We have integrated ESG in our manager research process and it is one of our 10 selection factors. The description of ESG advantage in our process is as follows: “The investment team takes account of ESG risk factors and acts on these when financially material; and there is buy-in at the business level”. We believe that ESG materiality is asset class and sector dependent. Therefore, a broad description of the ESG advantage allows us to focus on those areas with the highest impact within our preferred lists.
In order to ensure the consistency of our output we developed the following framework that works as an assessment guide:
1. Integration into investment process
3. Engagement (stewardship)
4. Business focus & accountability
Beneath these four high level areas we have identified a number of evidence points that we look for.
Preferred managers are surveyed annually to ensure we capture any changes to their ESG risk management and integration processes.