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Sustainability Excellence Management Consulting Ltd.

Service Providers Framework 2018

You are in Strategy and Governance » Responsible investment policy

Responsible investment policy

SG 01. Responsible investment policy

01.1. Describe how your organisation’s philosophy incorporates environmental, social and governance factors, and the link to your business offerings.

As a signatory of the Principles for Responsible Investment, Sustainability Excellence's independent ESG research arm - ESG Invest - has made the formal commitment to drive the responsible investment movement forward in the Arab world by providing a wide range of high quality ESG research that supports investors, asset managers, asset owners, and stock exchanges to integrate Environmental, Social, and Governance (ESG) issues in their core strategies and make better informed investment decisions.

ESG Invest commits to promote the integration of sustainability in financial markets across the Middle East. Through formal partnerships with several regional stock exchanges, we encourage sustainable economic development in the Arab region by promoting responsible investment and integrating sustainability into the financial system. 

ESG Invest commits to challenge every organization in the region to report and improve its sustainability performance and provide organisations with related tools and resources to improve their performance.

01.2. Indicate whether you have internal policies that formalise the incorporation of your beliefs in your business offerings.

01.3. Indicate the components/types of your internal policy

Policy components/types

01.4. Indicate how these are put into practice internally across the organisation.

01.5. Additional information [OPTIONAL]


SG 02. Publically available policies

02.1. Indicate which of your policy documents or statements (if any) are publicly available. Provide the URL and an attachment of the document.

Policy or document name

Attachment (optional)


02.2. Additional information. [OPTIONAL]


SG 03. Norms used to develop policies

03.1. Indicate what standards you have used to develop your organisation’s policies. Tick all that apply.

          Country specific national visions and national transformation plans
        

03.2. Additional information. [OPTIONAL]


SG 04. Policy offerings to clients

04.1. Indicate whether you offer standard, off the shelf, policies to clients as part of your product offerings, and/or whether you create tailored versions for individual clients.

Off the shelf Tailored
Asset class-specific RI guidelines
Sector-specific RI guidelines
Screening/exclusions policy
Engagement policy
(Proxy) voting policy
RI guidelines set out within the Investment Policy Statement (IPS)
RI guidelines set out in a freestanding RI policy
Multi-year RI implementation project plan
Conflict of interest management policy
Stockbroker allocation policy
Securities lending policy
Other, please specify (1)
Other, please specify (2)
Other, please specify (3)
None of the above

04.2. Briefly describe how you incorporate ESG factors and RI-consideration when advising clients on policies.

ESG incorporation guidelines and policies are customised to take into account our clients' investment styles and strategies. 

04.3. Additional information. [OPTIONAL]


SG 05. ESG/RI in business offerings

05.1. Briefly describe how you include ESG/RI factors as part of your business offerings.

Business area

Reporting

How you include ESG/RI factors

Sustainability Excellence Advisory maintains a strong partnership with the Global Reporting Initiative (GRI), the world’s leading guidelines for sustainability reporting. We have worked together to effectively increase the adoption of sustainability practice in the Middle East. Of the 453 sustainability reports issued in the region, more than 50% are by past and present Sustainability Excellence clients

Sustainability Excellence Advisory has worked with the first company, government agency and non-profit organisation in the region to develop aligned sustainability strategies, performance enhancements, and public reporting.

Nearly half of the +100 companies, governments and other organisations that have undertaken sustainability reporting in the region are current or previous clients of Sustainability Excellence.

Sustainability Excellence Advisory has worked with the highest levels of government to develop major national sustainability initiatives, including General Secretariat of the Executive Council in Abu Dhabi and the 34 government entities it oversees; the Qatar Petroleum HSE Regulations and Enforcement Directorate and the Qatar Ministry of Energy and Industry; and the Abu Dhabi Sustainability Group. 

Sustainability Excellence has also created http://www.ArabSustainability.com - the most comprehensive open
platform for ESG performance data of companies and other organizations in the Arab world.

Advisory and Consultancy

How you include ESG/RI factors

ESG Invest helps clients understand how rapidly accelerating responsible investing trends will impact their business – particularly their financial performance, reputations, strategic positioning and overall competitiveness.

We support investment managers incorporate ESG factors in investment decisions through providing a wide range of customised services:

1. Strategy and framework: Supporting investment managers build their ESG framework, strategy, roadmap and implementation strategy and action plan.

2. Investment policy:  Supporting investment managers integrate ESG factors in their investment policies. 

3. Research: Supporting investment managers leverage qualitative and quantitative ESG data, scores, and rating to inform their investment decision process.

3. Training: Providing advanced training on ESG integration strategies to investment managers senior executives and staff.

4. Reporting: Supporting investment managers report to the PRI.

 

Research and Data Provision

How you include ESG/RI factors

ESG Invest provides ESG research reports, ratings, and analysis of more than 700 companies’ risks and opportunities that emerge from environmental, social, and governance (ESG) issues. Through an in-depth analysis of material issues for the sector, our analysis reveals hidden risks or opportunities that may not be captured by mainstream financial analysis.

Our team of native Arabic speaking research analysts assess more than 146 ESG data points across 9 Sustainability Dimensions and 43 ESG issues for companies in the Arab world, analysing the level of integration of ESG issues at the company’s core business activities and assessing the company’s exposure to tail risk events or opportunities. 

Our ESG reports, scores, and percentile rankings are available for direct download to accredited investors via our client dashboard at esginvest.com

05.2. Indicate the roles in your organisation, and indicate for each whether they have oversight and/or implementation responsibilities for ESG/RI.

Roles present in your organisation Oversight/accountability for RI Implementation of RI
Board
Directors
Chief Executive Officer (CEO), Chief Financial Officer (CFO)
Other chief-level staff

Please specify

          
        

Please specify

          
        
Other heads of department

Please specify

          Head of ESG Research
        

Please specify

          Head of ESG Research
        
Dedicated ESG/RI staff
Other role, specify (1)

Please specify

          
        

Please specify

          
        
Other role, specify (2)

Please specify

          
        

Please specify

          
        
Other role, specify (3)

Please specify

          
        

Please specify

          
        
Other role, specify (4)

Please specify

          
        

Please specify

          
        
None of the above

05.3. Indicate how you ensure ESG/RI expertise for the roles where there are RI oversight/accountability or implementation responsibilities.

05.4. Indicate whether your organisation has any ESG/RI linked incentives for its employees.

05.5. Describe the ESG/RI linked incentives.

Performance conditions are linked with exceptional research deliverables on ESG materiality.

05.6. Additional information [OPTIONAL]


SG 06. Outsourcing of services

06.1. Indicate whether you outsource some of your services. Report percentage of services outsourced as percentage for that specific business area.

Business area

SG 07. Providing training/education

07.1. Indicate whether you provide training/educational services on ESG/RI. Tick all that apply.

07.2. Describe the main components of your training/educational services on ESG/RI and any variations depending on the group you provide training/education to.

Sustainability Excellence ESG division - ESG Invest - provides trainings to asset managers on how to integrate ESG factors in their investment decisions.

Sustainability Excellence has formal partnerships with several stock exchanges in the Middle East to promote the integration of ESG issues in capital markets and among the listed issuers.

07.3. Describe whether these training/educational services include any commercial elements.

          ESG trainings provided to stock exchanges and their listed issuers are 100% free and do not entail any commercial elements.

ESG trainings provided to asset managers are included in our ESG ratings service package provided.
        

07.4. Additional information. [OPTIONAL]


SG 08. Applying, advancing and promoting the PRI principles

08.1. Describe how your organisation applies, advances and promotes the PRI Principles.

Sustainability Excellence's ESG division - ESG Invest - strives to apply, advance and promote the PRI Principles.

Principle 1: ESG Invest commits to support the incorporation of ESG issues into investment analysis and decision-making processes. ESG Invest supports investors integrate ESG issues in their investment decisions by providing them with ESG reports, scores and ratings of more than 700 listed companies in the Middle East. 

Principle 2: ESG Invest commits to support the incorporation of ESG issues into ownership policies and practices. ESG Invest provides investors with engagement tools that allow them to identify and prioritise critical ESG engagement topics. 

Principle 3: ESG Invest seeks appropriate disclosure on ESG issues by the entities in which our clients invest in. ESG Invest provides companies in the Middle East with a free copy of their ESG report so that they can identify their strengths and weaknesses in terms of performance and disclosure indicators. 

Principle 4: ESG Invest promotes the acceptance and implementation of the Principles within the investment industry. ESG Invest partners with regional stock exchanges to promote the integration of ESG issues in financial markets.

Principle 5: ESG Invest commits to collaborate with stakeholder group to advance the responsible investing agenda forward in the Middle East. We have created the Middle East Sustainability Investment Forum (MiddleEastSIF.org) to promote responsible investing in the region. ESG Invest has invited senior members from the PRI to promote the principles to the launch event at the Qatar Stock Exchange. This event received high media attention in the Middle East and internationally: http://www.gulf-times.com/story/537780/QSE-chief-urges-firms-to-effectively-communicate-s

Principle 6: ESG Invest commits to report on our activities and progress towards implementing the Principles. ESG Invest has been among the advocates for the adoption of reporting requirement for the service providers. 

08.2. Highlight whether there are any ways that your organisation would like to engage further with the PRI. [OPTIONAL]

Sustainability Excellence has been continuously engaged with the PRI to promote the adoption of responsible investing in the Middle East. 


SG 09. Actions taken to promote responsible investment

9.1. Indicate which of the following actions your organisation has taken to promote responsible investments during the reporting year, independently of collaborative initiatives.

9.2. Additional information. [OPTIONAL]

Sustainability Excellence wrote the first report by the IFC (International Finance Corporation) on the state of sustainability screened investments in Arab region http://www.africasif.org/resources/si_in_mena-exsum-2011.pdf

Sustainability Excellence founded the Middle East Sustainable Investment Forum to promote the adoption of responsible investing practices in the Middle East - www.middleeastsif.org. The Middle East SIF aims to raise awareness on the role and benefits of Responsible Investing (RI) in the Arab world through its reports, regular dialogue via annual and quarterly events and the individual efforts of its members. The launch event of the Middle East SIF at Qatar Stock Exchange was welcomed by regional and international media channels: http://www.gulf-times.com/story/537780/QSE-chief-urges-firms-to-effectively-communicate-s

Sustainability Excellence has supported/ and currently supporting several regional stock exchanges to develop ESG guidance documents to the listed issuers. Sustainability Excellence has deployed and currently deploying engagement sessions with the listed issuers to encourage ESG disclosure. in collaboration with a regional stock exchange.

Sustainability Excellence supported several regional asset managers in integrating ESG factors in their investment framework and we have worked with one of largest regional private equity firms on development of their ESG framework for investing, and delivered pre-investment ESG due diligence reports on specific investments.


SG 10. Long term trends

10.1. Indicate which of the following long-term trends are addressed in your product outputs.

10.2. Explain how this long-term trend affects your product outputs.

Changing demographics is a material issue that we analyse across all sectors. Specific regional challenges we look at in the Middle East include local and youth employment.

ESG Invest assesses companies on issues related to local and youth employment leveraging three angles: strategies and targets set by the companies (policies, and alignment with country specific national visions), measures deployed to promote local and youth employment, and key performance indicators, such as youth employment rates and nationalisation rates.

10.2. Explain how this long-term trend affects your product outputs.

ESG Invest assesses companies within sectors that have a high impact on the issue of climate change, leveraging three angles: strategies and targets set by these companies (policies, and alignment with national visions), measures deployed (e.g. energy saving mechanisms, emissions reduction plans, the use of alternative and renewable energy sources, etc.), and key performance indicators, such as GHG, SOx and NOx emissions intensities.

10.2. Explain how this long-term trend affects your product outputs.

ESG Invest assesses companies within sectors that have a high impact on the issue of resource scarcity (e.g. water scarcity) leveraging three angles: strategies and targets set by these companies (policies, and alignment with national visions), measures deployed (e.g. water saving mechanisms, water reduction plans, water recycling, etc.), and key performance indicators including water consumption intensity, wastewater discharges intensity and water recycled.

10.2. Explain how this long-term trend affects your product outputs.

ESG Invest assesses companies within sectors that are impacted the most by the issue of technology development (e.g. Financials: with topics including Fintech, Data security and privacy) leveraging three angles: strategies and targets set by these companies (policies, and alignment with national visions), measures deployed (e.g. innovative technologies and data breaches prevention measures), and key performance indicators such as assessing trends in data breaches.

 

 

 

10.4. Additional information. [OPTIONAL]


SG 11. Interaction with asset owners

11.1. Indicate whether you interact with asset owner clients.

11.2. Indicate the typical frequency and type of interactions with your asset owner clients.

Type of interaction

Frequency

11.3. Additional information. [OPTIONAL]


SG 12. Aligning approach with investor goals

12.1. Describe how you align your organisation’s philosophy on and approach to ESG/RI with investor goals.

12.2. Additional information. [OPTIONAL]


SG 13. ESG recommendations not aligned with investor goals

13.1. Describe what steps you take, if any, when your ESG recommendations are not in line with investor goals.

13.2. Additional information. [OPTIONAL]


SG 14. Seeking feedback from clients

14.1. Indicate whether you seek feedback from clients on your RI/ESG services and product offerings

14.2. Describe how you use this feedback in your RI/ESG services and product offerings.

We always take feedback from investment managers into consideration to enhance our current products or develop new products that better fit the client's needs.

14.4. Additional information. [OPTIONAL]


SG 15. Managing conflicts of interest

15.1. Indicate whether your organisation has a policy for managing potential conflicts of interest.

15.2. Describe how you manage potential conflicts of interest.

Sustainability Excellence strictly separates its business unit for investors (“investor-solicited”: ESG Invest) from its business unit for Companies and Public Authorities (“corporate-solicited”: “Sustainability Excellence Advisory”). Each of these business unit has its own line management, methods, products and staff. Commercial services of both departments are separated. 

15.3. Describe how you ensure that company employees do not derive any personal gain from the use of information collected during your work process.

In all their research, all ESG research analysts of ESG Invest commit to the four principles listed below:

Objectivity: Capture and interpret the data on companies honestly and objectively by implementing and strictly applying the methodological guidelines.

Neutrality: To not accept any inducement and not succumb to any pressure, manipulation, political influence, or pressure from interest groups to capture and assess companies other than objectively.

Equality: Capture and assess all companies on exactly the same basis, regardless of its country of origin and of any other relationship “Sustainability Excellence” may have with a company e.g. as a client, investor, a consulting client or other stakeholder.

Confidentiality: Conform with all the relevant laws, rules and regulations of national and international financial authorities by not disseminating in a raw or direct public format material and non-public and market sensitive information that they may come across in the course of their work.

Analysts shall conduct the process of collecting and classifying information and perform all their tasks independently, each under the responsibility of the research manager. During the selection of information and the construction of opinions analysts adhere strictly to the principles of the methodological requirements. They should exclude all personal consideration, adjudication, philosophy, belief or preference of any kind whatsoever.

An ESG research analyst may not participate in the collection and assessments of ESG data if he/she:

- Owns stocks or financial derivatives of the company;

- Has had an employment or other major business relationship with the assessed company within the previous 6 months;

- Has a relative (i.e. spouse, partner, parent, child, and sibling) who currently works or has worked within the previous 6 months for the assessed company.

Gifts or favours from anyone with whom Sustainability Excellence does business, offered in the form of cash or any gifts, will be either refused or declared in writing to the research manager. Any personal relationship with a company that creates the potential for any real or apparent conflict of interest shall be disclosed to the research manager.

15.4. Additional information. [OPTIONAL]


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