Mint Asset Management has been upgraded across a number of key categories in the latest United Nations Principles for Responsible Investment (PRI) rankings.
As well as sustaining an overall A+ PRI score for the third year running, Mint moved the dial from B to A in two core listed equity measures: incorporation of environmental, social and governance (ESG) factors; and, active ownership.
Anthony Halls, Mint head of investments, said it was particularly pleasing to earn higher PRI scores in the listed equities categories.
Halls said the annual PRI assessment process provides a “useful discipline” for fund managers to keep up with global ESG investment best practice.
“It’s hard to know what the outcome will be,” he said. “But this time around we supplied more evidence of what we’ve actually been doing as well as the usual policies and documents.”
Mint has also made some “evolutionary” tweaks to its ESG process, Halls said – at least in the E and S departments.
“We’ve increased the emphasis on some environmental and social factors,” he said. “Nothing much has changed in governance, where we’ve had a long and robust process.”
But good environmental and social quantitative data was still hard to come by, Halls said, with Mint collecting its own bespoke information for Australasian firms. The Auckland-based manager uses global ESG data specialist Sustainalytics (part-owned by Morningstar) for international stocks.
Recently, Mint has focused on sourcing more information from Australasian firms on their response to climate change, including carbon footprint estimates.
“We’re also pushing for more data from companies about their supply chains,” Halls said.
And factors such as how companies treat their own staff are becoming important for investors to understand.
“If businesses treat their staff well then they probably treat customers well too, which should be good for long-term sustainable profits,” he said.
Last week another NZ-based PRI signatory, the Medical Assurance Society, also unveiled an expanded ESG investment strategy.
In a statement MAS says it had moved beyond exclusions to a positive ESG weighting approach for global equities.
“… within the responsible investing mandate of our international equities, we’re choosing to only buy shares in companies that are leaders in their industries with their environmental, social and governance (ESG) practices,” MAS says. “We don’t consider companies that are involved in serious controversies – irrespective of how good their ESG practices are.”
For example, the new policy has seen MAS cut Apple, Coca Cola and Cisco Systems from the portfolio on grounds of poor relative ESG scores. MAS also excludes big name stocks that “are mired in serious controversies” such as Johnson & Johnson, Samsung and Nestlé.
MAS has about $1.8 billion under management split almost evenly between its KiwiSaver and traditional superannuation schemes. The group uses JB Were as investment adviser.
In March this year the restricted scheme manager appointed Institutional Securities Services (ISS) to vote and engage on its Australasian shares. MAS invests most of its global shares via a passive BlackRock fund, which also implements the group’s ESG policies and proxy voting duties in the asset class.
Coincidentally, at the end of July the PRI launched a consultation on the challenges of ESG investing in passive vehicles.
The PRI consultation document lays out two core challenges of index-style ESG investments, covering: ESG data and portfolio construction issues; and, active ownership limitations of passive holdings.
For instance, the PRI release says “passive investment groups have little financial incentive to be active owners when they can freeride on others’ efforts”.
“The responses to these questions will help the PRI develop further guidance on the incorporation of ESG factors into passive rule-based investment,” the statement says. “If the passive investment market is to continue to flourish, then answers to some of the challenges need to be found and integrated into practice.”