Responsible Investing
ESG Policies
Aeon Investment Management’s approach to responsible investment is through Environmental, Social & Governance integration. The objective of ESG integration is to protect and enhance the value of our long-term investments. Central to our investment philosophy is the explicit recognition that sustainability factors directly affect long-term business profitability. By incorporating ESG factors, we have greater conviction in valuation and risk-reward assessment, and we are better able to identify security mispricing.
Environmental Policy
Aeon Investment Management’s motive for developing an environmental policy is to create a framework that identifies companies’ current and potential environmental risk factors and quantitatively integrate them into the investment philosophy to ensure responsible investment.
Some of the factors that are considered in the analysis of an investment case include the degree of Climate Risk Disclosure, Water Usage and Conservation, Emissions Policies, Waste Elimination Programs and the alignment of Environmental Targets and Metrics to companies’ Remuneration Policies.
Social Policy
Aeon Investment Management’s motive for developing a Social Policy is to set a clear framework that will be implemented in the investment philosophy. The “S” in ESG has often been neglected when integrating ESG and we believe that a better understanding of the socio-economic impact a business has on its employees and the environment it operates in, results in more sustainable and responsible investment decisions and practices.
Aeon Investment Management aims to identify companies which have a positive effect on the South African society through assessment of multiple factors including but not limited to Business Product & Service Delivery, Employment Creation and Labour Practices, Gender Pay Equality, Pay Ratios, Corporate Social Investing and Black Ownership and Management.
Governance Policy
The Governance Policy is divided into two sections: Engagement Policy and a Proxy Voting Policy.
Engagement Policy
Aeon Investment Management’s engagement policy details the types of engagements we have, our process of engagement and the number and type of interactions held with company management teams regarding Environmental, Social and Corporate Governance (ESG) issues. By engaging with company management, we alert them to ESG risk factors that we have identified and consider. We do not primarily use ESG factors to make an investment decision but rather as an aid to our investment decisions. We prioritise collaborative engagements as per our exposure and the materiality of the impact on our current and future holdings. We normally define specific objectives for companies’ engagement activities and monitor the actions they take following the engagement.
Proxy Voting Policy
Aeon Investment Management follows the King IV code and principles outlined in the PRI when making proxy vote decisions on behalf of our clients. Any conflicting resolution is usually voted against if no sufficient justification is provided. Aeon Investment Management considers its internally developed Social Policy in its proxy voting decision-making. Inevitably, most resolutions do not cover the Social Policy framework and in this instance, we interact and lobby company management directly on social responsibility investment and ESG relevant issues.