. Proactive engagement on new incidents that fall outside of our Active Ownership priorities for the year are done based on capacity, timeframe for effective engagement, and alignment with Catholic Responsible Investments priorities. We weigh the following factors when deciding if we will engage with that company or sector, or with policymakers, as a result of a specific event, including:

- Have we had an engagement history with that company or that sector before, where we have expertise on the issue at hand?

- Do we have capacity to not just inquire about an incident, but follow through on getting answers to drive real change?

- Are clients asking specifically about that issue, company or industry?

- Has the company or industry made a past commitment in solving the issue at hand, but had a significant relapse? (Especially a commitment to CBIS)

- Are our coalition partners asking us for help in building support for a robust response from the company or sector?

- Is the company a significant holding and is the issue one that is material from an ESG perspective?

- Do we have access to that company's executive management team or board of directors to drive discussions and a response?

- Would a swift policy response now curb the company and industry's ability to repeat the incident, and is policy a likely scenario with concerted action?


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