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Sitra

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 (Private)


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
          Off-shore jurisdictions are banned from Sitra´s investment universe
        
Conducted by
Asset class
Scope and process

Sitra cannot invest in funds that are registered in tax havens. By these tax havens we mean off-shore jurisdictions such as Cayman. And by fund we mean all of the essential and separate legal entities involved. When analysing potential new investment opportunities the question on domiciles is always raised. And still often the fund structure chart is missing from the fund presentations. And surprisingly the fund managers themselves do not necessarily know the details. This is a work that we conduct as part of our due diligence work. 

Outcomes

Unfortunately we had shortlisted couple exceptionally well performing funds that turned out to have structures that were not possible for Sitra to invest in. We discussed the issue with fund managers. Especially some global funds that have many international investors do have these complicated structures that are not necessarily easy to follow. In the end, we made ourselves clear to the fund managers, hopefully new and more transparent structures will be offered to investors with the following generation funds. We ended up not investing. 

Topic or issue
          Updated guidelines
        
Conducted by
Asset class
Scope and process

The screening of Sitra´s listed funds was done by an outside service provider. Assets were screened according to sectors and possible norm breaches. Also the peer group was consulted in relation to the responsible investment practices. The information of the widely used and accepted procedures was gathered and analysed.

Outcomes

The transparency of the investments was achieved. This analysis was used as a tool for updating Sitra´s responsible investing guidelines. As a result of the screening excercise specific filters were installed, so in the future Sitra will exclude from all our  investments: manufacturers of tobacco products if the tobacco products account for more than 50% of turnover, companies manufacturing controversial weapons (cluster bombs, land mines, biological and chemical weapons, nuclear weapons and depleted uranium), companies with more than 30% of their turnover linked to coal production or coal use in power generation without a clear strategy to reduce coal use, companies that have violated internationally accepted norms (concerning human rights, the environment, corruption and working conditions) and have not done enough to compensate for the violations. The funds are screened annually within the limits of the available information. The results of the screening are discussed with the asset managers. There is a 2 year transition period for all of the investments to be aligned with guidelines. If there are deviations, there will be changes in the portfolio.

 

Topic or issue
          Analysis of sectors and norm breaches  - discussions with asset managers
        
Conducted by
Asset class
Scope and process

After the screening of listed funds was done, the results of the analysis were discussed with relevant fund managers. 

Outcomes

Discussions with fund managers revealed the reasoning behind having some controversial assets in the portfolio, for example due to restrictions on exiting them. Our understanding of different interpretations of different ESG data providers was increased. These discussions were found most useful and we will continue having them regularly.

09.2. Additional information.


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