Perpetual’s long held and proven investment philosophy is the foundation on which our investment business is built. While the consideration of environmental, social and governance (ESG) factors was implicit in our philosophy prior to 2009, it was mostly done informally. We spent considerable time prior to becoming a signatory to the United Nations Principles of Responsible Investment (PRI), confirming that the principles fit with our philosophy and whether a more explicit approach to ESG would add value to our investment processes.

To do this, we started by understanding what responsible investment (RI) meant to us and imagining what an effective approach to RI would require. We not only looked at our competitors and the PRI to develop this vision, we also considered what investing in a world with a changing climate, significant demographic shifts and resource constraints would demand of us as investors. This work later became the heart of our RI framework and policy.

On becoming a signatory to the PRI, we created a new position of Head of Responsible Investment, whose role it is to design, implement and maintain an RI framework that embeds our approach and philosophy to responsible investment within our existing investment practices as well as working more effectively with other investors and reporting on our progress.

The RI framework was approved in May 2010 and is described below. The framework describes the governance structures, objectives and organisation of Perpetual’s RI implementation activities which we will develop over time.

We report our progress on the PRI annually and publish an annual update. If you have any questions about our responsible investment policy or implementation framework please email PRI@perpetual.com.au

Framework streams

1. ESG investment stream (PRI 1)
The ESG investment stream implements all activities associated with the consideration of ESG factors in investment decision-making. The responsibility for this work stream rests with our investment managers. The focus of the ESG investment stream is on developing training, tools and processes to assist investment managers in assessing and analysing ESG factors impacting on our investment decisions.

2. ESG engagement stream (PRI 2 and 3)
The ESG Engagement stream implements all activities associated with active asset ownership practices, for example, influencing boards and management of companies in which we invest. The target stakeholders for this stream of work are the companies in which we invest.

3. Industry collaboration stream (PRI 4 and 5)
The industry collaboration stream implements all activities associated with the development and promotion of ESG practices across the financial service industry. The target stakeholders for this stream are our clients and peers in the financial services industry.

4. ESG reporting stream (PRI 6)
The ESG reporting stream implements all reporting requirements including the United Nations, our clients and the broader public. The stream also manages the internal monitoring and reporting of our progress. The target stakeholders for this stream of work are internal and external parties interested in our policies and progress.

Framework elements

The framework is underpinned by five key elements which set the goals and standards that all of our responsible investment workstreams must work towards and be judged against:

1. Documented policies which define Perpetual’s approach to ESG integration.

2. Create or source high-quality information and develop key relationships which will influence relevant stakeholders.

3. Design and implement processes and tools which support ESG integration (and monitoring).

4. Design and implement monitoring processes which test and demonstrate the success of ESG integration for internal and external reporting requirements.

5. Implement governance, reporting and feedback systems which continuously assess and improve our approach to ESG integration. 

View diagram of our responsible investment framework