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Prime Buchholz

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.

Throughout our history, Prime Buchholz has partnered with clients who have sought to align their investments with their mission.From endowments seeking to divest from fossil fuels or tobacco and alcohol to environmentally oriented foundations who both divest from fossil fuels and proactively invest in solution-oriented products to clients who want their managers to integrate ESG factors into their investment process, we have been helping clients create portfolios that reflect their values for more than two decades.

What began as an organized task force looking specifically at socially responsible investing over a decade ago has transformed into our 20-member Mission-Aligned Investment Committee, which mirrors in structure our traditional Asset Class Committees. This Mission-Aligned Investment Committee meets regularly to formally discuss managers, portfolio implementation and emerging trends, and the continuing challenges and opportunities in mission-aligned investing that could potentially impact clients’ investment programs. The Committee provides updates to staff through our weekly Firm-wide meeting, professional development seminars, and at our annual summer summit—a meeting of the research team and consultants. Additionally the Mission-Aligned Investment Committee is tasked with working with clients and client service teams to find solutions for clients seeking to align their mission with their investments, and attending client meetings to provide education on sustainable, responsible, and impact investing to include trends we are seeing across the ESG space.

We have helped clients create investment policy statements that incorporate their mission and philosophy and have assisted them in developing socially responsible guidelines.We have extensive experience working with clients to build portfolios and/or select managers that meet their specific requirements from a sustainable/ESG perspective. We have performed a variety of exposure analyses for clients to help them understand their exposure to specific industries, including fossil fuels, alcohol, tobacco, gambling, GMO, and weapons manufacturing. We also provide research to address performance and fiduciary concerns, assess third-party ratings providers, help set priorities for implementation based on client goals and the robustness of the asset class universe, and create monitoring tools to allow clients to track and report their progress on mission-related goals.

As part of our continued efforts to expand and share our skill set and knowledge in this area, we have partnered with various organizations such as the Intentional Endowments Network (IEN), a peer-learning network advancing intentionally designed endowments, of which Prime Buchholz is a founding member. We have also partnered with BASIC and CERES and became signatories of the United Nations supported PRI initiative in the latter half of 2015. We’ve also worked in support of our clients in partnering with these and other organizations. Similar to how we assist clients through their traditional audits, we’ve helped assemble data to meet the reporting requirements of initiatives such as UN PRI and the Association for the Advancement of Sustainability in Higher Education (AASHE), and Sustainability Tracking, Assessment & Rating System™ (STARS), while supporting clients in becoming UN PRI signatories.

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

01.5. Additional information [OPTIONAL]

Regarding SG-01.02, as an independent investment consultant, our policies were established to support our clients and their beliefs.


SG 02. Norms used to develop policies (Not Applicable)


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.

The process involves identifying mission, stakeholders, non-investment activities that may inform the investment approach, alignment approach (exclusions, proactive, shareholder advocacy, proxy voting, separate pool, green revolving loan funds, program-related investments), available resources/staff, available networks, investment strategy, and comfort with short-term performance deviations.

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

Investment Consultancy

How you include ESG/RI factors

Our approach is to help clients create investment policy statements and programs that incorporate their mission, philosophy, and values. We perform a variety of exposure analyses to help clients understand their exposure to industries such as alcohol and fossil fuels.We provide research to help address performance and fiduciary concerns, assess third-party ratings providers, help set priorities for implementation based on client goals and the robustness of the asset class universe, and create monitoring tools to help clients track their progress to their mission-related goals. Additionally we assist clients in partnering with like-minded organizations and provide ad hoc education and research.

We work closely with all recommended investment managers to understand how their approaches to ESG align with those of our clients.

Prime Buchholz is a founding member of the Intentional Endowments Network (IEN). Our 20-person Mission-Aligned Investing Committee shares the responsibility of conducting due diligence and monitoring of ESG/SRI managers with the other asset class committees.Committee members also attend conferences, interface with thought leaders, develop exposure and impact reporting solutions, and work with clients to align their investments with their mission.The Committee has approved approximately 55 ESG products for client investment and influenced the development of products.

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

          Mission-Aligned Investing Committee Co-Chairs
        

Please specify

          Mission-Aligned Investing Committee Co-Chairs
        
Dedicated ESG/RI staff
Other role, specify (1)

Please specify

          Mission-Aligned Investing Committee Members
        

Please specify

          Mission-Aligned Investing Committee Members
        
Other role, specify (2)

Please specify

          Prime Buchholz Investment Committee
        
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.

04.5. Describe the ESG/RI linked incentives.

Variable compensation paid is tied to participation and performance in mission investment initiatives.

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.

Our training primarily takes place with individual boards/committees of our clients, but also includes speaking on panels at various investment conferences. Both will be tailored to the specific audience and subject of focus, but often includes trends, implementation approaches, and broad overviews of the ESG/SRI/Impact investing industry. In addition, we have partnered with investment managers on ESG/RI product development.

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

          They do not.
        

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 have helped clients assemble data specifically to meet the reporting requirements of the PRI initiative, while providing broad educational, analytical, and implementation support to clients seeking to invest with an ESG focus.

We sent surveys to Prime Buchholz-approved managers; the surveys were tailored to the relevant asset class, and the goal was to understand and document manager views on ESG-related issues and how they factor into their investment processes and risk assessments. After becoming signatories, we began to ask asset managers if ESG risks and/or opportunities are factored into the investment process as part of our initial due diligence.

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

We hope to continue to benefit from the educational materials and opportunities provided by PRI and to relay this knowledge to our staff and clients.


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.

We recommend strategies that are responsive to all of these trends and also engage traditional managers on these factors.

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

We recommend strategies that are responsive to all of these trends and also engage traditional managers on these factors.

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

We recommend strategies that are responsive to all of these trends and also engage traditional managers on these factors.

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

We recommend strategies that are responsive to all of these trends and also engage traditional managers on these factors.

          Workplace dynamics
        

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

We recommend strategies that are responsive to all of these trends and also engage traditional managers on these factors.


SG 10. Interaction with asset owners

10.1. Indicate whether you interact with asset owner clients.

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

Type of interaction

Frequency

Frequency

Frequency

Frequency

Frequency

10.3. Additional information. [OPTIONAL]


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.

As an independent investment advisor, our goals and the client’s goals are one in the same.We believe a client’s mission is intrinsic to its investment policies and guidelines and have been working with clients for decades on ESG/RI investment considerations and implementation.Our philosophy/approach focuses on turning visions into realities; therefore, we aim to utilize the knowledge we gain from PRI and other resources to guide clients through the planning, implementation, and monitoring process and build a portfolio that is designed to execute their ESG/RI mission.

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.

Our ultimate goal is to help clients execute their investment goals. There are often multiple avenues that can lead to the same destination. We often provide clients with a variety of options that we believe can achieve their goal of exemplary performance and executed mission. If a client does not approve of these options, we will work with them to find an acceptable alternative that achieves the mission-focused efforts.

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.

As with all aspects of our services, we are continually seeking feedback from clients on how to better serve them. We have several long-time clients who have become key sources of objective outside advice. When improvements are suggested as it relates to RI/ESG, we present the feedback to our Mission-AlignedInvestment Committee, which will investigate the feedback and seek to improve the services we provide clients.


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.

Prime Buchholz was built on the notion that without true independence, there is no such thing as conflict-free investment advice.As an independently owned and operated investment advisory firm, the sole focus of our business is to provide independent and impartial investment advice and guidance to clients.To avoid potential conflicts of interest, we are not associated or affiliated with any other business entities; do not sell any services or products to investment managers; and do not solicit or accept any fees, retainers, or other forms of compensation such as “soft dollars.”

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.

Our Code of Ethics establishes rules of conduct for all Prime Buchholz employees and is intended to preclude activities that may lead to or give the appearance of conflicts of interest, insider trading, and other forms of prohibited or unethical business conduct.It is based upon the principle that Prime Buchholz and its employees owe a fiduciary duty to the Firm’s clients to conduct their affairs, including their personal securities transactions, in such a manner as to avoid:(i) serving their own personal interests ahead of clients, (ii) taking inappropriate advantage of their position with the Firm, and (iii) any actual or potential conflicts of interest or any abuse of their position of trust and responsibility.

14.4. Additional information. [OPTIONAL]


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