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Elo Mutual Pension Insurance Company

PRI reporting framework 2017

Export Public Responses

You are in Direct - Fixed Income » ESG incorporation in actively managed fixed income

ESG incorporation in actively managed fixed income

Implementation processes

FI 04. Incorporation strategies applied

04.1. Indicate 1) Which ESG incorporation strategy and/or combination of strategies you apply to your actively managed fixed income investments; and 2) The proportion (+/- 5%) of your total actively managed fixed income investments each strategy applies to.

SSA
0 Screening alone
0 Thematic alone
0 Integration alone
100 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
0 No incorporation strategies applied
100%
Corporate (financial)
0 Screening alone
0 Thematic alone
0 Integration alone
0 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
100 All three strategies combined
0 No incorporation strategies applied
100%
Corporate (non-financial)
0 Screening alone
0 Thematic alone
0 Integration alone
0 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
100 All three strategies combined
0 No incorporation strategies applied
100%

04.2. Describe your reasons for choosing a particular ESG incorporation strategy and how combinations of strategies are used.

Within the corporate investments ESG issues are integrated into the investment process on a portfolio manager level within the overall company analysis. We also use external screening services. Screening strategy is done to understand the risks in the specific investment and on a portfolio level. We screen for certain elements like CO2 emissions, controversial weapons, global compact and  positive impact. The thematic approach involves for e.g CO2 intensity and positive impact within the credit portfolio.

04.3. Additional information [Optional].


FI 05. ESG issues and issuer research (Private)


FI 06. Processes to ensure analysis is robust

06.1. Indicate how you ensure that your ESG research process is robust:

06.2. Describe how your ESG information or analysis is shared among your investment team.

06.3. Additional information. [Optional]


(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

Investable SSA universe is divided into four buckets based on Corruption Index score (CPI). Best score category is favoured and issuers in the worst quartile are usually avoided or scrutinized thoroughly.

In corporates we use the MSCI data for screening the portfolio  and markets in general. Screening  is done to understand the risks in the specific investment and on a portfolio level. We screen for certain elements like CO2 emissions, controversial weapons, global compact and  positive impact. The thematic approach involves for e.g CO2 intensity and positive impact within the credit portfolio.

07.3. Additional information. [Optional]


FI 08. Negative screening - overview and rationale

08.1. Indicate why you conduct negative screening.

SSA

SSA

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.

Negative screening for issuers with worst score based on Corruption Perception Index. 

Screening  is done to understand the risks in the specific investment and on a portfolio level. We do negative screening for certain elements like CO2 emissions, controversial weapons, global compact. We do this to understand the risks and improve our portolio risk/return profile.

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]


(B) Implementation: Thematic

FI 11. Thematic investing - overview (Private)


FI 12. Thematic investing - themed bond processes

12.1. Indicate whether you encourage transparency and disclosure relating to the issuance of themed bonds as per the Green Bonds Principles:

12.2. Describe the actions you take when issuers do not disburse bond proceeds as described in the offering documents.

We would request further information why this has happened and if not satisfied we would sell the bonds. This would not only be due to uneligibility by definition but also a question of trust and governance.

12.3. Additional information. [Optional]


FI 13. Thematic investing - assessing impact

13.1. Indicate how you assess the environmental or social impact of your thematic investments

13.2. Additional information. [Optional]


(C) Implementation: Integration

FI 14. Integration overview

14.1. Describe your approach to integrating ESG into traditional financial analysis.

Within the credit investments ESG issues are integrated into the investment process on a portfolio manager level. In addition we also use external screening services. An ongoing dialogue and meetings with companies' management teams and in-depth knowledge of the investment targets all reduce the chance of negative surprises and provide an understanding of the kinds of factors that make a good, responsibly operating company, and thus a good investment. Our approach is a mixe of quantitative and qualitative. A good scoring improves the overall investment score and a weak ESG rating reduces the attractiveness on the investment.

14.2. Describe how your ESG integration approach is adapted to each of the different types of fixed income you invest in.

SSA

Corruption Perception Index by Transparency International used for ranking investable universe.

Corporate (financial)

ESG issues are integrated into the investment process on a portfolio manager level. In addition we also use external screening services. An ongoing dialogue and meetings with companies' management teams and in-depth knowledge of the investment targets all reduce the chance of negative surprises and provide an understanding of the kinds of factors that make a good, responsibly operating company, and thus a good investment. Our approach is a mixe of quantitative and qualitative. A good scoring improves the overall investment score and a weak ESG rating reduces the attractiveness on the investment. The process is the same for financials and non-financials but governance issues are more in focus.

Corporate (non-financial)

ESG issues are integrated into the investment process on a portfolio manager level. In addition we also use external screening services. An ongoing dialogue and meetings with companies' management teams and in-depth knowledge of the investment targets all reduce the chance of negative surprises and provide an understanding of the kinds of factors that make a good, responsibly operating company, and thus a good investment. Our approach is a mixe of quantitative and qualitative. A good scoring improves the overall investment score and a weak ESG rating reduces the attractiveness on the investment.

14.3. Additional information [OPTIONAL]


FI 15. Integration - ESG information in investment processes

15.1. Indicate how ESG information is typically used as part of your investment process.

Select all that apply
SSA
Corporate (financial)
Corporate (non-financial)
ESG analysis is integrated into fundamental analysis
ESG analysis is integrated into security weighting decisions
ESG analysis is integrated into portfolio construction decisions
ESG analysis is a standard part of internal credit ratings or assessment
ESG analysis for issuers is a standard agenda item at investment committee meetings
ESG analysis is regularly featured in internal research notes or similar
ESG analysis is a standard feature of ongoing portfolio monitoring
ESG analysis features in all internal issuer summaries or similar documents
Other, specify

15.2. Additional information [OPTIONAL]


FI 16. Integration - E,S and G issues reviewed

16.1. Indicate the extent to which ESG issues are reviewed in your integration process.

Environment
Social
Governance
SSA

Environmental

Social

Governance

Corporate (financial)

Environmental

Social

Governance

Corporate (non-financial)

Environmental

Social

Governance

16.2. Please provide more detail on how you review E, S and G factors in your integration process.

SSA

Environmental issues are currently under development in SSA investments. Social and Governance issues fully integrated into SSA investment process.

Corporate (financial)

Within financials it is similar to the description on corporates below but there is more focus put on the governance issues.

Corporate (non-financial)

A starting point is whether there are or has there been serious controversies. If yes we raise the question whether they have been resolved. The ESG factors can vary between sectors.Typical elements within environment would be toxic emissions and waste, water stress, carbon emissions, product carbon footprint and opportunities in clean tech. Social aspect includes labour management, health and safety or product safety. Within Governance the general corporate governance, anti competitive practicies and Business ethics & fraud. The focus on these issues varies between sectors.

16.3. Additional information.[OPTIONAL]


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