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PIRC Limited

Service Providers Framework 2019

You are in Strategy and Governance » Policy on ESG beliefs

Policy on ESG beliefs

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.

PIRC is a research provider specializing in a holistic approach to corporate governance and governance of Environmental & Social issues. Although our main focus is analysis on governance, we are currently expanding our coverage on other environmental and social factors, to cover a greater range of sustainability disclosures, in particular diversity at all levels and the governance of sustainability at board level.

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

01.3. Indicate the components/types of your internal policy and provide the URL and/or an attachment of the document/s if they are publicly available.

Policy components/types

Public availability

Public availability

Public availability

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

01.5. Additional information [OPTIONAL]


SG 02. Norms used to develop policies

02.1. Indicate what frameworks and guidelines you have used to develop your organisation’s policies. Tick all that apply.

          EU directives and regulations: EU Audit Directive, Non-Financial Disclosure Directive, Global Data Protection Regulation
        
          Local corporate governance recommendations
        
          Local board diversity legal quotas, or recommendations; EC initiative on 40% female on board by 2020.
        

02.2. Additional information. [OPTIONAL]


SG 03. Policy offerings to clients

03.1. 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

03.2. Provide a brief description of the key elements, any variations, or exceptions applying to these policies.

All of our voting recommendations are based on ESG factors, mostly governance concerns.

03.3. Additional information. [OPTIONAL]


SG 04. ESG/RI in business offerings

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

Business area

Research and Data Provision

How you include ESG/RI factors

Our voting recommendations to clients are based on a range of environmental, social and governance factors, with most analysis on governance. We take an all-round approach which includes the oversight of governance of sustainability within the board of directors, as well as the disclosure of non-financial indicators.

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

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

Please specify

          Heads of Research
        

Please specify

          Heads of Research
        
Dedicated ESG/RI staff
Other role, specify (1)
Other role, specify (2)
Other role, specify (3)
None of the above

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

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

04.7. Additional information [OPTIONAL]


SG 05. Outsourcing of services (Private)


SG 06. Providing training/education

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

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

PIRC hosts free seminars and conferences for clients discussing all aspects of the ESG work that PIRC provides. PIRC also attends trustee meetings presenting on ESG issues. PIRC provides a one day training course for clients on all aspects of the contents of a PIRC Corporate Governance report.

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

          PIRC provides publications to clients in support of its' ESG work in the form of global voting guidelines, responses to consultations in relation to the ESG agenda, a weekly client newsletter PIRC Alerts highlighting upcoming ESG issues.  PIRC also provides clients with in depth ESG policy papers.
        

06.4. Additional information. [OPTIONAL]


SG 07. Applying, advancing and promoting the PRI principles

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

We incorporate ESG issues into the investment analysis and decision-making processes of our clients, by providing ESG-based voting advice on resolutions at General Meetings. In order to do this, we review appropriate disclosure on ESG issues by the entities in which our clients invest. In addition, we are active in responding to public consultations as well as participating in other activities such as organising client seminars and speaking at  conferences, where we promote the implementation of ESG principles among issuers and across peers.

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


SG 08. Actions taken to promote responsible investment

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

8.2. Additional information. [OPTIONAL]


SG 09. Long term trends

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

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

Diversity and the changes related to diversity have been and remain some of the core challenges for the corporate governance agenda. There is growing pressure for companies to disclose a full breakdown (including pay) of the number of men and women employed at all levels, and to have gender-related policies integral to corporate strategy. We closely monitor local guidance and regulations, and constantly adapt our guidelines, in order to ensure the most relevant trends in diversity are captured in our analysis.

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

We are constantly monitoring the governance of data security: the more technological advances there are in capturing, retaining and using data, the more we expect corporate boards to be aware and to implement and report on related policies and practice.


SG 10. Interaction with asset owners (Not Applicable)


SG 11. Aligning approach with investor goals

11.1. Describe how you typically align your organisation’s philosophy and approach to ESG/RI with your investor clients’ goals.

11.2. Additional information. [OPTIONAL]


SG 12. ESG recommendations not aligned with investor goals

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

12.2. Additional information. [OPTIONAL]


SG 13. Seeking feedback from clients

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

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

We share policy changes with our clients annually, prior to any changes being applied in analysis of general meeting resolutions for client reports. In addition, we provide analysis and associated voting advice based on particular environmental and social -related factors with clients who have bespoke voting policies.


SG 14. Managing conflicts of interest

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

14.2. Describe how you manage potential conflicts of interest.

 PIRC is regulated by the Financial Conduct Authority and all employees are required to complete a declaration of interests. Public disclosure of the conflicts of PIRC’s conflict of interest policy is by means of the Stewardship Code Statement and PIRC’s compliance statement with the Best Practice Principles for Providers of Shareholder Voting Research & Analysis, both of which are on the PIRC website.

 

Voting Services

We recognise that PIRC is in a position of trust and should act at all times in the best long terms interests of its clients. One of our principles of best practice is the disclosure of conflicts of interest. PIRC has taken the business decision that to avoid conflicts of interest, we should not seek to provide services to both issuers and shareowners. Therefore PIRC only provides services to shareowners and does not work for, or consult to, public companies. This means the potential for conflicts of interest rarely arises with regard to the research carried out on client portfolios.

However, we do recognise the potential for conflicts of interest to arise, and PIRC will disclose in reports to voting services clients if it perceives a conflict to exist, for example if PIRC has advised the proponents of a shareholder resolution. Other conflicts of interest may arise through business, financial, personal or other interests. PIRC will generally identify any conflicts that may arise if it is selected to provide services for shareowners. It will then identify if they are manageable and will implement measures taken to avoid the conflict.

PIRC is regulated by the Financial Conduct Authority and all employees are required to complete a declaration of interests.  PIRC internally reviews its conflicts of interest policy and has incorporated this into its internal HR manual.  Public disclosure of the conflicts of interest policy is by means of the Stewardship Code Statement and PIRC’s compliance statement with the Best Practice Principles for Providers of Shareholder Voting Research & Analysis, both of which are prominently displayed on the PIRC public website. 

 

Engagement Services

Engagement services clients are frequently present in engagement meetings, with PIRC staff. In relation to its own staff, PIRC follows the same conflict of interest approach outlined above in respect of each engagement.  For clients, in engagement meetings, in practice this is often simply addressed by stating the nature of the connection that may be perceived as a conflict of interest, and if this is acceptable to the company representatives, the meeting can progress. As a matter of course, in engagement meetings, it is clarified that PIRC staff are only there to represent the client’s agenda.  PIRC has also worked with one engagement client to establish a code of conduct for them that covers conflicts of interest. Part of the conflict of interest clause contained within this code includes disclosure when they must declare conflicts of interest and in which fora.

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

Staff holdings must be periodically reported to the compliance officer; in addition, each report for clients goes through a checking process managed by at least two people at different levels.

14.4. Additional information. [OPTIONAL]


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