RI & Stewardship Measures

In recent years we have been including a number of new measures which we believe help evidence the influence that each team's RI and Stewardship practices have on the long-term performance of the team. We have called this 'rethinking performance', and encourage you to read the Rethinking Performance feature article on the home page and to explore the team profiles to see how they provide important additional context. 

We hope that publishing them furthers the conversation within the industry on how we can provide better quality and more insightful reporting. To aid in this conversation, we have made the measures as simple as possible and are disclosing the methodology for each on this page.

Team Level Reporting

We believe team level reporting best highlights the culture and responsible investment approaches of each team. This is because our investment teams have integrated responsible investment and stewardship practices within the investment philosophy and processes that apply regardless of the individual strategy or fund. These underlying investment processes translate into portfolio outcomes albeit in different ways due to the requirements of individual portfolios. Measures like five year average turnover at the team level therefore are intended to highlight the general attitude to trading, not to provide portfolio specific outcomes.

The other reason for team level reporting is that we manage hundreds of funds and so we are conscious not to overwhelm readers of the report with information that lacks insight or descriptive power. Over time we believe we can achieve the benefits of both strategy level and team level reporting through use of interactivity on our website. For example this year we have included a proxy voting portal which allows readers to search for specific company and team votes.

 We hope clients will find this approach useful for seeing their investments with us in context and how they are influenced by the relevant team's approach to RI and stewardship. We also welcome the opportunity to work with individual clients to develop portfolio specific reporting.

ESG and Carbon Metrics


ESG risks can vary for different companies based on the industry they are in (what they do), the countries they operate in or source from (where they do it) and their ethical and professional conduct (how they do it). Recently, our RI and Stewardship report has included ESG risk profiles to provide additional context on industry and country risks.

These risk profiles are based on industry and country exposures and so do not take into account how well these issues are being managed by individual companies or any risks that maybe unique to them. In the future, as data sources improve, we aim to complete this picture with disclosure on the performance of individual companies.

Poor management of any of such risks by companies could result in the loss of our clients’ capital and other negative impacts. Conversely companies that are managing these issues well can add long term and sustainable value for shareholders and other stakeholders. Our disclosures support each team’s approach to integrating ESG factors in their investment analysis and underlines why it is so important.

Industry Exposure

To compile the sector analysis we use Sustainalytics’ industry ESG risk map and count the number of times issues are flagged in eight categories we have created. We provide both a total of all the times the risks are flagged for the industries invested in along with a weighted average based on the actual industry exposure.  

The categories are:

  • Governance - Business Conduct
  • Governance - Product Ethics, Safety & Sustainability
  • Governance - Supply Chain
  • Social - Society
  • Social - Employees
  • Environment - Climate Change
  • Environment - Pollution & Resource Use
  • Environment – Biodiversity

The example below for our global listed infrastructure securities team shows the high exposure to climate change related risks from the team’s investments in utilities. The team has recognised this in its climate change statement. Separately the carbon exposure data points to the team investing increasingly in more carbon efficient utilities.

Also as described by the team in their profile, the social obligations that are a core consideration in the management of infrastructure assets which provide essential services are highlighted in the Social – Society and Governance – Product Ethics, Safety and Sustainability categories.

It is in this way that we believe the ESG risk profiles help to provide further context to the narrative and case studies provided by the teams.

Global Listed Infrastructure - Typical ESG Risks by Sector

Country Level Risks

For country risks we provide a number of indicators for countries where the companies we invest in are domiciled. Like the industry risks we include a weighted average based on the team’s exposure and also include a global average. The indicators are:

  • Corruption Perception Index 2016
  • Human Development Index 2015 (Inequality Adjusted)
  • Human Development Index Rank 2015 (Inequality Adjusted)
  • Human Development Index Rank Change 2015 (unadjusted)
  • Carbon dioxide emissions per capita 2013
  • CO2 Average annual growth (%) 1970 - 2013

These indicators were chosen to give a high-level view of the risks associated with investing in a particular country. However, as the exposure is based on the country of domicile this is not full view of the actual risks companies are facing. Better exposure analysis would be for the country of revenue or material supply chain (costs) but consistent data on this is not yet available.

Notwithstanding this limitation we believe that when considered in the context of the team profile this disclosure provides an important view of potential investment risks, particularly for teams with holding in companies with a large domestic presence.

Global Listed Infrastructure - Typical ESG Country Profile

Climate and Carbon

In addition to the ESG industry and country risk profiles, last year we disclosed our fossil fuel exposure for the first time and this year we are adding carbon exposure information. These exposure numbers are accompanied by a climate change statement from each team.

For carbon and fossil fuel information we rely on MSCI data, but have performed some calculation differently to traditional carbon footprints as we report at a whole of team rather than a portfolio level.

Fossil Fuel Exposure

The fossil fuel exposure information we have provided includes companies who are:

  • Fossil Fuel Companies inc gas which includes:
    • Coal miners and oil and gas companies
    • Utilities / Generators using fossil fuels for energy
    • Critical suppliers including oil and gas contractors, coal rail companies etc.
  • Companies with Gas Reserves

While the gas exposure is captured in the fossil fuel number, we have also split this out due to it being a less carbon intensive fossil fuel source than coal and oil.

There is no revenue, cost curve or other threshold applied and so the fossil fuel exposure should not be seen as a guide to the risk of stranded assets, however it is reasonable to expect that the attention paid to the risk of stranded assets by teams will correspond to their fossil fuel exposure.

Global Listed Infrastructure - Fossil Fuel Exposure

Number of Companies % of Funds
Number of companies 44 100%
Fossil Fuel Companies inc gas 7 15%
Total 7 15%
Companies with Gas Reserves 2 4%

Carbon exposure

We have provided carbon exposure for the first time in this year’s report. We have various concerns around carbon Footprinting which we described in this report last year.  However, notwithstanding these shortcoming we believe that a reasonable guide can be reached on the carbon efficiency when comparing companies at an industry group level.

In future years we will further refine this disclosure and are happy to discuss these findings or provide portfolio specific information to clients.

The carbon exposure provides two figures.

  • Equity share emissions – This adds together the team’s equity share of each company’s carbon emissions across all holdings - ($ Value of holding/market cap of company) * CO2 emissions
  • Industry average emissions – The average emissions intensity (emissions/$m of revenue) of the companies held split by industry group vs the average for all companies in the industry group.

The first measure provides an equity ownership approach to accounting for the emissions, while the second provides a guide of how efficient the companies held are vs other companies in that industry group. Better company reporting and industry specific denominators for intensity would improve this in future years (for example tonnes of ore produced would be a better denominator for resources companies as revenues are volatile due to commodity price and currency changes.  

We hope that when taken together these additional disclosure provide useful context. We welcome feedback on how we can better inform our clients and stakeholders on our different teams’ approach to responsible investment and stewardship.

Global Listed Infrastructure - Carbon exposure

Equity Share Carbon Emissions Number of Companies Team Average Team Company Intensity Number of Companies (GICS) Industry Group (Global) Average Industry Group Intensity (Global)
All Sectors 2392139.2 43 530.9 735 732.8
Utilities 2230118.5 18 1791.6 146 2527.7
Transportation 89514.8 16 222.6 106 522.7
Energy 67969.4 5 510.4 177 456.8
Real Estate 4371.4 3 82.8 214 93
Telecommunication Services 165.1 1 46.8 92 63.8

Difference Team Average Intensity vs Industry Average Intensity

Other measures

In addition to the ESG and carbon metrics described in detail above, below we have provided a summary of other measures used in this report and why we believe they are useful indicators for judging our performance.