This document explains how Trinity Street Asset Management LLP (“Trinity Street”) (a) factors sustainability risks into the investment decision making process and (b) how this assessment may impact on the returns of the clients whose assets it manages.
Trinity Street has incorporated and integrated ESG considerations into its investment process and approach.
A key aspect of Trinity Street’s methodology is to seek to ensure that it appropriately understands ESG issues relating to investee companies and potential investee companies; for example in relation to controversial issues, putting them into context and providing advice on voting at annual general meetings.
Integration of ESG in Trinity Street’s investment process means that the person making the investment decision is in possession of appropriate information, can determine how they impact the investment case, including valuation, and is in a position to engage with the managers of the investee company representing the interests of asset owners.
The Trinity Street investment team considers ESG as part of its assessment of the companies we invest in to seek to positively impact investment returns. It is important to note that ESG does not drive the investment process at Trinity Street, but rather is an important factor that is considered when investing, holding, and divesting, for example when considering valuation.
Integration begins with Trinity Street’s portfolio managers and analysts considering ESG factors as part of their bottom-up, fundamental research. Trinity Street believes that by embedding ESG considerations in the different stages of the work of our investment teams – rather than a separate ESG research function – provides the most effective integration strategy. Currently Trinity Street uses the in-depth resources provided by Sustainalytics, which supports the investment team’s analysis by providing additional ESG-related data, analysis, and training, and enhancements to processes and documentation.
Analysts monitor and update any material ESG considerations relevant to a particular security on an ongoing basis as a part of their standard research activities. The investment team determines the extent to which various research inputs are incorporated and weighted in their investment decisions.
ESG risk considerations are integrated into our risk management framework and is part of the mainstream investment risk conversation held on a quarterly basis. Trinity Street’s performance and risk team uses industry-recognised tools to provide a top-down, portfolio level perspective on ESG factors. This ensures ESG analytics are integrated into regular portfolio performance and risk analysis, as well as discussions with and between portfolio managers.
