UOBAM’s Sustainable Investment Framework
In our commitment towards advancing and supporting the principles of PRI, we have put in place our sustainable investing policy as part of our sustainable investment framework, as set out in the table below.
|SUSTAINABLE INVESTMENT FRAMEWORK
|ESG issues will be incorporated into existing investment practices using a combination of two approaches: integration and screening (when applicable in investment mandate).
|Sustainable Investing Strategies
|UOBAM's Sustainable Investing Policy
||Explicitly and systematically including ESG issues in investment analysis and decisions, to better manage risks and improve returns of investments.
||Application of filters to lists of potential investments to rule companies in or out of contention for investment, based on best-in-class and negative screening approaches.
We believe that Environmental, Social, and Governance (ESG) issues are financially material to a company’s performance and will translate to material financial impact on the investments that we make. As part of our fiduciary duty to our investors, we have put in place our sustainable investing framework and process which focuses on deep fundamental research, augmented by the use of technology and leveraging on our local expertise.
Our proprietary sustainable investment framework is a common framework that is utilised across the firm, and is implemented through the integration of ESG evaluation within our investment process. The process of ESG evaluation involves the assessment of material ESG factors of companies which is determined by UOBAM’s proprietary materiality map.
UOBAM’s proprietary materiality map is developed by referencing the Sustainability Accounting and Standards Board (SASB) materiality map. UOBAM’s proprietary materiality map also assigns specific E, S and G pillar weights to companies across 11 sectors that are classified using Global Industry Classification Standard (GICS). UOBAM has defined a list of ESG metrics for monitoring the ESG performance of portfolio companies and this is incorporated into our ESG evaluation process. Below is an overview of how ESG is incorporated into our investment process.
The execution of ESG evaluation and integration into our investment process is supported by dedicated resources in our regional investment teams and covering all major asset classes that we invest in.
UOBAM has in place our ESG news alert system which is an AI-ML model that combs through news reports daily and should there be any ESG controversy detected, the Portfolio Managers owning the securities of the impacted company will be notified and necessary investment action will be taken.
In our efforts to advance our sustainable investing capabilities, UOBAM has invested in specific environmental datasets and is working with external parties to develop in-house capabilities in order to generate portfolio carbon intensities as well as assess the physical and transitional risk of companies.
Overall, we believe that ESG integration into our investment process contributes to performance and risk mitigation by enabling us to identify high-quality companies which are resilient, well-managed, able to grow sustainably and are likely to maintain their competitiveness in the long term.
To complement ESG incorporation into our investment process, we also have in place an Active Ownership Policy which has a coverage that aligns to the Sustainable Investment Policy. The Active Ownership Policy serves to facilitate dialogue, engagement, and proxy voting. We will leverage our regional footprint and the local expertise of our regional investment teams to execute meaningful dialogues and engagement which will drive strategic investment decisions for the sustainable investments we make.
To quantify and enable our investors to better understand how their investments are helping to address critical global issues such as climate change and human capital management, we have developed internal capabilities to carry out portfolio impact analysis to highlight how we reduce our environmental footprint, and to make a more tangible contribution to the UN Sustainable Development Goals (SDGs), UOBAM will also integrate impact measurement aligned with these global trends as part of portfolio analysis.
We also continuously monitor on a global and regional basis, the changing regulatory landscape that impacts sustainable investing. Whenever possible, we will participate in responding to regulatory consultations to provide our inputs and help guide and develop ESG policies and guidelines that support the advancement of the six Principles of the PRI. Our responses to such regulatory consultations will be aligned to our sustainable investing policy and will look to support the six Principles of the PRI. To ensure that this alignment is achieved, we have in place our sustainability governance structure that will provide oversight and accountability for our responses.