Listed Equity: As part of the investment management agreement, external managers in separately managed public equities are restricted from investing in certain industries, such as the tobacco industry. If they inadvertently were to invest in an excluded company, our Compliance department would flag it and the external manager would be required to sell the holdings in the entity by end of the following quarter. This incident and the underlying reasons for it would then be reported internally in order to avoid future occurrences. The external manager must regularly check with Compliance to ensure that any entity not previously flagged has not entered the exclusions list by fulfilling the criteria for exclusion.
Governance aspects feature prominently in our considerations for selecting an external manager and generally only managers with a sound management record are considered. For example, AIMCo's Renewable Resources team regularly conducts meetings with selected managers and they receive operational reports covering issues such as workplace safety, environmental protection, human resources, community involvement and consultation to ensure best practice standards are fully implemented and upheld. Similarly, private and public equity external managers are expected to follow established country and industry ESG regulations.