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Corporate Social Responsibility & ESG

Perennial believes that environmental, social and governance (ESG) issues can impact the performance of companies and influence the returns generated by our investment portfolios, therefore we incorporate ESG considerations into our investment decisions

Our belief

We believe that a holistic view of a company, including the consideration of ESG factors, promotes a well-rounded approach to investing with better risk adjusted return outcomes for clients. In making investment decisions, we consider ESG through a range of perspectives including our proprietary ESG&E scoring system, external sustainability data and engagement with companies to assist with decision-making.

Dedicated ESG strategy

At Perennial, we have a dedicated ESG strategy which invests in companies that are making a positive contribution to a sustainable future. The strategy is available through:

Our approach

We believe that the incorporation of ESG principles into our investment processes is in the best interests of our clients

Process
  • Integrating ESG considerations into our investment, ownership and engagement policies and procedures at an analyst level.
  • Engaging with companies in which we invest, or are considering investing in, to ensure that we continue to promote ESG disclosure.
  • Working with our stakeholders to further the development of ESG initiatives.
  • Developing a corporate commitment to ESG.
  • Transparency with our stakeholders and regular ESG reporting.
  • Monitoring the greenhouse gas emissions of our holdings and encouraging companies to target improvements in emissions.
Research

The research we undertake on ESG attributes, in conjunction with the analysis of the numbers and financials, can provide us with a more holistic view of the company. We have compiled our own ESG database and have developed a proprietary ESG&E scoring system (see ‘Our Integration of ESG’).  We believe that this approach will ultimately lead to better risk-adjusted return outcomes for our clients.

Our Integration of ESG

ESG is integrated into our broader investment strategies.  We maintain an ESG database which includes relevant data for each company under coverage.  This data relates to a range of ESG issues including greenhouse gas emissions, safety performance, diversity metrics and governance structure.  This data is used when determining our proprietary ESG&E score for each company.  The ESG&E scoring criteria takes into account the company’s performance in relation to environmental, social and governance metrics.  In addition, the criteria include an “Engagement” score where we assess the extent to which the company is engaged in improving ESG outcomes rather than just “ticking the boxes”.  We take the ESG&E score for each company into account when making investment decisions.  Further detail in relation to the steps we have taken to incorporate ESG into our investment process is included in our Responsible Investment Policy.

Our commitment

Perennial is a signatory to the United Nations backed Principles for Responsible Investment. We report our progress annually in the PRI signatory reporting tool. We are supporters of the Task Force on Climate Related Financial Disclosures (TCFD) and a signatory to the 30% Club, which campaigns for at least 30% of women on boards.

Perennial’s Corporate Activities

Our internal activities support our values

Responsible Investments Working Group

We have a Responsible Investments Working Group which includes representatives across investment teams as well as from our operations and corporate functions. It is engaged in not only improving our approach to responsible investing but also developing our corporate strategy in relation to ESG, sustainability and responsibility.

We are constantly seeking to improve our performance in this area, and current initiatives include:

  • We source the electricity that we consume from 100% renewable energy.
  • We carbon offset staff flights.
  • We participate in building recycling programs and are engaging building management to improve sustainability outcomes.
  • We have mandatory ESG training for all staff members (including non-investment staff) each year.
  • Our primary cause that we support is the Humpty Dumpty Foundation which provides life-saving medical equipment for sick and injured children.

Our Corporate Governance and Proxy Voting Responsibilities

In keeping with our philosophy of putting the long-term interests of investors first, our Responsible Investment Policy is designed to assist us to improve and uphold the governance of the entities in which we invest, as well as the competence and integrity of management

Corporate governance

For corporate governance to be effective, it is necessary for us, and other shareholders to be willing to act as owners of companies and to express our views to boards of directors, as well as exercising our voting rights.

Voting policy

Our policy is to vote on all company resolutions. We believe that voting rights are a valuable asset and should be used appropriately for the long-term interests of shareholders. We seek to vote ‘yes’ or ‘no’ in all circumstances. We prefer not to ‘abstain’ from any vote.

Engagement & Proxy Voting

We engage with management on contentious issues and vote against board recommended resolutions when considered appropriate. Our approach to proxy voting is incorporated in our Responsible Investment Policy and ensures that we adhere to, and are compliant with, the Financial Services Council Standard No 13 (Voting Policy, Voting Record and Disclosure).

On an annual basis, we publish a summary of our proxy voting record. To see the 30 June 2019 report, please click here.

Perennial’s commitment to ESG

For further information on our commitment to ESG or tailored solutions available, talk to a Client Services Representative today.