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RBC Global Asset Management

PRI reporting framework 2017

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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

As described in detail in our response to question 8, our designated socially responsible strategies, which include fixed income strategies, have negative screens for certain industries. Most of the screening criteria are based on a threshold of involvement defined in terms of percentage of annual revenue.

Qualitative screening criteria are also applied to these strategies. The application of qualitative criteria involves evaluating each company's overall performance in each issue area and balancing strengths and concerns. Our qualitative screening criteria include: community, corporate governance, employee relations, environment, human rights and product/business practices. In the specific areas of occupational health and safety and environmental performance, we apply the qualitative screening criteria using a best-of-sector approach, where each company's record is evaluated relative its industry counterparts. The standards for performance are industry best practices.

We also apply custom ESG screens for a small number of segregated fixed income institutional accounts for both RBC GAM and BlueBay.

For all portfolios where we control the investment policy, we will not knowingly invest in companies whose business activities would contravene the prohibitions contained in the Anti-personnel Landmines Convention or the Convention on Cluster Munitions, or for any international sanctions we are required to comply with.

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.

Our designated socially responsible strategies have negative screens for alcohol, gaming, military weapons, pornographic materials, nuclear power and tobacco products. Most of the screening criteria are based on a threshold of involvement that is defined in terms of percentage of annual revenues.

Negative screens may also be applied for certain segregated accounts where investors have specified particular screening criteria.

Where there are full economic sanctions that prohibit any financial dealings with a foreign state, we will not invest in securities that fall within the sanctions. Where sanctions have been imposed against foreign countries that do not prohibit financial dealings but restrict other activities, we will review the restrictions in the course of the investment process to understand the sanctions and their implications, identify and assess any risk and consider whether the investment would still be in the best interests of our clients.

When we control the investment policy for a portfolio, we will not knowingly invest in companies whose business activities would contravene the Anti-Personnel Landmines Convention or the Convention on Cluster Munitions. These exclusions apply to corporate credit holdings, but do not apply to derivatives or other index exposures where our exposure is indirect and outside of our control.

08.3. Additional information. [Optional]


FI 09. Examples of ESG factors in screening process

09.1. Provide examples of how ESG factors are included in your screening criteria.

Type of fixed income

ESG factors

Screening

Description of how ESG factors are used as the screening criteria

Our designated socially responsible strategies have negative screens for alcohol, gaming, military weapons, pornographic materials, nuclear power and tobacco products. Most of the screening criteria are based on a threshold of involvement that is defined in terms of percentage of annual revenues. Additionally, we apply negative screening regarding controversies across environmental, social and governance areas.

Type of fixed income

ESG factors

Screening

Description of how ESG factors are used as the screening criteria

Where there are full economic sanctions that prohibit any financial dealings with a foreign state, we will not invest in securities that fall within the sanctions. Where sanctions have been imposed against foreign countries that do not prohibit financial dealings but restrict other activities, we will review the restrictions in the course of the investment process to understand the sanctions and their implications, identify and assess any risk and consider whether the investment would still be in the best interests of our clients.

When we control the investment policy for a portfolio, we will not knowingly invest in companies whose business activities would contravene the Anti-Personnel Landmines Convention or the Convention on Cluster Munitions. These exclusions apply to corporate credit holdings, but do not apply to derivatives or other index exposures where our exposure is indirect and outside of our control.

Type of fixed income

ESG factors

Screening

Description of how ESG factors are used as the screening criteria

Qualitative screening criteria are applied to our designated socially responsible strategies in areas such as community, employee relations and environment. The application of qualitative criteria involves evaluating each company's overall performance in each issue area and balancing strengths and concerns. Our qualitative screening criteria include: community, corporate governance, employee relations, environment, human rights and product/business practices. In the specific areas of occupational health and safety and environmental performance, we apply the qualitative screening criteria using a best-of-sector approach, where each company's record is evaluated relative to its industry counterparts. The standards for performance are industry best practices.

Type of fixed income

ESG factors

Screening

Description of how ESG factors are used as the screening criteria

We also apply customised ESG screens for a small number of institutional clients.  These screens are determined by the client and are mostly based on alcohol, tobacco, and human rights issues.

Type of fixed income

ESG factors

Screening

Description of how ESG factors are used as the screening criteria

One of the BlueBay retail strategies has additional restrictions which are based on the Norwegian Government Pension Fund Global/Norges Bank Investment Management exclusions list. The SRI guidelines on which this list is based on includes product-based exclusions (which include coal/coal-based energy, nuclear weapons, tobacco) as well as conduct based exclusions (e.g. human rights, environmental damage, gross corruption, and other serious violations of fundamental ethical norms). The conduct-based exclusions could potentially apply to any corporate issuer irrespective of their sector.

09.2. Additional information.


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?

other description

          Data used for the screening criteria is updated monthly.
        
Positive/best-in-class screening

other description

          Data used for the screening criteria is updated monthly.
        
Norms-based screening

10.2. Additional information. [Optional]


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