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Valoral Advisors

Service Providers Framework 2020

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.

Agricultural assets play a number of roles in portfolios, providing diversification, stable current income, the potential for strong, long-term returns, and an inflation hedge. Besides these benefits, investments in agriculture can also present opportunities for alignment with a number ofimportant Sustainable Development Goals (SDGs).

Valoral Advisors embraces the sustainable development of the food and agriculture sector built on the triple bottom line – social responsibility, environmental soundness, and economic viability. We believe that conducting business for profit and impact represents the largest investment opportunity of our era in this sector. In this way, enduring value can be created through strategies that leverage the inherent link between natural, social and financial capital.

For this purpose, and together with ESG consultants:

We facilitate specific expertise and resources for those clients who are looking to invest in or to build impact-focused opportunities in areas such as water conservation, regenerative agriculture, sustainable food production, food loss & food waste mitigation, health and wellness, and resource efficiency, among other impact themes.

We screen and evaluate opportunities for value creation through sustainable agriculture.

We work with clients to combine investment performance, along with environmental and social impact, into well-diversified investment portfolios.

We help to incorporate environmental, social and governance (ESG) metrics and analytics into investment decisions and management as a way not only to contribute to sustainable development in the target markets, but also to provide a way to enhance the investment process by assisting to identify and manage risks, as well as to create value.

We partner with fund managers and other investment firms to support long-term sustainable and scalable solutions that adress some of the most critical global challenges.

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

01.5. Additional information [OPTIONAL]

We are in the process of formalising our ESG policy during 2020.


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 RI guidelines that we help our clients to develop are always specific to the broad food and agriculture sector, which is our area of expertise.

Usually, these guidelines include screening and exclusion considerations, given the negative ESG background of certain sectors in our industry, such as tobacco, alcohol, deforestation, water pollution, etc.

These guidelines also increasingly focus on climate-smart farming practices, as investors and asset managers find that this is becoming a critical component of their operations.

All our work in this domain is tailored by nature, as our clients usually execute very specific, niche strategies.

 

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

While the specific factors vary by asset strategy, project and geography, there are several common ESG factors that are considered when evaluating opportunities and managing investments.

In general, the process involves identifying the key factors relevant to the strategy in place or to a specific investment and defining the investment process and approach in light of those specific factors. As part of this process, the ESG relevant aspects are factored in the investment process, including negative and positive screening and the use of available industry-wide ESG indicators.

Increasingly, we are considering the use of an impact theme approach, in which the specific impact outcomes that the investors look for have associated ESG factors that we can track.

 

Research and Data Provision

How you include ESG/RI factors

When researching investment managers, we focus on how managers integrate ESG factors into their investment approach. Because of the specificity or the investments we research in the broad food and agriculture investment space, usually the ESG focus is put on specific aspects which are most relevant to the strategy or asset in question. Where appropriate, we may bring a specialist ESG consultant to participate in meetings with management teams from funds, companies or projects alongside.

As part of the monitoring of fund managers, we may carry out a survey of managers, where we evaluate them on their commitment to ESG, how they integrate it into investment and ownership practices and how they report on this to investors.

We are increasingly working on a thematic investment approach, in which we can incorporate specific ESG/RI factors to each of the relevant investment themes we research.

 

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
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.

The training and educational services on ESG/RI provided to our people are mainly based on external courses and attendance to relevant conferences and forums.

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

          No.
        

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.

As a professional service partner to investors and investment managers, being a PRI signatory is a commitment to providing, developing and promoting services that support clients’ implementation of the Principles.

A major effort is put on creating awarness of ESG issues in our investment sector, by publishing proprietary research, participating in industry efforts and engaging with our clients to discuss the relevance of ESG for their investment management activities.

For those clients who are already signatories to the PRI, we look to enhance their ESG adoption into their investment analysis and decision-making process and to report on their activities.

We see this role as a continued, ongoing process, as in many cases it requires a change in investors' mindset.

 

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

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

08.2. 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.

Changing deomographics are at the heart of the food and agricultural investments that we advise on. The main socio-economic factors that drive increasing food demand are population growth, increasing urbanization and rising incomes. There are many investment themes and opportunities that arise from this trend.

 

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

The climate is changing and constraints on natural resources are developing. Indeed, climate change and the impact of global warming is probably the most critical trend in the food and agricultural sector, which is our area of domain. As such, we see more clients pursuing investment strategies that consider the impact of climate change in our sector. Over time we have witnessed that the implications of climate change and global warming are growing in number and relevance in our sector and thus we are putting specific emphasis on how investors can mitigate and adapt to all the negative effects of climate change.

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

Resource scarcity is another major trend in our sector. The projected increase in food demand will put pressure on the already limited natural resources. And the issues are further exacerbated by other trends, such as urbanization. Resource scarcity is seen in land degradation, constrains on water, etc. As such, this trend is also at the heart of the investment advice we provide.

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

Technology innovation is a major trend by itself across sectors and geographies. It is also at the heart of the supply and demand challenges that affect our sector, as innovation across the broad food and agriculture can help mitigate and solve some of those challenges. Investing in technology R&D will prove critical in addressing these challenges and already today the emergence of the AgTech and FoodTech sectors are a testimony of investors embracing technology.

As such, our investment advisory work is increasingly focused on the potential of technology developments. A growing number of clients are investing in this area and we foresee the relevance of technology innovation will continue growing in the years ahead.


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

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.

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.

This feedback is essentially used to measure the relevance and applicability of our advice on RI/ESG to the specific requirements of each client.

We also consider this feedback as a valuable learning tool, as we continue to advance our knowledge and expertise on this domain.


SG 14. Managing conflicts of interest

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

14.4. Additional information. [OPTIONAL]


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