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Pendal

PRI reporting framework 2020

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You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes » (C) Implementation: Integration of ESG factors

(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]

Pendal's philosophy for all our funds, not just explicit RI mandates, is that where any ESG factor is considered to be material to the risk and return outcomes of the investment, the investment teams take it into consideration. 

 


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.

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

09.3. Indicate how frequently third party ESG ratings that inform your ESG integration strategy are updated.

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]

Use of ESG Information:

Both our internal and externally sourced ESG data is used as inputs, both formally and informally, in stock analysis. In addition, for some strategies, ESG data is explicitly utilised for portfolio construction and management purposes formally and informally.

  • Analysis of company strategy and quality of management - this is undertaken by analysts on a systematic basis as part of their stock research.
  • Idea generation examples - environmental factors providing investment opportunities in areas such as the gas industry. Social factors are providing investment opportunities in the health care sector.
  • Portfolio construction - some of our strategies systematically look at the impact that ESG factors are having at the overall portfolio level whilst for our mainstream strategies the Portfolio Manager will on occasion look at the composition of the portfolio from an ESG perspective.

LEI 10. Aspects of analysis ESG information is integrated into

New selection options have been added to this indicator. Please review your prefilled responses carefully.

10.1. Indicate which aspects of investment analysis you integrate material ESG information into.

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

10.2. Indicate which methods are part of your process to integrate ESG information into fair value/fundamental analysis.

10.3. Describe how you integrate ESG information into portfolio weighting.

For the Australian equity portfolios managed by Pendal, the impact of ESG on our portfolio construction is primarily a function of the bottom up stock selection investment process employed by the team, combined with a recognition of specific opportunities and risks that have ESG elements, driving the Portfolio Manager’s decision on how much of the stock to own in the portfolio.

Portfolio construction - some of our strategies systematically look at the impact that ESG factors are having at the overall portfolio level whilst for our mainstream strategies the Portfolio Manager will on occasion look at the composition of the portfolio from an ESG perspective.

We recognise that ESG factors can have a significant influence on the value placed on a company and its ability to drive shareholder returns on a long term basis.

We believe ESG is relevant to a portfolio or investment decision if one or more of the following apply:

1. ESG is a predictor of future returns and cash flows.

2. ESG analysis can flag longer term risks that investment analysis may not factored into the long term discount rate.

3. ESG analysis indicates that there are regulatory or ethical issues which should be considered.

10.4. Describe the methods you have used to adjust the income forecast/valuation tool.

Our investment analysts'  income forecast and valuations may be adjusted based on ESG factors that we have identified to have a significant influence on the value placed on a company and its ability to drive shareholder returns on a long term basis.

We believe ESG is relevant to a portfolio or investment decision if one or more of the following apply:

1. ESG is a predictor of future returns and cash flows.

2. ESG analysis can flag longer term risks that investment analysis may not factored into the long-term discount rate.

3. ESG analysis indicates that there are regulatory or ethical issues which should be considered.

Analysis of company strategy and quality of management - this is undertaken by analysts on a systematic basis as part of their company research. We accept that there is a relationship between governance and investment returns. For this reason, Governance will be assessed in making asset allocation decisions.

10.6. Additional information. [OPTIONAL]

.

 

 


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