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Pensionfund Metalektro (PME)

PRI reporting framework 2017

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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
95 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
5 All three strategies combined
0 No incorporation strategies applied
100%
Corporate (non-financial)
0 Screening alone
0 Thematic alone
0 Integration alone
85 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
15 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.

SSA: We use negative screening based on UN PRI principals and European sovereign bonds investments we rank the countries by looking at several governance indicators. Only the top 25% ranking countries are eligible for inclusion. We take into account Governance data from the World Bank Worldwide Governance Index.

EMD: We use negative screening based on UN PRI principals and ESG criteria (based on MSCI country scores which are updated yearly) to provide a minimum level of ESG standards in the portfolio. When we established the investable universe, we do a deep-dive in each country that we are allowed to invest in and we take into account data that covers E, S and G. The analysis done is updated regularly and consists indicators like United Nations Human Development Index, World Bank Worldwide Governance Index, Heritage Index of Economic Freedom, World Bank Ease of Doing Business Index, World Bank Dependency Ratio, MSCI environmental data to analyze countries.

Credits: We use negative screening based on UN PRI principals and positive screening in instrument selection (green bonds). Subsequently, we (analyst is in the lead, but portfolio managers are also involved) perform a downside risk analysis which is most important to bondholders (see further 04.3)

04.3. Additional information [Optional].

Credits; We use negative screening based on UN PRI principals and positive screening in instrument selection (green bonds). Subsequently, we (analyst is in the lead, but portfolio managers are also involved) perform a downside risk analysis which is most important to bondholders. Risks and opportunities with respect to environmental, social and governance issues are explicitly taken into account and fully integrated in our analysis. As it could have impact on credit quality or even threaten the viability of a company's business model. Thematic is used when all companies within a sector are heavely exposed to a certain trend and therefore the risk is more systemic.

Also, we would like to provide you with some examples:

Credits&EMD: Screening example; we conduct positive screening in case of green bonds, conditional on yields, which need to match those on conventional bonds. Credits: Thematic example; Within utilities, we take a thematic approach: in addition to screening and integration, we clearly prefer players which are less exposed to regulatory risk and are ahead of the curve regarding the energy transition towards more renewables.


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:

specify description

          - Discuss with other asset managers key ESG challenges/how to leverage our combined knowledge; 
- organize and participate in internal Education sessions regarding specific ESG themes.
        

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

          We keep track of our ESG activities, discuss the progress on climate issues from the cross-asset Climate Task Force. Furthermore, ESG is regularly discussed
        

06.3. Additional information. [Optional]

SSA: Our investable universe is determined by either positive (Rates) or negative (EMD) screening. After the investable universe is determined we use multiple ESG indicators and multiple providers of ESG research to determine where to most efficiently invest the money. As such ESG is an integral part of our investment decision/process and can take on different forms depending on the country at hand. To determine that ESG research is robust we use different providers for similar ESG indicators to check for consistency. We participate in country visits to determine if the 'on the ground' situation is reflected in the reported ESG criteria.

 

Credits, our investable universe is determined by negative screening. Subsequently, we use various ESG indicators, depending on sector and issuer specific characteristics and use various ESG sources (primarily from MSCI and CRA's if available) and use recent ESG specific news flow for determining the most imminent issues. We also compare ESG performance within heterogeneous sectors and assess whether or not we see risks for credit quality and if so when (short or long term) this could materialize.


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