Our investment process is structured to identify ESG risks and opportunities alongside traditional measures within our active investment strategies in each equity investment case. The methods that we use include Exclusions, Best-In-Class, ESG Integration, and Engagement and Proxy Voting. We have applied ESG or sustainable consideration to all our investments. Moreover, among our four equities analysts, we have one analyst exclusively dedicated to ESG.
The methods that we use for responsible investment:
Step 1 - Exclusions
Eliminating companies mainly involved in non-ESG activities (oil, thermal coal, tobacco, gambling, adult entertainment, controversial weapons, civilian firearms, violent video games, and military equipment and services)
Step 2 - Best-In-Class
Giving priority to investing in companies with better ESG rating results when the operating performance and financial performance of the companies are equivalent
Step 3 - ESG Integration
Considering the ESG topics that are highly material to the companies in the investment decision-making process
Step 4 - Engagement and Proxy Voting
Communicating and pro-actively engaging with the investee companies and exercising voting rights as an investor
In order to have a clearer understanding and more comprehensive evaluation of our investee companies, we also employ a broad-based research approach to assess ESG information, as well as relevant sector, thematic, and macro sustainability considerations.
Our ESG due diligence is determined by factors, such as sector, activity, geographic location, and track record. We review ESG risks and opportunities alongside traditional investment risks in our investment process.
In addition, for tackling climate change, our goal is to avoid investment exposure to sectors with high climate-related risks as much as possible to create long-term investment value for our asset owners. We avoid investing in sectors that are contrary to tackling climate change (i.e., those with high carbon emission intensity) as much as possible. The carbon-intensive sectors here include thermal electric utilities, exploration and production of oil, gas and thermal coal, construction materials, iron and steel producers, airlines, chemicals, and metals and mining.
Since 2018, we have examined the proportion of carbon-intensive sectors in our equity portfolio as of the end of each year. In addition, we also have calculated the carbon footprint of our equity portfolio as of the end of each year and obtained the adjusted portfolio carbon footprint by considering the carbon offset from the renewable energy produced by the investee companies. Through the above two metrics, we can objectively measure our performance in mitigating the climate-related risks of our equity investment.