AIA’s approach to assessing ESG factors from an investment perspective commences with an assessment of ESG factors as they relate to risk management, profitability and continues with engaging with management at investee companies.
Our initial priority is to assess performance against a number of specified ESG criteria, including but not limited to water shortage, energy supply, climate change, environmental regulations, labour supply and relations, human rights, resource scarcity/bottleneck, management capability and integrity, and financial management.
Investment analysts are required to assess ESG issues, as required and outlined by our Investment Governance Framework, and specifically the requirements under the ESG Investment Standard. Every research report prepared by AIA research analysts must contain an assessment of the ESG risks and opportunities relating to the issuer covered in such report. Investment teams across countries where we operate should be able to demonstrate compliance against these internal standards.
As ESG issues are often highly country and industry-specific, AIA’s in-country fixed-income and equity analysts, with their understanding of local markets, will employ their “on the ground” knowledge to analyse and monitor ESG issues when and where they arise.
AIA research analysts shall refer to any company ESG reports as a proxy for how ESG issues are being managed by the relevant issuer. Analysts are encouraged to stay up to date on contemporary ESG research and risk uses, whether through attending internal or external training courses or through considering ESG research produced by, or received from, third party research providers in their assessment.
Analysts are also required to incorporate an analysis of ESG risks into their credit proposals to be considered by Group Credit Research when initiating or renewing credit limits.
Portfolio managers are responsible for considering the aforementioned factors and analysis, guarding against risks associated with investments, the potentially negative impact on society and the environment, and continually pursuing sustainable long-term outcomes.
Our analysts are required to remain vigilant in monitoring ESG criteria for the companies that they cover, throughout the investment process, and provide timely update reports to their AIA business unit portfolio manager(s) on their assessments.
Should any ESG-related concerns or queries arise with our local business units, dedicated channels exist for issues to be escalated to AIA’s Group Investment team for further discussion or consideration.
The specific ESG criteria in our analysis and monitoring process includes the following: