Transcript EPM3 update Additional functionality

EIRIS
7 September 2009
Greeneye SRI Seminar
Signatory to the
© EIRIS
Introduction to EIRIS
• EIRIS is an established not for profit research organization
specializing in environmental, social and governance
research on publicly listed corporations.
• Founded 25 years ago, EIRIS was created as a
collaborative research project to assist a group of churches
& charities put their principles into practice.
• Our mission is to conduct high quality research on extrafinancial issues to encourage improved social and
environmental performance.
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© EIRIS
Governance of EIRIS
EIRiS Foundation
Governed by Trustees
Ethical Investment Research Services (EIRiS)
100% owned commercial subsidiary
Governed by Company Board
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© EIRIS
• 1983 – Founded by churches
and charities interested in
issues related to South Africa
• 1990 – EIRIS helps launch
the UK Social Investment
Forum
• 2000 – Launches Ethical
Portfolio Manager
– Provides research for
Norwegian Petroleum fund
– Goes global with
research and sales partners
across Europe, North
America, Asia and Australia
© EIRIS
• 2001 – Launch of
FTSE4Good Indices,
supported by EIRIS research
• 2004 – EIRIS announces the
opening of offices in the US
and Japan in 2005.
• 2005 – Launch of Convention
Watch product
• 2006 – Launch of country
sustainability ratings
• 2008 – Launch PRI & Climate
change toolkits
A Short History
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Our Staff & EIRIS
Network of Partners
• Our 50+ staff are highly educated and come from a
variety of professional and academic backgrounds
• Our analysts are frequently called upon for their
expertise in methodology development, reporting
standards and social & environmental best practice
• We can build customized teams according to the
specific needs of the client – ensuring a high level of
competency and project specific solutions
• EIRIS works with partner organisations to gain local
knowledge, language skills and provide extensive
additional resource
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Short-term performance vs.
long-term sustainability
• Increasing number of
investors concerned with
ESG related risks
• Conflicts over ESG and
fiduciary duty still remain
(common law jurisdictions)
• Long term nature of ESG
risks conflicts with short
term measurement of fund
manager performance
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Source: www..cartoonstock.com
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Helping clients
For
integration
Provision
ESG data
&
advice
Engagement
reviews
Provision
of Due
Diligence
services
For stock
selection
For
Engagement
negative
screening
tilting
portfolios
Carbon
profile
Sustainability
report card
ID of risks & PRI report
card
opportunities
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positive
screening
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What data do we hold?
a) Coverage
© EIRIS
Note larger coverage available on Controversial weapons
and news services
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Stakeholder
Responsibility
SEE risk
• Risk management
• Specific sector risks
• E.g. Access to medicine
Board
Structure &
Practice
Board Ethics
Bribery &
Corruption
Convention
Watch
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Military
Nuclear power
Animal testing
GMOs
etc
b) Criteria
Other
involvements
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Equal opps
Training
Health & safety
Trade unions
Employees
EIRIS
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Alcohol
Tobacco
Gambling
‘Pro-life’
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Chemicals of concern
Sustainable timber
Product Stewardship
Transport
criteria
‘Sins’
Product
and
process
= Risk / impact linked assessments
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Community
Customers &
suppliers
Policy
Systems
Reporting
Performance
Human
rights
Biodiversity
Climate
Change
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Human rights
Labour standards
Supply chains
Indigenous rights
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Most clients access data
via EPM = flexibility
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Climate Change Toolkit
3 Products:
• Carbon Profile
– To identify risks in a portfolio
• Carbon Engager
– Encourage companies to address climate
change risks
• Carbon Risk factor
– Quantify carbon risk
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Example
Carbon Profile
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Carbon
Engagement
assessment
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Carbon Risk Factor
• Score for each
company on a scale
from zero to 100
• Below 50 considered
unmitigated risk
• Above 50 risk is
considered mitigated
• Above 75 considered a
‘carbon solutions
company’
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Case Study
• Asset Management arm of Lloyds Banking Group
• Two SRI Retail funds – SWIP Environmental
Investor and SWIP Ethical Fund
• Two carbon profile reports completed on
Environmental fund
• Twice as many companies in portfolio have
adopted a ‘good’ carbon strategy as benchmark
• Advice on engaging with high impact companies
in portfolio
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PRI Toolkit
3 Products:
• EIRisk
– To integrate ESG considerations into investment
mangement
• UNGC Engager
– Encourage companies to address global compact issues
• Report Monitor
– Improving Corporate ESG reporting
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© EIRIS
Case Study
• 5th largest insurance group globally
• PRI signatory
• Manage institutional and retail funds in
accordance with responsible investment
guidelines
• Use Global Compact Engager to flag ESG
risks facing companies for portfolio
managers
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Breach result
identifies
companies with
unaddressed
(No evidence)
Convention
Watch
allegations
Companies that
are ‘low risk’ in
all areas are
identified
separately
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EIRisk (ctd.)
As well as generating a result and a score for each
company, the EIRisk policy will come with a secondary
policy identifying High/Medium/Low risk companies
based on combination of issues:
Same result
but different
risk level –
may want to
treat them
differently
Company
name
Sector
EIRisk
rating
Total score
Risk level
Co A
Mining
Risks
mitigated
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High
Co B
Mining
Some weak
areas
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High
Co C
Media
Some weak
areas
2
Low
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Convention Watch
• Covers 5 main issue areas (reflecting UN Global Compact)
• Enables investors to identify allegations of company
breaches of the spirit of international conventions on
human rights, labour standards, the environment,
corruption and landmines
• Quarterly reports
• Available on paper or though EIRIS EPM software
• 2,800 companies researched + bespoke
• Each company with allegations is contacted for their
response
• Transparent methodology and thorough research process
using a wide range of sources
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© EIRIS
Case study: ATP
• Danish state pension fund 4.5 Million
members, assets approx €40 Billion
• Recently established ethical committee
• International norms-based approach
• Seeking severe or repetitive allegations
– Do the allegations represent one-off issue or
management failure?
• Combined approach: exclusions and watch
list
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How is this applied at ATP?
• Quarterly EIRIS reports
• Internal analysis – examples:
– Watch list 1: Single issue (acceptable)
– Watch list 2: Varied repeated issues i.e. 1 addressed, 1
not addressed (acceptable)
– List 3: Repeated breaches i.e. 2 not addressed
(unacceptable)
• May disagree with EIRIS assessment
• Ethical committee approval
– Case by case evaluation and final decision
• Exclusions made on unacceptable cases
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Using EIRIS Research
Screening
Governance
Engagement
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Screening
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Engagement
= Active
Ownership
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Governance
• Social, environmental and (SEE)
issues relate to corporate
governance
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– Increased interest in how board
manages risk and reputation
– Association of British Insurers (ABI)
guidelines: assessing the board
– SEE risk: impact on long-term
profitability
– Investors want disclosure on risk
management – SEE risk affects share
price
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Public Client List includes: Over 100 Institutional clients +
index providers, HNW individuals and charitable organisations
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ACT Pension Fund
AEGON Asset Management
AIB Investment Managers
Allianz Global Investors France
AMP New Zealand
ASB Community Trust
ATP
Australian Conservation Foundation
AXA Investment Managers
Bank fuer Kirche und Caritas
Bank of Ireland Asset Management
Bansabadell
BI Management (BankInvest)
BlackRock
Boston Common Asset Management
Brewin Dolphin
Bristol Zoo
British Ecological Society
Brown Shipley Investment Managers
CajaMadrid
Capital International
Cats Protection League
Cazenove Fund Management
Chiswell Associates
CIS
Co-operative Bank
Credit Suisse
Dalton Nicol Reid
Etica
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F & C Asset Management
Fauna & Flora
Federis Gestion d’Actifs
FIDH
FRR
FTSE
Geographical Association
HSH Nordbank
Inhance Investment Management
Insight Investment
Invesco Perpetual
Johannesburg Stock Exchange (JSE)
Joseph Rowntree Charitable Trust
KBC Asset Management
Kleinwort Benson
L&P Financial Trustees
Legal & General Investment Management
Legg Mason Investment Council
Lupus Alpha
M & G Investment Management
Macif Gestion
Martin Currie Investment Management
Merrion Investment Managers
Methodist Church Central Finance Board
Mondrian Investment Partners
Morgan Stanley
Nataxis Asset Management
New Star Asset Management
New Zealand Superannuation Fund
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Newton Investment Management
Nomura Asset Management
Norwegian Government Pension Fund
Norwegian Red Cross
Oxfam
Pen-Sam
PKA
Plan International
Prosecur
Red Cross Australia
Robeco Institutional Asset Management
Royal Geographical Society
Royal London Asset Management
Santander Gestion de Activos
Schroders Investment Management
Scottish Widows Investment Partnership
Setanta Asset Management
Souls Fund Management
St. Patricks Missionary
Standard Life Investment Management
Strathclyde Pension Fund
Suntrup Portfolio Management
Union Investment
Unipension
World Vision
WFF
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© EIRIS
EIRIS USP
Expert,
Independent &
Holistic Research
Expert:
Clear
methodology designed with
relevant
stakeholders
& centralised
quality
control
© EIRIS
Holistic &
Flexible:
EPM – data
on wide
range of issues
Enabling
Rankings,
Screening &
Engagement
Independent:
- Owned by
EIRIS
Foundation
- Derives no
income from
corporate
consultancy.
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Contact details
Stephen Hine
Head of Responsible Investment Development
80 - 84 Bondway
London SW8 1SF
tel: 44 (0) 20 7840 5716 (direct)
44 (0) 20 7840 5700 (switchboard)
fax: 44 (0) 20 7735 5323
web: www.eiris.org
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© EIRIS