Active Ownership

Responsible Investment Philosophy:

Responsible investment (RI) is an umbrella term used to describe a broad range of approaches that can be used to incorporate ESG considerations into the investment process. RI is also sometimes referred to as sustainable investment. PH&N views ESG integration as systematically incorporating ESG factors into investment processes with the goal to identify potential risks and opportunities and improve long term, risk-adjusted returns.

Their approach to RI is comprised of three pillars, and PH&N takes specific actions under each of these pillars to deliver investment returns without undue risk of loss.

• Fully integrated ESG: All investment teams integrate relevant ESG factors into their investment processes.
• Active Stewardship: PH&N conveys its views through thoughtful proxy voting, engagement with issuers and regulatory bodies, and collaboration with other like-minded investors.
• Client-driven solutions and reporting: PH&N aligns solutions with client demand and provide transparent and meaningful reporting.

Integration in the Investment Process:

Rather than applying a top-down ESG investment screen, PH&N teams assesses the risks and opportunities associated with issuers’ ESG practices throughout the due diligence process. A team’s main goal is to understand the impact of such practices on the company’s overall sustainability and credit quality. The teams employ a wide range of resources to expand their insight of pertinent ESG information, including management and rating agency engagement, as well as third-party research. PH&N does not force themselves to look for ESG factors in order to fulfill an arbitrary requirement but, instead, believe it is prudent and vital to look at a corporate bond in its entirety. This research naturally includes ESG considerations to the extent that they reflect the quality and value proposition of an investment.

ESG Philosophy:

Whether one calls it corporate governance, corporate social responsibility, ESG, responsible business conduct, or sustainability, the underlying concept is the same: a company’s character matters. In our experience, the odds of a company achieving a successful combination of growth and longevity cannot be separated from its corporate character. Good corporate behaviour can increase the probability of exceptional returns.

Being long-term investors with an investment horizon of 5-10 years and beyond, Baillie Gifford seeks to ask the right questions and get to know companies deeply. Business fundamentals – such as a company’s market opportunity, returns, capital deployment, and sustainability of competitive advantage – are considered together with the intangible notions of business culture, adaptability, and role in society. In other words, an analysis of corporate character is intrinsically built-in to our investment approach.

Integration in the Investment Process:

Baillie Gifford integrates potentially material ESG issues affecting holdings through its 10 Question Stock Research Framework. Specific questions target a company’s sense of wider responsibility and ESG considerations are embedded into several questions.

Responsible Investment Philosophy:

As active stock investors, C WorldWide favors a proactive engagement approach rather than an approach based on extensive exclusion lists. Its objective is to have an ongoing dialogue with invested companies. Integrating environmental, social and governance (ESG) factors in its investment decisions is an essential part of its fundamental analysis process as it evaluates what is material to all stakeholders of the investee company over the long-term and not just the next few quarters or even years. C WorldWide believes that addressing stewardship with investee companies results in a dialogue that will assist the investee companies’ adaptability to changing markets.

Integration in the Investment Process:

C WorldWide believes that a strong ESG company profile starts with the G (i.e., governance). Its view is that good corporate governance is typically anchored with good company managements. The firm believes that a good corporate governance foundation is a key steppingstone to a good ESG profile. For companies to improve their social and environmental agenda they require, first and foremost, a robust governance framework.

C WorldWide feels that ESG factors make a difference to long-term active portfolio management and the firm believes there is no conflict between stock returns and sustainability. It believes that investments in sustainable companies are drivers for higher, longer term risk-adjusted shareholder returns. C WorldWide believes that this mitigation of risk is a key contributing factor when ESG considerations are taken into account.

C WorldWide thinks that its active, high conviction equity portfolios reinforce its commitment to ESG. This is because the firm’s focus on concentrated stock-picking lifts company specific ESG awareness. Its experience is that sustainable companies often make a good stock resulting in higher returns at a lower risk and therefore outperforming over the longer term.

Responsible Investment Philosophy:

Responsible Investing is central to what Walter Scott does and what it believes. The firm understands that Environmental, Social, and Governance factors, as much as financial metrics, determine the long-term success of an investment. It believes integrity, sustainability, and governance factors are important in assessing a company’s ability to prosper over the long term. Because of this, Walter Scott fully integrates its assessment of these factors into the firm’s investment process. Walter Scott is member or signatory to a number of select groups that it believes best represents the industry in pushing for meaningful change or where it feels the educational element will complement its own research in a material way.

• Principles of Responsible Investment (PRI) Walter Scott has been a signatory since 2017. Our 2020 rating is A+, A, A.
• Carbon Disclosure Project (CDP)member
• UK Investment Associationmember
• Climate Action 100+member
• International Corporate Governance Network member

Integration in the Investment Process:

• Responsible: The firm is entrusted to invest on behalf of our clients over a long-term investment horizon. As such, it has a duty to understand each company in which it invests, including its approach to Environmental, Social, and Governance (ESG) matters. Water Scott’s experience has taught them that only those companies that strive towards appropriate ESG standards are likely to prosper over the long term. Companies that do not meet the firm’s rigorous standards will not be considered as potential investment candidates.
• Integrated: The research team assesses the ESG factors that may affect the operating and financial performance of each company. ESG considerations could include air and water pollution, human rights, labour standards, safe development of medicines, board leadership, remuneration, and conflicts of interest among others. The list is not exhaustive and not every factor considered will apply to every company. The firm’s assessment is a key part of our engagement discussions with company management. Given the importance of these factors in determining the long-term sustainability of a business, we do not delegate ESG analysis to a separate team. We believe it is essential that each member of the firm’s Research team has responsibility for understanding a company’s ESG profile.
• Engaged: Engagement with companies is pivotal to good stewardship. Walter Scott expects every company it invests in to engage on issues of sustainability. By actively engaging with a company, the firm gains a better understanding of its business, including its ESG credentials. It also means Walter Scott can use its influence as investors to effect meaningful change. Through its long-term investment horizon, and very often long-term tenure through the firm’s clients as significant shareholders, Walter Scott has built excellent relationships with corporate management teams. The firm’s direct engagement with companies allows better assessment and understanding of how they approach ESG issues. The firm expects management teams to assess the materiality of ESG factors and to target, disclose, monitor, and provide progress reports accordingly.

Responsible Investment Philosophy:

Brookfield’s business philosophy is based on its conviction that acting responsibly toward its stakeholders is foundational to operating a productive, profitable and sustainable business, and that value creation and sustainable development are complementary goals.

Brookfield defines material ESG considerations as those that have the potential to have a direct, substantial impact on an organization’s ability to create, preserve or mitigate erosion of economic value, environmental or social value for itself and its stakeholders. The elements on which we focus may differ across certain industries, activities, geographic locations and types of business (i.e., control, joint control, minority, public equity or debt). Its approach to ESG incorporates leading ESG frameworks and standards, including Sustainability Accounting Standards Board (“SASB”) standards and the Taskforce for Climate-related Financial Disclosures (“TCFD”).

Integration in the Investment Process:

Brookfield embeds material ESG considerations and evaluate risks and value creation opportunities throughout its investment process. The firm actively looks to advance ESG initiatives and improve ESG performance in driving long-term value creation throughout the lifecycle of our investments. Its investment processes align with the PRI’s six Principles.

Responsible Investment Philosophy:

Macquarie believes the identification, assessment, and responsible management of ESG risks and opportunities is essential to the sustainable long-term development of assets and the communities in which they operate.

ESG considerations are embedded within Macquarie’s investment decision-making approach and the asset management frameworks that inform the way in which portfolio companies assess and improve their performance. Macquarie partners with its portfolio investments to share best practices and drive positive change. They seek to improve working conditions, minimize environmental impact, and preserve the cultural heritage of the communities in which they invest.

Integration in the Investment Process:

To ensure the consistency and adequacy of these assessments they have comprehensive due diligence scope checklists and external expert advisers are engaged as needed on specific ESG issues.

Results from ESG due diligence assessments include:

• Permit and license requirements and issues arising from investigations;
• Key ESG risks and potential liabilities;
• Recent regulatory actions taken, reviews and/or third-party actions or claims against the company;
• Ongoing obligations/regulatory standards to be met post-acquisition;
• Assessment of the ESG risk management framework in place against accepted good practice; and
• Recommendations for any remediation actions.

Responsible Investment Philosophy:

BentallGreenOak (BGO) is guided by its purpose as a fiduciary to create sustainable spaces that deliver long-term value for our clients, tenants, and the communities that we serve. Empowered by this responsible investment mindset, the firm is committed to realizing ESG goals that enhance asset value, ensure compliance, promote industry-leading management practices, and drive superior performance. This commitment to responsible investment and ESG integration is carried across BGO’s global real estate debt and equity investment platform, at both the portfolio and property levels.

While BGO’s decade of ESG leadership has achieved global recognition to date, the increased focus over the last several years on the climate crisis, social unrest, and the COVID-19 pandemic have brought ESG risk management to the fore. To successfully respond to these critical ESG issues and continue to be at the forefront of environmental and social change, the firm incorporates ESG considerations throughout an asset’s entire lifecycle. Through this approach, BGO is building a portfolio of the future that recognizes the relationship that we all have to our buildings, and our desire for safer, healthier, and more inclusive cities.

Integration in the Investment Process:

BGO’s approach to responsible investment is built on the following core pillars:

• Operational Efficiency:

Data Analytics, Target Setting, and Green Building Certifications

State-of-the-art sustainability data management system and comprehensive ESG programs to drive operational excellence and support data-driven decision-making.

• Climate Risk and Resilience:

Climate Risk Analysis and Portfolio Planning

Climate risk profiling and customized adaptation planning tools.

• Social Impact:

Socially Impactful Investments, Equity, Diversity, and Inclusion, and Community Engagement

Proprietary Social Impact Assessment Tool, sound supply chain policies and practices, community engagement activities, and an extensive suite of equity, diversity, and inclusion (EDI) initiatives to drive positive impact for our stakeholder partners and society.

• Tenant Experience:

Tenant Engagement and Health and Well-Being

Bespoke tenant engagement programs that further drive sustainability performance, enhance occupant health and well-being, and strengthen tenant loyalty and satisfaction.

• ESG Governance:

ESG Policies and Disclosure

Firm-wide policies that delineate our approach to sustainable investment, environmental stewardship, responsible procurement, and ethical conduct, and robust disclosure practices that enable us to manage ESG risk, strengthen transparency and accountability, and create value for our clients and stakeholder partners.