This report shows public data only. Is this your organisation? If so, login here to view your full report.


PRI reporting framework 2020

Export Public Responses

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


Explicit ESG-related exclusions are undertaken for our range of Ethical and Sustainability strategies, as well as for some of our individually managed institutional accounts.

Our range of negative screens are:

  • Fossil Fuels (ranging from thermal coal to oil & gas and metallurgical coal and oil sands).
  • Tobacco
  • Weapons
  • Controversial weapons
  • Alcohol
  • Gambling
  • Pornography
  • Uranium
  • 'Red Flag' incidents (analysis of contentious, emergent and topical issues includes inputs from Regnan)
  • Abortifacients, any ties to abortion
  • Stem cell fetal tissue research
  • Stem cell human embryonic research
  • Contraceptives production
  • In Vitro Fertilisation (IVF) involvement
  • Entities related to sanctioned countries

The above screens - applied variously depending on the individual strategy - are based on a material revenue range of 0% to 50% in the specified sectors, again depending on the individual strategy.



Screened by


For our Ethical and Sustainability strategies, our universe of positive screens (applied in various combinations across different funds) may include:

Industries with products and services that provides a direct benefit to social and/or environmental outcomes such as:

  • environmental management or remediation
  • environmental technologies
  • energy efficiency and renewable energy
  • low-impact products or products that reduce ecological footprint
  • sustainable buildings and property development
  • sustainable land use and food production
  • improved health and community well-being

Companies we deem to demonstrate leading environmental and social practices, in assessing this we have regard to sustainability strategy, policy, management and performance in the following areas such as:

  • Environmental management including for example, climate change, greenhouse gas emissions, energy and water use
  • Business ethics and conduct, including stakeholder relations
  • Occupational health and safety management and performance
  • Human Capital Management (HCM), including workplace relations, equal opportunity, consultation and participation in the workplace and employee conditions and benefits
  • Improving community health and wellbeing

Screened by


Our norms-based screens are incorporated within our ethical overlay strategies and include issues such as human rights, labour standards, environmental and anti-corruption business practices based on international initiatives and guidelines (as noted above). Our Ethical Australian Shares fund includes explicit consideration of the Norms-based principles across issues such as:  

  • Environment: companies that have committed significant or recurrent breaches of environmental  regulation
  • Workplace and business ethics: companies that have committed significant or recurrent breaches of workplace health and safety, anti-discrimination, equal opportunity,  trade practices, or industrial relations legislation


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

The above screening criteria is based on extensive engagement with clients and other industry bodies as well as an in depth analysis of portfolio impacts related to each screen category.

The criteria is reviewed typically on a monthly basis or if significant events occur that require more immediate consideration. Some clients will be notified or any changes as part of their reporting arrangements whilst others will be notified during our regular presentations to them. 

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]

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.

Pendal has an effective incident management process in place to ensure prompt notification, escalation and rectification of any incidents or potential incidents. The process requires all employees to identify, report and escalate any known or suspected incidents. The Risk & Compliance and Legal functions are stakeholders in the incident management process to assist with assessing the incident, the actions required to contain and rectify the incident and the reporting implications. All incidents involving non-compliance with internal policies and procedures are assessed by Risk & Compliance to ascertain their significance and regulatory reporting requirements.

Incidents are governed by the Pendal Incident Management Policy, which is owned by Risk & Compliance. All incidents are reported to the Executive Committee Risk Forum on a monthly basis and the Pendal RE Boards, Managed Investment Compliance Committee and the Audit and Risk Committee on a monthly basis.

An example of the process used to ensure fund criteria is not breached is provided below:

  • Regnan data that sets the companies and issuers to be excluded from the portfolio is delivered directly to the Portfolio Management team as well as the Investment Risk team (data management, monitoring and reporting) within our Investment Operations group. This ensures the excluded securities are hard-coded into our trading systems to ensure compliance on a pre- and post-trade basis.
  • The Investment Risk team perform the post-trade monitoring on daily basis. In addition, there are hard-coded rules in system that restrict pre-trade activity. This will stop the portfolio from purchasing excluded securities. Any changes in ethical or sustainable ratings will be picked up by the post trade monitoring.
  • In case of a breach, e.g. a security is no longer classified as sustainable as per monitoring rule mentioned above, the alert notification is immediately sent to the Portfolio Manager of the fund to inform the status of the security. The Investment Risk team works with the Portfolio Manager in managing the resolution of the breach.
  • Depending on the nature of the security (liquidity) and financial consideration the security is sold out in feasible timely manner. All Portfolio guidelines breaches are reported to Executive Risk & Operations Group as part of Investment Risk's monthly reporting, where such items are discussed and noted.

06.3. Additional information. [Optional]