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Responsible Investment

Our commitment and focus

Serving our clients’ long-term financial interests

At the core of our investment practices is a drive to serve our clients’ long-term financial interests by demonstrating good citizenship in the countries in which we operate and invest, as well as those countries that may be affected by our investments.

Our beliefs
Our purpose
Stewardship

We believe that we will make the best possible investment decisions on behalf of our clients by incorporating material environmental, social and governance (ESG) factors into our investment processes. This belief is core to our business. At the same time, we believe that there is no universal approach to Responsible Investment. At Eastspring, our investment teams are empowered to integrate ESG considerations into their investment processes and philosophies, as appropriate.

We recognise that sustainable investing requires a patient approach and an understanding that changes in corporate behaviour can support shareholder value over time. We firmly believe that companies that adopt sustainable business practices are more likely to deliver superior shareholder value in the long-term and, where appropriate, we encourage ongoing improvement through an ongoing and collaborative dialogue.

We believe that companies are more likely to prosper if they minimise their environmental impact; treat employees, customers and workers in their supply chains fairly and with respect; and act responsibly within their communities and toward their shareholders. However, we also look beyond companies and use our insights to inform our investment decisions in Government bonds which are included in instruments across various asset classes.

Our culture and values underpin our stewardship commitment to our clients. We understand that in managing our clients’ assets, we have been granted a social licence to operate. Maintaining this licence means that we need to ensure that our clients continue to have confidence in our investment capabilities and that we always put their interests at the heart of our business. Striving for the highest degree of transparency that we can achieve ensures that we are held accountable and, therefore, operate with honesty and integrity in our work on our client’s behalf.

In the latter half of 2019, we conducted an exhaustive exercise to determine our organisation’s purpose. Through extensive consultation with colleagues and other stakeholders, Responsible Investment frequently came out as a key driver behind what we do. Our purpose – Experts in Asia. Invested in Your Future. – highlights our firm commitment to securing the long-term future of our stakeholders. We are not just focused on investing, but also ‘invested in’ and committed to,your future. And that means the future of everyone: Our clients, our colleagues, our partners, our shareholders and our community. To be truly ‘Invested in your future’ we must be completely committed to Responsible Investment, so that we can fulfil our promise.

As a signatory to the United Nations-supported Principles for Responsible Investment. We are demonstrating not just our commitment to Responsible Investment, but our desire to become leaders in the field in Asia.

We are firmly committed to be a responsible steward of our clients’ assets.

As a member of the International Corporate Governance Network, we adhere to their Global Stewardship Principles and Global Governance Principles, believing governance is the foundation of effective stewardship. We:

Develop and implement stewardship policies
Monitor and assess investee companies
Engage with companies and collaborate with investors
Exercise our voting rights
Promote long-term value creation and the integration of environmental, social and governance factors
Encourage enhanced transparency and disclosure

Responsible Investment Framework and Governance Structure

At Eastspring, we have wide-ranging investment expertise and diverse investment approaches – and so work under the premise that there is not a single, universal approach to Responsible Investment.

All investment teams are informed by our Responsible Investment Standards, including ESG, Stewardship, Proxy Voting and Best Execution. Each asset class and investment strategy has its own unique characteristics, and investment teams are empowered to own their approach to ESG integration and engagement.

All investment professionals are responsible for incorporating all factors deemed to impact the investment decision making process. The results of this effort is monitored at the portfolio level where the aggregate ESG score is reported along with performance on a monthly basis.

Supporting each of these approaches is an overarching Responsible Investment Framework and Governance Structure, which informs our Responsible Investment Standards and associated policies.

How it works

Eastspring executive committee

Our parent company, Prudential Plc

As a life insurer, asset owner and manager, we are long-term stewards of our customers’ assets. We have a responsibility to our customers, the communities and environment in which we operate, to apply ESG considerations into our investment decisions and our fiduciary and stewardship duties.

Our Group-wide Responsible Investment Framework (GRIF) is designed to draw together the ESG-related approaches of our asset management businesses (Eastspring in Asia and PPM America in the US) and our asset owner insurance businesses (PCA in Asia and Jackson in the US).

Oversight of the GRIF is the responsibility of our ESG Executive Committee, which reports to the Nomination & Governance Committee of Prudential plc. The ESG Executive Committee maintains our Group-wide Responsible Investment Standards, which are based upon our Group Code of Business Conduct and set minimum requirements for each of our business units. These Group-level standards require all of our businesses to develop and maintain their own local responsible investment policies, which capture their own approaches to responsible investment and are appropriate to the jurisdictions in which they operate.

Eastspring Investments

The Eastspring Management Committee (EMC) drives and oversees the day-to-day operation of the firm globally. Eastspring Investments Responsible Investment Taskforce (RIT) is designated responsibility to oversee Eastspring Investments Responsible Investment activities by the EMC. The RIT provides a forum to determine the strategic direction for Responsible Investment. It comprises of cross-functional representation of investment teams across our business.

The Eastspring Responsible Investment Working Group (ERIWG), which comprises of representatives across Eastspring Investments Local Business Units (LBUs), is a sub-committee of the RIT. It assists the RIT in implementing our Responsible Investment Framework. In turn, locally-represented Responsible Investment Committees are formed, as needed, to discuss practical and operational issues encountered in the application of the investment teams' policies.

We are committed to an ongoing process of improving our approach to integrating ESG into our investment processes. Our policies will evolve over time to reflect changes in business practices, structures, technology, and the law.

Standards and Policies

Affiliations and memberships

Responsible Investment activities

At Eastspring Investments, Responsible Investing principles drive our asset management practice. Responsible Investment includes the explicit incorporation of relevant ESG issues into every aspect of our activities as an investor – both before we make investment decisions and during the time we hold an investment. We seek to identify and take account of these issues into our investment decision-making processes and in the way we conduct stewardship activities.

Find out more about our policies:

Signatory to:

United Nations-supported Principles for Responsible Investment (PRI)

The PRI is the world’s leading proponent of responsible investment. It works to understand the investment implications of environmental, social and governance (ESG) factors and to support its international network of investor signatories in incorporating these factors into their investment and ownership decisions.

Developed by investors, for investors, the six Principles for Responsible Investment are a voluntary and aspirational set of investment principles that offer a menu of possible actions for incorporating ESG issues into investment practice. When implemented, it allows signatories to contribute to developing a more sustainable global financial system.

Eastspring has been a PRI signatory since February 2018 and we continue to stay committed and uphold the six principles in our business. To find out more, read our 2019 PRI Transparency Report.
The Singapore Stewardship Code
The Japan Stewardship Code
The Korea Stewardship Code
The Taiwan Stewardship Code
The FX Global Dealing Code

Member of:

At Eastspring, we take every opportunity to raise industry awareness on environmental, social and governmental issues. Here are a few examples of recent activities:

How we integrate ESG factors into decision-making

Equity

Fixed income

Our Singapore-based equity teams focus solely on exploiting opportunities, where changes to the market’s risk perceptions and expectations have caused a meaningful dislocation between the price and long-term trend valuation of a company. Our focused research helps us to understand the sources of market mispricing through deep fundamental analysis.

In building our fundamental assumptions that underpin the valuation for a company, we apply a holistic approach to identifying material risks—including ESG issues—to the sustainable earnings of a company. We rely on the robustness of our proprietary fundamental research process and apply our judgment to assess material factors that impact sustainable earnings. We require significant valuation support to compensate for material risks to longer-term sustainable earnings.

ESG issues and their potential impact differ across companies and are only incorporated into our fundamental analysis and decision-making process when we believe they could have a material impact on a company’s valuation and financial performance.

Implicit in our approach is that we do not screen out companies solely on the basis of perceived problematic ESG issues. Although this approach does not prohibit us from purchasing or holding a position due to an ESG issue, consideration of these issues is made part of the investment decision.

A patient timeframe can improve the probability of outcomes. We believe our focused, valuation-driven approach is clearly aligned with stewardship activities, including ongoing company engagement, for shareholder value realisation over the longer-term. Our approach is aligned with promoting increased long-term value creation and sustainable business practices by companies. The approach focuses principally on long-term factors that determine companies’ earnings, rather than on the short-term factors that may predominate in determining share prices. We place a high level of importance on an ongoing dialogue with investee companies, primarily based on what we believe will maximise shareholder value as long-term investors.

All investment professionals are responsible for the integration of ESG issues into the investment process, rather than outsourcing this responsibility to dedicated ESG or stewardship specialists.

The following details the Equity team’s policy:

Assessment and monitoring of ESG factors are an integral part of our bottom-up credit research process. Our focus is on ESG issues that are material with regards to the issuer’s credit fundamentals, i.e. those that have current or potential future impact on its operating or financial performance, its risk of default, and the valuation of the bonds it issues. The process involves identifying industry or region specific ESG risks or opportunities that the issuer faces (including how the materiality of the risks may change over time) and assessing how prepared the issuer is in dealing with these ESG issues (which would depend on its policies and mitigating actions). It would also involve assessing the issuer’s ESG practices relative to peers and how these may change over time.

Whilst we do not screen out companies solely on the basis of perceived ESG issues, consideration of these issues and their implications on the company’s fundamental and the risk premium to be priced in for the bonds the company issues forms an integral part of our investment decision. Our assessment and ongoing monitoring of ESG factors incorporates information obtained from public sources and direct interaction with the companies, as well as from third-party ESG analysis providers, to assist us in identifying relevant ESG issues. Responsible Investment would also entail engaging with issuers on ESG factors that are relevant to them. Whilst bondholders are not able to vote on key company matters, it is still possible to influence the company’s ESG practices by highlighting key ESG issues to management and encouraging them to adopt a more proactive approach to address these issues through regular engagements with management.

The following details our Fixed Income Policy:

ESI Singapore Fixed Income ESG Policy

ESG is being fully integrated into the investment processes for all our funds and policies, bespoke to the strategy.

ESG Thought Leadership

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Responsible Investment

Our commitment and focus

Responsible Investment Framework and Governance Structure

How we integrate ESG factors into decision-making

Strengthening ESG risk assessment through dynamic credit analysis

Greening our approach to credit analysis

Climate change and Asia: An existential question?

Raising the bar on diversity

The next frontier: Climate change

Not a waste(d) opportunity?

The rise of green bonds

Tracking corporate governance in Asia

Mainstreaming ESG Investing in Asia

Strengthening ESG risk assessment through dynamic credit analysis

Greening our approach to credit analysis

Climate change and Asia: An existential question?

Raising the bar on diversity

The next frontier: Climate change

Not a waste(d) opportunity?

The rise of green bonds

Tracking corporate governance in Asia

Mainstreaming ESG Investing in Asia

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