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NEI Investments

PRI reporting framework 2020

You are in Indirect – Manager Selection, Appointment and Monitoring » Outputs and outcomes

Outputs and outcomes

SAM 08. Percentage of externally managed assets managed by PRI signatories

08.1. Describe how you ensure that best RI practice is applied to managing your assets

Measures

          Initiated joint corporate engagements with some managers.
Communicated with all managers about emerging RI standards.
Discussed ESG performance during regular review meetings.
        

Measures

          RI mandates have moved to managers with stronger ESG processes.
Non-RI mandates have increasingly appointed managers with ESG capacity.
Initiated impact-related investments with new managers
        
          Investment structure that allows for flexibility in integrating NEI's ESG philosophy
Working with managers to communicate NEI Proxy voting practices, such that the manager can align voting on other mandates with NEI
        

Measures

          Review holdings on a weekly basis 
Conduct in-house ESG research on each holding
Monitor each portfolio holding for ESG-related headline risk
Maintain discretion on each and every holding since the assets are all managed in separate accounts that are dedicated to us.
        

08.2. Additional information. [Optional]

Educating our Investment Managers

NEI has been instrumental in laying the groundwork for responsible investing in Canada. In addition to our leadership role in the Responsible Investment Association (RIA), we have been a resource for our investment managers to evolve their ESG policies and practices. In one particular example, a Canadian investment manager had no ESG capabilities when it began to manage a mandate for us but showed a strong interest in  integrating ESG practices into investment decisions. The manager now has full-time ESG personnel on staff.


SAM 09. Examples of ESG issues in selection, appointment and monitoring processes

09.1. Provide examples of how ESG issues have been addressed in the manager selection, appointment and/or monitoring process for your organisation during the reporting year.

Topic or issue
          Engagement with portfolio companies: Board Oversight
        
Conducted by
Asset class
Scope and process

As part of our on-going efforts to work collaboratively with our sub-advisors, we asked the managers to consider working with us on an investor sign-on opportunity at Alphabet (Google). The sign-on opportunity was to ask Alphabet to include board oversight of societal impacts of their technologies related to data privacy, freedom of expression and artificial intelligence.

Outcomes

A number of managers responded favourably and two managers signed-on.

Topic or issue
          Impact Balanced Fund – Manager Selection
        
Conducted by
Asset class
Scope and process

The NEI Balanced RS funds was one of the first Responsible Balanced fund in Canada. As we considered the next phase of NEI’s growth in maintaining our leadership position, we decided to repurpose this fund to an impact-based mandate. While keeping it a public balanced fund, we searched for strategies and managers that create a visible, measurable impact with respect to environmental and social goals. 

Outcomes

A decision was made to hire an impact-based fixed income manager to complement an existing thematic, impact equity fund in a balanced portfolio.

09.2. Additional information.

NEI's ESG team completes a quantitative and qualitative ESG assessment and conducts ongoing risk monitoring of each portfolio holding. At the time of appointment, we assess the manager's ability to incorporate our ESG process and manage the account in accordance with NEI's eligibility list.

On a monthly basis, NEI portfolios are examined to ensure that holdings are aligned with NEI's eligibility list. This is part of the compliance procedure for NEI RS funds and portfolios. On an annual basis, we conduct an on-site review of all managers. A key component of the onsite manager due diligence is an update of the manager's ESG capabilities and how they continue to integrate ESG factors within investment decision making. 

Adherence to the NEI Responsible Investment process has been included in the Investment Policy Statement (IPS) for select external managers with ESG mandates. Therefore, any infractions would be considered a breach of the IPS and an in-depth review of the manager and the situation would be initiated.


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