DSPAM’s Responsible Investments Policy DSP Asset Managers Private Limited (DSPAM)
DSPAM Investment Managers Private Limited (DSPAM) is an Indian asset management company (AMC), with a wide range of offerings across the risk-reward spectrum. We are backed by the 150+ year old DSP Group.
Our vision: To be an organization with a purpose - helping investors gain confidence by incorporating material environmental, social and governance (ESG) issues in investment decisions.
Our core value #InvestForGood is a philosophy built on our belief in integrity. We want our investor community to ‘do good’ for the world, not just focus on building a better future for themselves. Our strong belief in ethics and integrity will power our ‘responsible investment’ practices and aim to make a real difference to both people, and the planet. Our focus is on integration of an ESG lens into our investment process and framework and hence our Responsible Investment policy is applicable to the entirety of our equity investments. We plan to build on our responsible investment approach and apply it to other asset classes: Fixed Income, Alternatives and Passives in due course.
Our Commitments to Responsible Investment
We are a signatory to the United Nations Principles for Responsible Investments (UN PRI) and are committed to abiding by the six Principles for Responsible Investment. We strongly believe that a focus on ESG factors could serve to minimize risks and improve financial returns in the medium to long run, thus creating value for our clients.
The following commitments guide and inform our responsible investment policy:
• To drive ESG integration in our investment decision-making process through robust policies, protocols, and procedures
• To drive accountability for adverse impacts amongst portfolio companies through active ownership
• To allocate resources for effective implementation of our Responsible Investment approach
• To enhance the firm’s ESG awareness, skills, and knowledge through capacity building and collaborations with key stakeholders in the industry
• To foster transparency on responsible investment through public disclosure of our policies and processes
• To continue to adapt and improve our responsible investment activities going forward
Responsible Investment Approaches
We believe that ESG Integration is a part of our fiduciary duty towards our customers as it could help reduce risks and enable long-term value creation. We aim to ensure that robust ESG principles are integrated in our investment decisions and that our portfolio companies act in the interest of their stakeholders.
1. ESG Integration
At DSPAM, we have a diverse set of professionals in our equity investment team including fund managers, research analysts, a forensic analyst, an ESG analyst and investment strategists. We conduct detailed meetings with investee companies, and the team leverages reports published by ESG rating agencies and sell side brokers to incorporate ESG into the investment process.
We believe that it is critical to consider performance of portfolio companies on material Environmental (E), Social (S) and Governance (G) topics, during investment decision making. This will help identify risks and leverage investment opportunities. However, ESG factors do not form the sole, or primary, set of considerations for an investment decision. We understand that companies of different size, scale and industry are at different levels of maturity in their ESG journey. The implementation of the policy shall attempt to factor these.
Raw data on portfolio companies’ ESG performance are collected from our primary and secondary research. Key inputs to the research include portfolio companies’ public disclosures, third-party rating reports and information received during periodic engagements
2. Active Ownership
We conduct periodic engagements on ESG performance with investee companies. We also exercise our (proxy) voting rights based on our stewardship and proxy voting policies. We also help companies evolve on their ESG journey, providing them with guidance towards improving disclosures, their ratings, their perception in the investor community etc.
We encourage our investee companies to adopt sustainable and responsible practices through our stewardship activities. We discuss ESG issues and monitor their performance through our engagements with the Management of portfolio companies on a periodic basis. We encourage our portfolio companies to make disclosures on ESG performance (through sustainability reports or integrated within annual reports).
We view stewardship as both a responsibility and a privilege. We have a robust Stewardship Policy that is aligned to the six Principles defined by SEBI and defines the roles and responsibilities of the Stewardship Committee. This policy covers essential components such as conflicts of interest, scope and engagement approach on ESG issues, prioritization methods, monitoring, insider information, transparency of activities, escalation and service provider criteria.
B. Proxy Voting
We have a (Proxy) Voting Policy in place that is designed to ensure that we vote in the best interest of our clients. These procedures are overseen by our Stewardship Committee comprising of the President, Chief Operating Officer, Head of Equities, Head of Passive Investments, Head of Legal and Compliance and Head - Risk and Quantitative Analysis. We work with third party (proxy) voting advisers for support with voting decisions. Information on voting exercised and abstained along with the rationale is made available on our website, on a quarterly basis.
Review of the Proxy Voting policy is conducted periodically by the Stewardship Committee.
ESG is a rapidly evolving field. As such, investors should be aware that many Indian companies and Indian equities in general are catching up on mature disclosures relating to ESG and Sustainability performance as certain other parts of the world, especially the developed markets. Certain thresholds on various aspects (such as emissions, pollutant levels etc.) may be lower or less stringent for developing / emerging markets such as India, while availability of data and disclosures too could be lesser. ESG evaluation is not standardized and faces limitations due to lack of availability of accurate, timely and uniform data. It must be acknowledged that ESG evaluation carries a significant degree of subjectivity. Our approach towards implementing the RI policy makes use of both, third party data service providers for ESG risk rating and an internal ESG evaluation based on engagement. DSP has sole discretion to determine ESG materiality and interpret performance in the context of this RI Policy for its investment decisions. DSP is not liable to any other party with differing ESG risk interpretation or evaluation metrics for similar investments.
At DSP, the Head and Co-Head of Equities have oversight and accountability for our Responsible Investment practices. Fund Managers, Investment strategists and Research Analysts are responsible for implementation of the related policies and procedures.
Reporting and Disclosures
We will publicly disclose our ESG related activities, practices and policies through our PRI report and other periodic public disclosures. We will also maintain transparency by keeping our clients informed on the initiatives taken by us on Responsible Investment.
This policy shall be reviewed once in a year or if significant changes occur to ensure its continuing suitability, adequacy, and effectiveness. This policy document and its updates shall be recommended our Investment team and approved by the Board.