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Zürcher Kantonalbank

PRI reporting framework 2017

Export Public Responses

You are in Direct - Fixed Income » ESG incorporation in actively managed fixed income » (A) Implementation: Screening

(A) Implementation: Screening

FI 07. Types of screening applied

07.1. Indicate the type of screening you conduct.

Select all that apply
SSA
Corporate (financial)
Corporate (non-financial)
Negative/exclusionary screening
Positive/best-in-class screening
Norms-based screening

07.2. Describe your approach to screening for internally managed active fixed income

All corporates (Financials/non-Financials):

Exclusion of controversial weapons

 

Sustainable Investments

Corporates (Financials/non-Financials)

=>Ex-ante exclusion criteria (details see  additional information below)

The application of the exclusion criterias is followed by a sector analysis

SSA

The latest government sustainability rating of Zürcher Kantonalbank encompasses 52 countries, among them the OECD member states, the EU and the BRIC countries. About half of the analysed countries are emerging markets. The sustainability assessment is based on 80 environmental, social and government criteria (ESG), most of which are measured by quantitative and some by qualitative factors. Each of the three dimensions has a weighting of one third in the rating.

Special research process exist for different types of fixed income of supranationals and cities.

07.3. Additional information. [Optional]

We use for all the above described analysis ESG-Data/Research from different providers: Asset4, MSCI-GMI's, RepRisk,  Trucost, Factiva.

Details to the multi-step process for Corporates (Financial/non-Financials):

=> Focused on a high "Sustainability Impact"

In order to define the range of sustainable products, the analysts apply a selection of very stringent exclusion criteria. The ex-ante exclusion criteria make sure that our clients do not invest in companies that contribute to the world's most serious environmental problems and social risks. Further problem areas such as the compliance ILO principles are reviewed in the analysis and monitored constantly and companies breaching standards are excluded ex-post.

Ex-ante exclusion criteria: => Anthropogenic climate change - Extraction of fossil fuels - Operation of fossil-fuel power stations - Production of cars and aircrafts - Airlines => Endangerment of the Earth's atmosphere - Production of substances that deplete the ozone layer => Loss of biodiversity - not sustainable forestry - not sustainable fishery and fish farming - not sustainable palm-oil plantations - Genetic engineering => Threat to society and health - Nuclear energy - Production of arms and war material - Production of tobacco and smoking - Exploitative child labour.

The application of the exclusion criteria is followed by a sector analysis: The aim is to extract those companies in their respective industries and regions that set an example by excelling at taking responsible actions in terms of environmental protection, social and governance issues. The selection of is based on a multi-step process. The quantitative analysis compares roughly 50 environmental, social and corporate governance indicators. The data is obtained from specialized providers (such as Asset4, Trucost, MSCI ESG Research & Governance Metrics or RepRisk). Then, we carry out a qualitative product and sector analysis, which is mainly built on the know-how, experience and industry-specific knowledge of our analysts.

The sector analysis is followed by a fundamental bond analysis with a strong focus on companies with a high "Sustainability Impact". The following investment opportunities were defined: Energy: Renewable energy, energy efficiency. Sustainable Mobility: Public transport, Individual transport. Knowledge: Education/Research, Interlinking. Health: Access to basic health supply, Preservation of health. Finance: Access to financial services, Financial infrastructure. Resources: Efficient use of water, resource efficiency.


FI 08. Negative screening - overview and rationale

08.1. Indicate why you conduct negative screening.

Corporate (financial)

Corporate (fin)

Corporate (non-financial)

Corporate (non-fin)

08.2. Describe your approach to ESG-based negative screening of issuers from your investable universe.

All corporates (Financials/non-Financials):

Exclusion of controversial weapons

 

Sustainable Investments

We have exclusion criteria for Corporates (financial/non-financial)

The ex-ante exclusion criteria (list of exclusion criteria are mentioned below) make sure that our clients do not invest in companies that contribute to the world's most serious environmental problems and social risks.

Ex-ante exclusion criteria: => Anthropogenic climate change - Extraction of fossil fuels - Operation of fossil-fuel power stations - Production of cars and aircrafts - Airlines => Endangerment of the Earth's atmosphere - Production of substances that deplete the ozone layer => Loss of biodiversity - not sustainable forestry - not sustainable fishery and fish farming - not sustainable palm-oil plantations - Genetic engineering => Threat to society and health - Nuclear energy - Production of arms and war material - Production of tobacco and smoking - Exploitative child labour.

Further problem areas such as the compliance with ILO principles are reviewed in the analysis and monitored constantly and companies breaching standards are excluded ex-post.

08.3. Additional information. [Optional]


FI 09. Examples of ESG factors in screening process (Private)


FI 10. Screening - ensuring criteria are met

10.1. Indicate which systems your organisation has to ensure that fund screening criteria are not breached in fixed income investments.

Type of screening
Checks
Negative/exclusionary screening?
Positive/best-in-class screening
Norms-based screening

10.2. Additional information. [Optional]


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