ESG Integration
As UTAM’s approach to responsible investing has evolved, we’ve become more systematic in weighing ESG considerations when we select and monitor our investment managers. Below, we offer a more granular view of the many ESG-related factors that we typically take into account, where appropriate to the mandate:
Investment Manager Selection
- Evaluate the manager’s responsible investing approach
- Review the manager’s responsible investing policies
- Evaluate the quality of the manager’s investment policy and its reference to ESG
- Review the manager’s firm-level versus product-level approach to responsible investing
- Review the manager’s responsible investing promotion efforts and engagement within the industry
- Meet with staff members who are focused on responsible investing in order to assess their skills and competence
- Discuss the current governance and management of the firm’s responsible investing activities including how ESG implementation is enforced
- Discuss the manager’s involvement in collaborative and direct ESG-related engagements with companies in the manager’s investment portfolio
- Discuss relevant ESG due diligence questions with the manager and follow up where appropriate
- Review how the manager evaluates ESG materiality
- Discuss the process for defining and communicating ESG incidents
- Review the manager’s proxy voting policy and processes (in cases where UTAM would not direct voting)
- Determine whether the manager is a signatory to the PRI and/or other relevant initiatives and organizations
- Review responsible investing reporting to clients and/or the public
- Communicate the type of ESG reporting we expect
- Evaluate the coverage and quality of the firm’s ESG-related research
- Assess current strategies for incorporating ESG factors, as well as the manager’s ability to identify and manage ESG-related issues
- Review ESG-related characteristics of the investment portfolio
- Investigate the impact of ESG factors on specific investment decisions and, where relevant, subsequent performance
- Discuss securities in the manager’s portfolio that appear to have material ESG risks
- Incorporate a review of ESG considerations in our internal manager recommendation memos, including rating the manager from an ESG perspective
Investment Manager Monitoring
- Discuss how the manager has evolved its responsible investing approach
- Include responsible investing as a standard agenda item at manager update meetings
- Where relevant, highlight examples of good practices by other managers in the area of responsible investing
- Encourage the manager to participate in responsible investing initiatives or to join organizations engaged in promoting ESG integration and responsible investing
- Discuss and monitor the manager’s participation in collaborative projects with other investors
- Review the manager’s responsible investing reporting
- Meet with staff members who are focused on responsible investing to discuss current research and review any changes in the manager’s approach since the last meeting
- Review ESG-related characteristics of the investment portfolio
- Request details of the integration of ESG considerations in specific investment decisions
- Discuss securities in the manager’s portfolio that appear to have material ESG risks
- Incorporate a review of ESG considerations in our internal manager review memos, including updating the manager’s ESG score