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Finance in Motion GmbH

PRI reporting framework 2017

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.

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.

Finance in Motion is an impact investing advisor exclusively focused on development finance. Our funds have the primary goal of achieving significant positive economic, social and environmental impact in low- and middle-income countries. Applying a combination of ESG incorporation strategies for our fixed income investments is thus part of our core business.  

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
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

Our fixed income investments are based on several screening activities. Firstly, we require our investees to adhere to exclusion lists. Amongst others, funding may not be used to finance activities involving forced labour, radioactive materials, unbound asbestos fibres, hazardous chemicals, or wood or other forestry products from unsustainably managed forests (“negative screening”). Secondly, since we seek to achieve positive impact, our investments are based on investment guidelines or “green lists”, which stipulate what investments are eligible. For instance, certain investments need to achieve a 20% reduction in energy consumption and/or a 20% reduction in CO2 emissions, or contribute to soil conservation and sustainable land use (“positive screening”). Thirdly, we apply environmental and social (E&S) performance requirements when analysing investments during due diligence processes (“norms-based screening”). This involves an assessment of the Environmental and Social Management Systems of financial institutions we invest in, and a full E&S due diligence based on E&S performance requirements for our direct investments. Similarly, analysing governance aspects is part of our standard due diligence process.

07.3. Additional information. [Optional]


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.

We require the financial institutions we provide financing to to adhere to our mandates’ exclusion lists when on-lending to clients. Direct investments are screened against the same exclusions lists. Amongst others, funds may not be used to finance activities involving forced labour, radioactive materials, unbound asbestos fibres, hazardous chemicals, or wood or other forestry products from unsustainably managed forests.

Beyond legal reasons, we apply these criteria due to the mission of our funds. All funds we advise or manage are impact funds, which pursue a certain strategy in what they aim to promote (e.g. energy efficiency, biodiversity conservation). Hence, we exclude activities, which counteract the missions of our funds.

08.3. Additional information. [Optional]


FI 09. Examples of ESG factors in screening process (Not Completed)


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.

At present, we do not invest in 'green' or 'climate' bonds. Thus, FI 12.1 and FI 12.2 are not applicable.

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

          We measure the impact of our themed investments on specific ESG factors such as carbon emissions.
        

13.2. Additional information. [Optional]


(C) Implementation: Integration

FI 14. Integration overview

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

As an impact investing advisor exclusively focused on development finance, integrating ESG into financial analysis is part of our core business. Our approach to fixed income investing is based on integrating the consideration of ESG aspects in all stages of the investment cycle in order to achieve a positive impact. 

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

Corporate (financial)

When investing into financial institutions (FI), our ESG integration approach involves an E&S due diligence questionnaire to assess the FI’s Environmental and Social Management System and yearly reporting on E&S compliance and performance. For financial institutions investing into renewable energy, it involves additional E&S requirements to be met. The consideration of corporate governance is integrated in our standard risk assessment and monitoring procedures in the investment cycle.

Corporate (non-financial)

When investing directly into non-financial institutions (mostly renewable energy projects), our ESG integration approach involves a full E&S due diligence, based on our E&S performance requirements, and a detailed E&S action plan derived from the E&S due diligence findings. The implementation of the E&S action plan by the client is monitored with support from E&S consultants. The consideration of corporate governance is integrated in our standard risk assessment and monitoring procedures in the investment cycle.

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
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
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.

Corporate (financial)

When investing into financial institutions (FI), our ESG integration approach involves an E&S due diligence questionnaire to assess the FI’s Environmental and Social Management System and yearly reporting on E&S compliance and performance. For financial institutions investing into renewable energy, it involves additional E&S requirements to be met. The consideration of corporate governance is integrated in our standard risk assessment and monitoring procedures in the investment cycle.

Corporate (non-financial)

When investing into non-financial institutions (mostly renewable energy projects), our ESG integration approach involves a full E&S due diligence, based on our E&S performance requirements, and a detailed E&S action plan derived from the E&S due diligence findings. The implementation of the E&S action plan by the client is monitored with support from E&S consultants. The consideration of corporate governance is integrated in our standard risk assessment and monitoring procedures in the investment cycle.

16.3. Additional information.[OPTIONAL]


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