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Alberta Investment Management Corporation

PRI reporting framework 2020

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ESG incorporation in actively managed listed equities

Implementation processes

LEI 01. Percentage of each incorporation strategy

01.1. Indicate which ESG incorporation strategy and/or combination of strategies you apply to your actively managed listed equities; and the breakdown of your actively managed listed equities by strategy or combination of strategies.

ESG incorporation strategy (select all that apply)

Percentage of active listed equity to which the strategy is applied — you may estimate +/- 5%
4.53 %
Percentage of active listed equity to which the strategy is applied — you may estimate +/- 5%
95.47 %
Total actively managed listed equities 100%

01.2. Describe your organisation’s approach to ESG incorporation and the reasons for choosing the particular strategy/strategies.

AIMCo's exclusionary screening applies to internally managed portfolios, as a result of client mandates and to comply with federal legislations. Exclusionary screening is applied to securities involved in the production of tobacco, cluster munitions, anti-personal mines, dedicated weapons systems integration services, nuclear weapons and other weapons of mass destruction, as well as companies prescribed by the Special Economic Measures Act and the United Nations Act with respect to the Suppression of Terrorism. Companies may also be excluded if they appear to contravene local or international legislation or agreements such as the UN Global Compact, International Labour Organization Standards, the UN Security Council Arms Embargo, etc. Analysts and Portfolio Managers further integrate ESG into analysis of companies to enhance the investment thesis.

01.3. If assets are managed using a combination of ESG incorporation strategies, briefly describe how these combinations are used. [Optional]

Using the exclusionary screening criteria set out by AIMCo, companies are filtered out accordingly. The fundamental equities team integrates ESG further into their analysis regarding the company's sector, country of operations, governance profile (management team), the composition of the board of directors, executive compensation, capital allocation policies, etc. Environmental factors are analyzed further if the specific company warrants. Sources such as Glass Lewis, ISS, MSCI ESG Manager and SASB are used during investment management activities for actively managed listed equity portfolios. 


LEI 02. Type of ESG information used in investment decision (Private)


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


(A) Implementation: Screening

LEI 04. Types of screening applied

04.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by

Description

Products such as tobacco, cluster munitions, anti-personal mines, dedicated weapons systems integration services, nuclear weapons or other weapons of mass destruction are excluded from AIMCo's investable universe. AIMCo does not invest in high-risk geographic areas excluded by the Special Economic Measures Act (Canada) and is subject to the United Nations Act (Canada).

04.2. Describe how you notify clients and/or beneficiaries when changes are made to your screening criteria.

AIMCo's ESG screening criteria are broadly established based on investment restrictions stipulated in client's statements of investment policy and government regulations. Specific screening parameters for industries are created by the RI team and approved by the RI committee internally. These criteria help inform this portion of the exclusions list. Tobacco, cluster munitions, and federally mandated screens are implemented as part of our internal fundamental screening process. AIMCo regularly meets with clients to give investment updates, including updates with respect to investment exclusions. 

AIMCo's exclusions lists for industries are updated quarterly. Statutory Investment Restrictions criteria are obtained from the federal government which inform updates to the Exclusions Guidelines on a rolling basis. The latest investment Exclusions Guidelines are also made publicly available on AIMCo's website.


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

05.1. Indicate which processes your organisation uses to ensure ESG screening is based on robust analysis.

          The RI Committee reviews and approves screening criteria. Compliance and RI teams collaborate to implement screening protocols to be applied across all asset classes
        

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

05.3. Indicate how frequently third party ESG ratings are updated for screening purposes.

05.4. Indicate how frequently you review internal research that builds your ESG screens.

05.5. Additional information. [Optional]


LEI 06. Processes to ensure fund criteria are not breached (Private)


(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]

Characteristics of an industry influence the extent to which ESG issues are considered by Portfolio Managers. Coal mining for example is handled with an increased focus on environmental analysis and certain PM's will include coal mining on their even more stringent exclusionary list. Materiality of ESG factors vary company to company and therefore influence the associated analysis. ESG factors of AIMCo investments are systematically tracked by the RI team. If significant changes to ESG scores are identified by RI, the appropriate PM's are notified. RI may contact PM's regarding an upcoming vote or a significant event such as M&A. AIMCo's proxy voting guidelines include ESG considerations and incorporate proxy research from external providers.


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.

          ESG ratings upgrades and downgrades for fundamental equity portfolios are delivered to key portfolio managers on an ongoing basis, and ESG data for screening purposes.
        

09.6. Additional information. [Optional]


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


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