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Keva

PRI reporting framework 2020

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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
          Building a global sustainable equity portfolio
        
Conducted by
Asset class
Scope and process

The external equity team conducted a search to build our first global, sustainability-themed, portfolio. The process was similar to our normal manager selection process, but an additional requirement for the managers chosen was that they need to be thought leaders in ESG thinking and their ESG integration efforts must compass all of the manager's investment strategies. Futher, the aim of the portfolio is to address global sustainability issues (as guided by UN SDGs) in addition to our normal financial return target (which we are not compromising).   

Outcomes

As a result of this search, the team recommended investments in three new strategies. Two of them are impact investing strategies, and the third is a strategy with a focus on goal-oriented engagements and sustainable business models. The strategies were funded in Q1(20).  

Topic or issue
          Passive manager selection and passive ESG investments
        
Conducted by
Asset class
Scope and process

The external equity team conducted a search for passive equity exposure provider. In addition to price, a key criteria was candidates' ESG intergration and active ownership practises. We used an external consultant's assessment as a basis for this, and chose the candidate with the highest rating. In connection with the change of our passive equity asset manager, we invested in two passive ESG mandates. These are benchmarked against an established ESG index. 

Outcomes

Search was concluded and investments were made in 2019. 

Topic or issue
          Establishing a new quarterly reporting template
        
Conducted by
Asset class
Scope and process

We created a quarterly reporting template that aims to reflect our stance as a long-term investor and partner to our managers. With our template, we are gathering information not only on the external portfolios' performance, but on characteristics, such as turnover and number of holdings. It also includes a section on portfolio financials, or “portfolio as a company”. Further, we emphasized to our managers that their quarterly comments should focus on developments, processes and events during the quarter that influence long term value creation, instead of merely commenting on short-term price movements. We  also included an ESG/engagements section that specifically asks managers to report on their interactions with company management; what were the issues raised, were they E, S or G related, what methods were used, who was the counterparty and what was the outcome. Finally, some firm level KPIs are included as well.

Outcomes

The template has been reviewed and agreed with almost all of our managers. Simultaneously, we asked our managers to discontinue monthly reporting. 

Topic or issue
          Engagement and Voting Survey
        
Conducted by
Asset class
Scope and process

Every year external equity and fixed income investment teams conduct an ESG Survey which is targeted to Keva's external asset managers. For now two years in a row, we have focused on our asset managers’ deliberate and goal-oriented influence on their portfolio companies - either through voting or engagement practices - in the pursuit of long-term value creation

Altogether, 61 of our external equity and fixed income managers participated in the survey this time.

Outcomes

The results revealed a very active use of various active ownership methods among our external asset managers. Voting activity was again very high; most managers voted in close to a 100% of cases. Over three quarters of our asset managers were involved in discussions and meetings with companies or in the engagement projects. Over half of the managers collaborated with other investors. 

Various more granular level metrics were collected from both voting and engagement activity, such as utilisation of proxy advisor, votes cast for or against, top voting themes, geographical split of general meetings participated, method, lenght and outcomes of engagements undertaken as well as most common engagement themes and their respective sector biases.

In addition, for the first time, we asked specific questions about collaborations and global frameworks, and plan to follow their acceptance as well going forward.

 

 

Topic or issue
          Review of specific investments and their potential RI concerns
        
Conducted by
Asset class
Scope and process

As part of our monitoring of portfolio investments, PE team members conducted a review of certain investments of GP's. We wanted to make sure that the manager was acting in an ethical manner and that it's practices were up the standard we expect from them.

Outcomes

We had several productive discussions with the manager as well as with other investors. No changes were deemed necessary.

09.2. Additional information.


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