Maple-Brown Abbott specialises in the management of investment portfolios across Australian equities, Asia Pacific ex-Japan equities and global listed infrastructure securities. A signatory to the United Nations Principles for Responsible Investment (UNPRI) for the past 12 years, it has a longstanding commitment to ESG integration and engagement. RIAA hears from Natasha McKean, ESG Investment Analyst on Maple-Brown Abbott’s responsible investment approach.
Can you tell us a little about Maple-Brown Abbott’s approach to responsible investment?
As a value manager with a long term investment horizon, Maple-Brown Abbott (MBA) recognises that responsible investment enhances investment decision making. We have adopted an environmental, social and governance (ESG) integration and engagement investment strategy. This strategy ensures that ESG risks and opportunities are factored into the risk-return assessment. Further, it leverages our position as a long only, long term investor to engage with the Board and management of portfolio companies for long term benefit.
Whilst climate change risk has long been assessed as an investment risk, in preparing MBA to report under the Task Force for Climate Related Financial Disclosure (TCFD), MBA has developed a standardised climate change risk assessment framework. A key feature of this framework is climate scenario analysis where company valuations are assessed against a range of carbon transition scenarios.
Complementing the integration of ESG into investment decision making, MBA has a comprehensive engagement program, including company engagement meetings and proxy voting.
What prompted Maple-Brown Abbott’s move into the responsible investment space?
MBA has a long standing commitment to responsible investment, which was formalised when we became signatories to the UNPRI in 2008. MBA recognises that responsible investment can improve investment decision making and ultimately returns. Why is this so? MBA believes that a company’s
ESG performance is a strong indicator of broader company behaviour. MBA believes that companies that have strong ESG governance, are likely to make good business decisions across the company more broadly, they are likely to have a greater propensity for productivity, brand strength and innovation and reduced exposure to downside from accidents and scandals. Further, responsible investment issues and regulations for example, climate change, Sustainable Development Goals (SDGs) and Modern Slavery can be helpful in predicting the future operating. And finally, the integration of responsible investment in investment decision making can challenge analysts’ prejudices.
Seeking to continually improve our ESG capabilities, MBA appointed myself, a senior MBA investment analyst, to the role of specialist ESG analyst in 2015. I am responsible for overseeing the integration of ESG issues into the investment decision making process and for co-ordinating the implementation of the firm’s Responsible Investing, Engagement, Proxy Voting and Climate Change Policies and initiatives. I have worked at Maple-Brown Abbott for over fifteen years, as both a portfolio manager and investment analyst, covering the resources sector, and since 2011, ESG. This investment experience has given me valuable insight into ESG and our investment process.
What RI focussed products do you have, and what strategies apply to these?
In terms of its responsible investment focus, MBA is dedicated to the execution of its ESG integration and engagement strategy across its Australian Equity, Asian Equity and Global Listed Infrastructure (GLI) products. We feel that by identifying and assessing ESG risks in the investment decision making process and by leveraging our role as shareholders, we can effect change.
Within our Australian Equity product mix, we also offer the Maple-Brown Abbott Responsible Investment Fund (RIF). MBA’s RIF product is an actively managed Australian share fund that delivers responsible investment through the adoption of an integration, engagement and negative screening strategy. The RIF leverages the resources, experience and expertise of MBA’s Australia equities team who manage A$4bn FUM as at 28 February 2020 across our Australian equities funds and mandate clients.
What drove you seek RIAA certification, and what value do you now derive from it?
RIAA certification is an industry recognised standard which allows investors to compare and contrast responsible investment options. The revised certification program launched in 2019, sets the benchmark for industry responsible investment expectations.
MBA have used the standards set in the revised certification program to improve the rigour of our ESG integration and engagement capabilities, across both our main stream and RIF responsible investment product offerings. This was particularly pertinent in the recent review of MBA’s ESG policy suite, which included the drafting of a standalone Climate Change policy, which were approved by our Board in December 2019.
Maple-Brown Abbott has been a strong supporter of ESG Research Australia for many years, with yourself leading the research and awards judging process. What is it in strong ESG research that you see as so important for our sector?
The ESGRA initiative strongly aligns with MBA’s values and investment philosophy. MBA conduct in-house, bottom-up stock analysis, and the availability and quality of ESG broker research is a valuable resource in both the ESG integration and engagement processes.
As a sector, ESG research has helped inform and educate investment professionals on responsible investment. It has been a catalyst for the incorporation of ESG into the investment industry and provides ongoing content for the incorporation of ESG in decision making and company engagement initiatives, including proxy voting. Good ESG broker research also challenges the investment industry to continue to evolve their ESG capabilities, and provides necessary support on this journey.
How does this research inform your own investment decisions?
MBA uses ESG broker research to inform our ESG investment decision making and engagement initiatives. ESG broker research assists in our ESG issue identification and materiality considerations and proposes frameworks to assess qualitative ESG issues and incorporate them into our assessment of company valuation. ESG broker research, and ESG client service, including corporate access, is used to prepare for company engagement initiatives, as a resource for proxy voting decision making, and as a tool to inform investment professionals’ training sessions.