Approach to Responsible Investment

Assessment and monitoring

We have developed a tailored ESG framework that is part of our stock review process. When an analyst reviews a property company, an ESG review will also be done. While the primary source of ESG information is company dialogue, the team also utilises Sustainalytics and MSCI Governance Ratings to streamline the sourcing of data and information. Despite sourcing third party research, in-house research remains the most important source of reference when integrating ESG considerations into the investment process.  

Integration

ESG issues are assessed using a two-pronged approach. Firstly, ESG considerations are one of the variables in the initial screen that we use to determine our defined investible universe. A low ESG score (in combination with low scores on other factors) can lead to a stock being excluded from our investment universe. 

Secondly, each company in our universe is rated on specific ESG factors. These are used in determining the beta in the capital asset pricing model, which directly impacts our valuation of a stock. The higher the team rates a company's ESG profile, the lower the beta, which leads to a higher target valuation. This outcome would make it more likely that we would invest in the stock. 

Engagement

We are firm believers in investor rights and take a proactive stance on ESG issues, especially with regards to corporate governance. Communication with CEOs and board members is undertaken where it is deemed appropriate in order to try and influence and enforce change. 

"Despite sourcing third party research, in-house research remains the most important source of reference when integrating ESG considerations into the investment process."

"We are firm believers in investor rights and take a proactive stance on ESG issues, especially with regards to corporate governance."