Sustainability integration for Investment Products
Incorporation of Sustainable factors in the course of investment process
In accordance with its basic policy on sustainable investment, Sumitomo Mitsui DS Asset Management, in principle (*), expects all fund managers and analysts engaged with active investment management products to take into account ESG (Environment, Social and Governance), which is an important factor for the sustainability of investee companies.
*This principle may not apply to passive investment management products and others such as long/short products that are difficult to accord with the principle.
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Investment restrictions/engagement (responses to investee companies with sustainability issues/concerns)
When we have concerns about sustainability of corporations identified in the outcome of our internal ESG research or acknowledgement of any investee company's misconducts, we will examine materiality of the incident and prospect of improvement through various means such as interviews and decide to add to negative list if necessary.
In addition, we will use the exercise of voting rights and other means to address issues and concerns and encourage improvements. -
Sustainability considerations in investment decisions
We take ESG factors into consideration as a material element to evaluate sustainability when making investment decisions. In particular, we incorporate analysis and evaluation of ESG factors into the security selection process to the extent suitable for characteristics of each investment product so that we are able to deliver stable return in the medium- to long-term. -
Measurement and Response to Sustainability Indicators
We continuously monitor sustainability / ESG related indicators including greenhouse gas emissions at a portfolio level. Measurement results are evaluated and reflected into the investment process going forward if necessary. -
Risk Monitoring and Reporting
To ensure the effectiveness of investment, sustainability / ESG-related monitoring indicators are established and monitored by the Risk Management Department. We also strive to disclose appropriate ESG information from the perspective of investor protection. -
Sophistication and expansion of methods to consider sustainability
We continuously enhance various ESG integration methods including security screening, engagement activity and the extent of ESG evaluation considered in portfolio construction. With these efforts, we will strive to increase the number of products with deeply integrated sustainable elements and monitor and improve the effectiveness of ESG integration.
Evaluation of ESG factors
We have developed and utilized multiple ESG evaluation methods, taking into account the asset class, the attributes of the company, the availability of ESG data, and the materiality.
In addition, we leverage ESG-related data provided by external ESG vendors to complement in-house ESG information. A broader range of information enables us to create a framework for multifaceted analysis of the ESG characteristics of each portfolio.
Evaluation items and evaluation weights are determined primarily by the Responsible Investment Section and are reviewed regularly to ensure the effectiveness of the evaluation method.
