ESG & Stewardship Policy

1. An ESG Risk Management Framework based on SASB Guidelines

ARI’s ESG framework is part of its risk management process. This framework is based on fundamental research using the SASB materiality matrix, to identify potential red flags. Red flags can be identified for companies operating within certain sectors and subsectors, by incorporating and effectively managing ESG principles and material factors for the companies in a specific sector and industry. ARI’s framework is based on fundamental analysis of material factors of the SASB materiality matrix. Link to the materiality map: https://materiality.sasb.org/. Committees including ARI Investment Team members, portfolio managers and the CEO, are accountable for executing ARI’s ESG framework.

2. ARI’s Screening Process

Exclude deep cyclicals. As a result of ARI’s continued aversion to investing in deep-cyclical and commodity-based sectors (which is a core tenet of its investment approach), ARI’s strategies aim to inherently carry relatively minimal exposure to companies involved with fossil fuels, carbon emissions, and greenhouse gases.

3. Management

In addition, Criteria 3 of the investment process (Management’s Operational Track Record), aims to address Governance factors included in SASB materiality map for a specific company in an industry.

4. Ethical filter

ARI Group is proud to incorporate environmental, social and governance (ESG) guidelines. In addition, we have the ability to offer customized ethical filter in order to help clients align their investment strategies with important core values – without sacrificing diversification or return potential. On top of the regular ESG research framework based on the SASB materiality matrix, the filter prohibits investments in companies that operate within (and obtain a significant percentage of sales from a handful of pre-defined ethically “unattractive” industry sub-groups such as: adult entertainment, gambling, tobacco, alcohol, and firearms.

5. Engagement

ARI aims to engage with various stakeholders on ESG related matter, fiduciary and stewardship matters as well has have a direct impact over the long run on client portfolios and communities.

Investee Engagement

ARI prioritizes engaging with companies for which our analysis suggests that ESG or other factors are potentially material to an investment’s risk/reward profile.

5.1 Proxy Voting Engagement

When shareholder proposals on the proxy include ESG, ARI’s policy is to vote in favor of ESG proposals. ARI’s belief is that these ESG factors may affect investment performance over the long run and require appropriate consideration to protect the client’s investment. ARI is of the view that behaving in a socially responsible manner should reduce potential liability and therefore be an additional factor that guides ARI’s risk management and proxy voting standards. ARI aims to align its voting practices in reference to the U.N Sustainable Development Goals to guide socially responsible voting practices. ARI’s focus is to enhance transparency and disclosure.

• Engagement efforts are recorded and tracked in a centralized internal database to manage engagement objectives. This process is monitored regularly through a committee.
• ARI also aims to communicate and engage with investees in its proxy voting process, and not to use voting as a punitive measure when engagement targets are not met.
• Disclosure of voting intentions are in compliance with ARI's fiduciary duty to its clients. 

5.2 Broader Investment Community and Company Engagement

Key holdings with ESG material factor risks across portfolios are monitored for potential engagement opportunities where ARI considers they can be impactful. If the results of stakeholders and ARI do not align with ARI’s intended approach and create a material risk, ARI looks to divest or manage portfolio security weights at Investment Teams’ discretion. Engagement efforts are monitored to guide and monitor ARI engagement objectives.

5.3 Stakeholder and Community Engagement

Engagement practices: Education and Communication 

• Education and communication: ARI regularly monitors companies on ESG SASB factors, which are material for growing capital, and managing risk of the ecosystem over the long run. It also shares findings and communicates with various stakeholders.
• Strategies also consider an understanding of the governance, corporate culture and the company’s performance and strategy through its research processes.
• ARI aims to build deep relationships with companies to obtain and understand any public information about the companies’ financial information and any information relevant to the ESG practices. This is done through regular meetings between the analyst team and the company’s representatives and management, as well as through proxy voting engagements.
• ARI aims to engage in its community on material factors for assets managers according to SASB. ARI actively engages in industry events and organization memberships that align with that goal.
• Relation to investment decisions with training program 

ARI aims to link its active ownership to investment decisions making. To be able to achieve this goal, ESG research is conducted by analysts and portfolio managers. ARI always involves portfolio managers and analysts in risk committees when defining an engagement program and developing voting decisions. ESG investment teams are encouraged to join engagement meetings and roadshows and pass on that knowledge to the next generation.

Community Engagement

ARI aims to engage in its community on material factors for asset managers according to SASB, engaging with groups like vendors and regulators to advocate ESG or regulatory positions. This includes vendor diversity such as Minority Brokers for example and various organizations that promote diversity in the investment management industry. ARI also publicly discloses relationships and support for trade associations and other bodies that conduct advocacy on behalf of their members. ARI’s Investment committee and Compliance committee review potential or ongoing communications with policy makers and other engagements, to make sure our engagements are in line with our organizational priorities.

Service providers assessment and engagement:

• ARI proceeds to a regular review of its services providers. This includes a review of every policy applicable on the service provider side.
• ARI is a signatory of the UN Principles for Responsible Investment (PRI), which allows ARI to publicly demonstrate its commitment to including environmental, social and governance (ESG) factors in investment decision making and ownership. ARI dedicates to facilitate collaboration to help investors align their responsible investment practices with the broader sustainable objectives of society.

Direct Impact, driven by Direct Action:

• Fueled by the mission of doing the right thing, ARI’s global Impact goals have been 2 folds to date. 
• Locally: Incubating, training, growing uncovered diverse talent accessing/ the investment management industry. 
• Opportunistically, Globally, Direct Impact Action- Through small baby step action, ARI aims to provide Access to basic needs for underserved communities around the globe. When ARI became profitable, through access to a direct diverse network, small action initiative towards giving back to underserved communities around the globe through ARI’s global diverse network. An example of direct action- Local Water drilling for a village in Guinea Conakry where families used to walk 1 mile to access water for basic needs. 

5.4 Political Engagement Policy

ARI’s policy of not making political statements or engaging in political activities is driven by various factors, including fiduciary duty, a desire to remain neutral, avoid potential conflicts, and focus on its core business objectives. This approach is often justified the fiduciary duty that the ARI owes to its stakeholders. By abstaining from political engagement, ARI aims to avoid potential controversies, polarization, and risks that could negatively impact shareholder value and Governance. ARI acknowledges that companies may still indirectly engage in political activities through their lobbying efforts, support of industry associations, or involvement in public policy debates. These actions may be driven by specific business interests, such as advocating for favorable regulations or protecting their market position and therefore may influence fiduciary duty. While refraining from making explicit political statements it is essential ARI considers the ESG broader impact.

ARI's political engagement policy is aligned with its values, corporate culture, and long-term fiduciary duty.

6. ARI Group - CFA Institute ESG Disclosure Standards Statement

ARI Global Opportunities - ESG Disclosure Statement

ARI International Equity - ESG Disclosure Statement