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Vontobel Holding AG

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

We identify the companies for the investment universe that meet our positive and negative sustainability criteria. The most important element of this analysis is to determine which companies are on average ahead of their peers in terms of an active sustainability approach. These sector-specific ESG themes (environmental, social, governance) are covered by many different criteria as a basis to evaluate a firms' sustainability performance. The most progressive issuers in each sector are identified and selected for the sustainable investment universe. On this basis, the sustainable bond universe is determined.
In addition to the positive screening, we apply several exclusion criteria for negative screening of companies such nuclear energy, tobacco, or GMO or death penalty when it comes to countries.

07.3. Additional information. [Optional]

For our Sustainable Investing Boutique:

BEST-IN-CLASS: CORPORATE BONDS
The evaluation of the individual company's contribution to reducing environmental and social risks and the exploitation of corresponding opportunities is performed with the help of a matrix of criteria developed in-house which comprises the following three aspects:

Environmental responsibility: the company's measures and initiatives to reduce the environmental impacts in production, the supply chain and product usage. Social responsibility: the company's measures and initiatives to take into consideration the interests of customers, employees, suppliers and society as a whole, for example product safety, occupational health& safety, working conditions at suppliers. Corporate governance: embedding sustainability aspects in the corporate strategy and business model; management systems; corporate governance standards.

GOVERNMENT BONDS
The two dimensions for the sustainability rating of government bonds are resource availability and resource productivity.
Resource availability includes the current and future availability of a country's natural resources (primarily the available biocapacity minus the ecological footprint), as well as its social and financial resources.
Resource productivity measures the efficiency with which resources are transformed into material wealth (gross domestic product), the education and health system of a country with respect to resource consumption, as well as the efficiency of a country's economic, political and social processes, and the overall conditions.

PUBLIC FINANCIAL INSTITUTIONS
Public financial institutions are state-supported banks with a set mandate, such as financing export activity or combating poverty.
The contribution made by the mandate assesses to what extent the institution's mandate promotes sustainable development. The contribution made by the implementation establishes how well this mandate is performed within the framework of a company's rating, which is based on the rating criteria for banks.

PUBLIC COVERED BONDS
Covered bonds are eligible for investment if both the issuer and cover pool are sustainable. The issuer rating is determined according to the same methodology as for the corporate rating for that sector, which in most cases are banks (see above, not shown here). The cover pool comprises loans to the public sector as well as government bonds. The sustainability rating of the cover pool thus corresponds to the weighted average rating of the countries financed.


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.

These negative screenings are applied to all Vontobel sustainable products:

Corporations:

  • nuclear power
  • agricultural genetic engineering
  • arms and other defense products
  • tobacco
  • gambling
  • pornography
  • gross violations of human rights and rights at work

Countries: death penalty

08.3. Additional information. [Optional]

For some of our products, these additional negative screenings are applied:

Corporations:

  • Airlines
  • Alcohol
  • Agrochemicals: production of crop protection agents
  • Chlorine chemicals: production of organochlorine bulk products (e.g. PVC)

Countries:

  • Human rights: Countries classified as "Not Free" by Freedom House
  • Peace and security:  Countries classified as "Very Low" opr "Low" in the Global Peace Index

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

10.2. Additional information. [Optional]

We have a strict investment control in place: automated IT systems prevent our portfolio managers from investing in excluded issuers of bonds that do not meet screening criteria.


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