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Prosperity Capital Management

PRI reporting framework 2020

You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities

アクティブ運用している上場株式におけるESGの組み入れ

実施プロセス

LEI 01. Percentage of each incorporation strategy

01.1. 以下を記載してください。(1)組織でのアクティブ運用上場株式にどのESG組み入れ戦略や組み合わせを使用しているか(2)アクティブ運用している上場株式の戦略または戦略の組み合わせ別内訳

ESG組み入れ戦略 (当てはまるものをすべてお選びください)
アクティブ運用される上場株式に戦略が適用される割合 (推定 +/- 5%)
100 %
アクティブ運用している上場株式の合計 200%

01.2. 組織が実施しているESG組み入れアプローチ、および、特定のESG組み入れ戦略を選択している場合はその理由を説明してください。

Prosperity Capital Management seeks to consider all factors, including ESG issues, into its investment analysis and investment management. Within reason we employ all available methods to build a holistic and detailed view of the companies within our investment universe.

Screening

Negative: Prosperity excludes cluster munitions companies and those that are on relevant sanctions lists.

Positive: Prosperity believes that the quality of management is very variable in our investment universe and that this qualitative metric has a very significant impact on shareholder value. This is true anywhere, but it is our view that the variance and impact of management quality is greater in Russia than in many other markets. As a result, Prosperity places a considerable emphasis and importance on meetings with company management and core shareholders throughout the investment process in order to evaluate their quality. As such, Prosperity positively screens on corporate governance quality and E and S factors.

Norms-based: Prosperity conducts peer analysis of the companies in our investment universe and portfolios against equivalent and leading businesses around the world. We engage in such analysis not only to identify the strengths and weakness of our portfolio companies and of the companies in the broader investment universe, but also to assess the opportunities available to them to improve their operations and businesses – which we actively promote through our engagement with stakeholders.

Integration

Prosperity specifically includes the consideration of ESG factors, alongside other factors, to develop a holistic and detailed understanding of the businesses in our investment universe.

PCM believes that ESG monitoring, engagements and improvements reduce respective investment risks and provide for better returns. PCM also believes that good corporate governance, high environmental standards, responsible social policies and respective adequate risk-management are indicative of efficient and sustainable management. And, in the contrary, cases or risks of governance abuses, environmental or social disregard are signals of inefficient and non-sustainable management and should be taken into consideration during investment process and as a subject for engagements.

Thus, in particular, our investment decisions take into account governance factors, and our financial models include, when applicable, material effects of any industrial accidents/downtimes including staff costs, current and expected environmental regulations, environmental fines, environmental capital expenditure, social costs related to local communities etc.

 

 

01.3. ESG組み入れ戦略の組み合わせを使用して資産を運用している場合、ESG戦略の組み合わせをどのように使用しているかを簡単に説明してください。 [任意]

Prosperity’s investment decisions are underpinned by highly-detailed, proprietary investment analysis conducted by the Moscow-based sector-specialist analysts that form the Prosperity investment advisory team. Prosperity seeks to develop a thorough and robust understanding of the businesses in our investment universe and portfolios. ESG considerations are just one factor of far broader ranging investment analysis criteria. In the consideration of ESG factors, the various incorporation strategies detailed previously are blended to produce a holistic and compressive understanding of the company in question's operations and activities. No implementation strategy carries a higher weight than the other by rote; instead our approach is tailored to the individual company and prevailing situation in a dynamic fashion.


LEI 02. Type of ESG information used in investment decision

02.1. 組織でESG組み入れ戦略に使用しているESG情報およびこの情報の提供者を記載してください。

ESG情報の種類

この情報の提供者を選択してください

この情報の提供者を選択してください

この情報の提供者を選択してください

この情報の提供者を選択してください

この情報の提供者を選択してください

この情報の提供者を選択してください

02.2. ブローカーに対しESG調査結果を提供するよう奨励しているかどうかについて記載してください。

02.4. 補足情報 [任意]

Prosperity seeks management teams with a sound understanding of the business and the competitive environment in which they operate, with a clear focus and strategy for the successful execution of the company’s development plans. It is also considered important that the management and their incentive structures are strongly aligned with shareholders’ interests.

Triangulation (i.e. speaking with a company’s external stakeholders, such as suppliers, distributors, competitors, etc.) is considered an important part of the process, allowing Prosperity to build strong convictions in our views and to take significantly contrarian stances to the general market and sell-side analysts with considered and monitored comfort.

We regularly meet with management (members of Prosperity’s investment team conduct over 500 company meetings and engagements each year), appoint Independent Directors and monitor external data on Bloomberg, etc. to follow the development of financial and ESG related factors. We monitor 100% of corporate actions. As to ’E’ and ’S’ criteria, we have started to monitor certain data from company's annual reports, websites etc. in relation to the top-50 positions in our portfolio. Where there is no such disclosure, we engage with the companies regading insufficient dosclosure issue.


LEI 03. Information from engagement and/or voting used in investment decision-making

03.1. ESGへのエンゲージメントや(委任状による)議決権行使から得られる情報を投資の意思決定に利用できるプロセスが組織にあるかどうかを記載してください。

03.2. 補足情報 [任意]

Prosperity Capital Management's active and pro-active approach is an integral part of the investment function. Out of the ten strong Prosperity investment team members, two are devoted to Corporate Governance affairs, including, but not limited to engagement and voting activities. The Corporate Governance members of the investment team do not operate in isolation, however, and all such actions are considered as part of the investment process, which is operated in a collegial and collective manner with all investment team members participating in all decisions.


A) 実施:スクリーニング

LEI 04. Types of screening applied

04.1. 組織内でアクティブ運用している上場株式に適用するスクリーニングの種類を記載し、説明してください。

スクリーニングの種類

スクリーニング実行者

説明

With the exception of cluster munitions and relevant sanctioned entities, Prosperity Capital Management does not seek to exclude any potential investment. The core belief of Prosperity is that positive results for environmental, social and governance work comes from active involvement in companies rather than from exclusion of certain investments.

Broadly speaking, we seek to invest into fundamentally sound and well-managed businesses. In this way, those companies that have poor corporate governance practices tend to be unattractive.

As a value investor with an active and pro-active investment approach, it should however be noted that such decisions are made on case-by-case basis with many influencing factors, not least the price and the ability to engage with the owners, management, shareholders and other stakeholders to promote positive changes in a business.

Also, we have formalised the incorporation of other non-financial data in our investment process, including the monitoring of carbon-related matters and the reporting thereof. Where relevant, we will also actively seek to engage with companies on these issues.

At the same time, generally, PCM does not include in its investment universe companies with poor corporate governance, environmental and social records.

スクリーニング実行者

説明

Prosperity believes that the quality of management is very variable in our investment universe and that this qualitative metric has a very significant impact on shareholder value. This is true anywhere, but it is our view that the variance and impact of management quality is greater in Russia than in many other markets. As a result, Prosperity places a considerable emphasis and importance on meetings with company’s management and core shareholders throughout the investment process in order to evaluate their quality.

The rapid rate of change in Russia also necessitates constant monitoring, as the market for corporate control is quite active and both core shareholders and management may change. These changes may sometimes work to dramatically increase the efficiency of a company and its shareholder value. Our long-standing participation in the market allows us to often form a well-researched view of incoming shareholders and management based on their respective previous track records. It also gives us the opportunity to efficiently reach the management to discuss strategy and plans for operational improvements.

 

スクリーニング実行者

          Where appropriate, Prosperity employs a proprietary benchmarking analysis against global industry peers to ascertain global industry best practices as part of our investment process.
        

説明

Where appropriate, Prosperity employs a proprietary benchmarking analysis against global industry peers to ascertain global industry best practices to seek to identify areas of strength and of opportunity for our portfolio companies. Where we see opportunities for improvement for our portfolio companies, we will actively engage with them to demonstrate and discuss those, promoting positive changes and seeking to add value over time.

04.2. スクリーニング基準が変更された場合に顧客や受益者に通知する方法について説明してください。

Prosperity's screening criteria are an integrated part of the investment process. As such, they are reviewed and evolved on an ongoing basis, as we continue to learn from our decisions and to seek to ever-enhance our processes. At the very least, a formal review is conducted once per annum.

Where significant changes are made to our screening criteria, which is not anticipated, Prosperity would communicate these to the relevant stakeholders, with reverence and consideration to the due process and our general communication approach.


LEI 05. Processes to ensure screening is based on robust analysis

05.1. スクリーニングが徹底した分析に基づいていることを確実にするために、組織が使用しているプロセスを選択してください。

          Prosperity's investment team, comprised of sector-specialist analysts, works in a collaborative fashion before seeking to reach a consensus agreement on a company.
        

05.2. ESGスクリーニング戦略の一環で包括的なESG調査の対象となるアクティブ上場株式ポートフォリオの割合を示してください。

05.4. 組織のESGスクリーニングを構築するための組織内リサーチを精査する頻度を示してください。

05.5. 補足情報 [任意]

Prosperity believes that accessing high-quality management is extremely important in achieving investment success in Russia and the FSU. There are substantial opportunities in these dynamic and quickly evolving markets and it is Prosperity’s view that strong and capable management teams are most able to benefit from these characteristics, whilst also minimising the risk of corporate governance malfeasance and breaches.

As such, Prosperity places considerable emphasis and importance on meetings with the company’s management, executives, majority shareholders and other stakeholders throughout the investment consideration, inception, monitoring and exit process.

Triangulation (i.e. speaking with company’s external stakeholders, such as suppliers, distributors, competitors, etc.) is considered an important part of the process, allowing Prosperity – in conjunction with our considerable experience of investing in Russia and the FSU since 1996 and our long historical knowledge of many companies – to build strong convictions in our views and to take significantly contrarian stances to the general market and sell-side analysts with considered and monitored comfort.

Members of Prosperity’s investment team conduct over 500 company meetings and engagements each year. It is considered that on average:

65% of such meetings take place at Prosperity’s or the respective company’s offices
20% “on-site”
10% at conferences
5% by tele/videophone.

Access to senior corporate personnel and management is generally considered to be very good in Russia and the Former Soviet Union and provides us with the opportunity to develop a robust understanding of the company and its practices, in conjunction with other investment research work.


LEI 06. Processes to ensure fund criteria are not breached

06.1. ファンドの基準に違反がないことを確認するために組織が使用しているプロセスを記載してください。

          Prosperity's investment team, comprised of sector-specialist analysts, works in a collaborative fashion before seeking to reach a consensus agreement on a company.
        

06.2. ファンドのスクリーニング基準に対する違反が判明した場合、これらの違反を是正するために従うプロセスを説明してください。

The Group Compliance Officer conducts monitoring exercises in order to ascertain that the Company adheres to rules, regulation and internal policies. If a breach is discovered in the investment process, then this would immediately be escalated to the Risk Committee. The Committee will discuss the matter with all relevant stakeholders and ensure that the breach is rectified, whilst also considering additional enhancements to Prosperity's processes.

06.3. 補足情報 [任意]


C) 実施: 統合

LEI 08. Review ESG issues while researching companies/sectors

08.1. E・S・Gの各要因が投資分析の一環として体系的に調査されている、アクティブ運用の上場株式ポートフォリオの割合を記載してください。

ESG問題

影響を受ける割合
E(環境)

E(環境)

S(社会)

S(社会)

コーポレートガバナンス

コーポレートガバナンス

08.2. 補足情報 [任意]

Prosperity Capital Management seeks to consider all factors, including ESG issues, in its investment analysis and investment management. We seek to employ all available methods of doing so to build a holistic and detailed view of the companies within our investment universe.

We regularly meet with the management, appoint Independent Directors and monitor external data on Bloomberg, etc. to follow the development of financial and ESG related factors. We cover 100% of portfolio with ’G’ analysis. We are currently expanding our ’E’ and ’S’ analysis to the firm’s top-50 positions, which is around 90% of our portfolios. Where there is no such in a company’s annual report, website etc., we engage respective company to find relevant data and regarding insufficient disclosure issue. In 2019, "E" and "S" monitoring and engagements covered 63 % of our portfolio.


LEI 09. Processes to ensure integration is based on robust analysis

09.1. ESG統合が徹底した分析に基づいていることを確実にするために、組織が使用しているプロセスを記載してください。

          Prosperity's investment team, comprised of sector-specialist analysts, works in a collaborative fashion before seeking to reach a consensus agreement on a company.
        

09.2. 組織の統合戦略の一環で包括的ESG調査の対象になるアクティブ運用上場株式の割合を記載してください。

09.4. ESG統合戦略に使われる組織内調査を見直す頻度を示してください。

09.5. ポートフォリオ・マネージャーがどのようにしてESG情報を保有し、使っているのか説明してください。

          Prosperity's investment team, comprised of sector-specialist analysts, works in a collaborative fashion before seeking to reach a consensus agreement on a company.
        

09.6. 補足情報 [任意]

Prosperity Capital Management seeks to consider all factors, including ESG issues, into its investment analysis and investment management. We seek to employ all available methods of doing so to build a holistic and detailed view of the companies within our investment universe.

Our active ownership approach can be expressed in three ways. We monitor ESG factors (incluging 100 % of corporate actions) and engage with the corporate management and core shareholders of the business to discuss issues of corporate governance, corporate finance and "E" and "S" matters, and realize our corporate rights. Another form is where good corporate governance practices have been or are at risk of being breached. In such cases, we take action to resolve a potential conflict or to minimise the damage where a conflict has already arisen. This activity can take many forms from negotiations, appeals to the regulatory authorities or, in some cases, legal action. The third avenue of our active approach is working with the government, regulators and legislators to improve the overall investment climate, including in relation to ESG issues.

 


LEI 10. Aspects of analysis ESG information is integrated into (Private)


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