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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%
100 %
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.

Poor management of long-term ESG related risks by a company not only impacts our investments but can potentially harm the broader community and environment as well. Managing ESG risks implies that we must behave as the owners of assets rather than just investors in various securities. It is also important to ensure that the Funds’ agents, be they investment managers, boards, or company executives, act in our interests and are seeking to maximise the long-term returns on behalf of the Funds. ESG considerations are therefore integrated into the Funds’ investment activities, from investment selection and due diligence to ownership activities such as monitoring our internal and external investment managers, exercising our voting rights and engaging with companies to improve their ESG policies and practices.

Our ESG integration approach applies to all asset classes and regions.

 

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

ESG integration is across the whole of the fund.  We also screen out tobacco across the whole fund and offer socially responsible investment options that screen out certain industries such as gambling; fossil fuels; weapons.


LEI 02. Type of ESG information used in investment decision

02.1. Indicate what ESG information you use in your ESG incorporation strategies and who provides this information.

Type of ESG information

Indicate who provides this information  

Indicate who provides this information 

Indicate who provides this information 

Indicate who provides this information 

Indicate who provides this information 

Indicate who provides this information 

02.2. Indicate whether you incentivise brokers to provide ESG research.

02.3. Describe how you incentivise brokers.

We have a broker panel for transitions and research.  Tags are provided to brokers and directed to ESG related research.  We have also paid for bespoke research by providing a direct tag.  We also ensure our brokers on the panel offer ESG research.

02.4. Additional information. [Optional]


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

03.1. Indicate whether your organisation has a process through which information derived from ESG engagement and/or (proxy) voting activities is made available for use in investment decision-making.

03.2. Additional information. [Optional]

Our engagement and voting activities are reported to our internal equities team regularly and our voting decisions are made available weekly via a shared source on our SharePoint directory.  All of our engagement and voting information is available to our equities team for them to reference at any time.  In our manager review meetings we communicate engagement activities to our fund managers.


(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

We exclude companies that manufacture or produce tobacco or cigarettes.

 

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

We disclose this via our Product Disclosure Statement and website.  If material, we would notify all members with a significant event notice in our annual report.


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.

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.

05.5. Additional information. [Optional]


LEI 06. Processes to ensure fund criteria are not breached

06.1. Indicate which processes your organisation uses to ensure fund criteria are not breached.

06.2. If breaches of fund screening criteria are identified, describe the process followed to correct those breaches.

Should it be identified a breach has occurred, the portfolio manager would be required to sell the stock immediately.

06.3. Additional information. [Optional]


(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]

All companies researched for investment in our actively managed portfolio are assessed on a number of environmental, social and governance issues.

Environmental issues include:

- Climate change and its potential impact on investments

- The availability or over supply of water, and competition for the use of water

- Pollution and disposal of waste products

- The impact that a company and its operations have on the local environment

- Future liability risk, arising from activities such as the disposal or spillage of toxic substances, or from contamination of areas or populations

Social issues include:

- The effectiveness of a company in maintaining its ‘licence to operate’

- Labour relations

- Safety

- Adherence to international conventions

- Supply chains

- Workforce diversity

Governance issues include:

- Board composition

- Remuneration structure

- Ethics and culture

- Bribery and corruption


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.

09.6. Additional information. [Optional]


LEI 10. Aspects of analysis ESG information is integrated into

New selection options have been added to this indicator. Please review your prefilled responses carefully.

10.1. Indicate which aspects of investment analysis you integrate material ESG information into.

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

10.2. Indicate which methods are part of your process to integrate ESG information into fair value/fundamental analysis.

10.3. Describe how you integrate ESG information into portfolio weighting.

Companies identified with material ESG issues may be excluded from the portfolio - for example poor governance.

10.4. Describe the methods you have used to adjust the income forecast/valuation tool.

After the ESG issues are identified the analyst incorporates this into their cash flow forecasts which drives the valuation. For example higher operating costs relating to compliance with increased regulation, supply chain disclosure (Modern Slavery).  Higher capital requirements are also considered e.g. Insurers due to physical climate risk.

10.5. Describe how you apply sensitivity and /or scenario analysis to security valuations.

A base, bear and bull scenario analysis is performed on all companies when undertaking research. These scenario analysis look at financial implication of relevant and material E, S and G risks.

10.6. Additional information. [OPTIONAL]


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