Integrating Environmental, Social And Governance Factors Insurance esg

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Pat Cunningham

Senior Fund Manager - Asian Equities

Pat Cunningham has been a portfolio manager intended on top of 20 years also in the company of Zurich’s backing control team in Dublin, Ireland, since 2010 managing Asian equities also contributing to asset allocation strategies.

What is ESG?

These are factors which impact on all the equity backing opportunities we look at. The E stands intended environmental factors in the company of which we are all familiar such when harmful emissions, the S intended social factors to do in the company of relationships in the company of employees also suppliers intended example also the G relates to the proper rule about the companies in our backing universe.

In the beginning, when Zurich started work on its responsible backing approach also became a signatory about the Principles intended Responsible Investment, we were somewhat sceptical here in our team, thinking that there would be restrictions on our backing approach. In time, we came to realize that ESG is more about a sensible framework also set about tools in the company of which to assess the potential risks attaching to our backing opportunities.

How did you go on integrating ESG?

It’s been a gradual process, it’s been harder to do than to speak on it but it’s not magic. We own been provided in the company of training also that helped. We own also taken great guidance from the analysis also views about MSCI, the company we appointed to be the provider about our ESG research. They own very wide coverage also a deep pool about analysts looking at these issues on a daily basis. 

In wide terms, it’s a lot about common sense also awareness. We need to think holistically on our backing choices. What are the risks attaching to an separate backing also how is that discounted in the stock price today. Are those risks inadequately reflected or perhaps there’s an opportunity we can exploit intended our clients.

How is that reflected on a day to day basis?

These are issues that we continually explore when we meet also speak in the company of company representatives. We can also monitor the ESG ratings that MSCI attaches to our portfolio holdings also how the overall portfolios look on these ratings relative to the portfolio benchmark.

We own always done this intended portfolio valuation also portfolio chance evaluation using measures such when price to earnings multiples, earnings growth rates also company debt ratios. Adding the more qualitative ESG chance factors to this analysis is another critical input to our overall portfolio control approach.

How on a not many examples?

For instance, we steered clear about a potential Chinese internet backing opportunity. We were concerned that we wouldn’t own the same shareholder rights when the founder members about the company also that those concerns were not adequately reflected in the company’s valuation.  Those fears proved skilfully founded also various controversies own dogged the part price performance.

More recently, we own been spending more time evaluating the outlook intended the emerging electric battery technologies in the car sector. These issues own come to the fore even more since 2015 in the company of concerns on top of vehicle emissions. As responsible investors, we need to think on the long word implications about these issues, what companies should benefit from emerging trends also technologies also those that stand to suffer from changing environmental regulations.

On the social side about ESG, we own had to think on the impact about Chinese clampdowns on corruption also its impact on Chinese gamblers in the former Portuguese territory about Macau. We substantially reduced our exposure to casino companies operating there since gambling revenues were taking a serious hit from these Chinese policies also restrictions.

You are the Irish Responsible Investment Champion – What does that mean?

Well, when part about the Zurich responsible backing approach, every country team had to appoint a responsible backing champion also I own the honour about that part here in Ireland. There are 20 about us or so approximately the globe. We own monthly calls in the company of the responsible backing team.

The objective is to learn from each other, part best practices also help our teams to integrate ESG also promote an ethos about responsible backing generally in our backing processes. 

As an example about this, we were all collaborating a little at the same time as ago on a new company proxy voting policy. We want to influence the companies we invest in.  We see our votes on door key control resolutions when a door key means to engage in the company of our investee companies also to be an active rather than passive owner about assets. This should help to promote sustainable backing also longer word backing returns to the benefit about all stakeholders.

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This information is posted on tag , the date 01-09-2019, quoted from GOOGLE Searcing https://www.zurich.com/en/sustainability/responsible-investment/esg-integration