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Parnassus Investments

PRI reporting framework 2017

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You are in Direct - Fixed Income » ESG incorporation in actively managed fixed income » (C) Implementation: Integration

(C) Implementation: Integration

FI 14. Integration overview

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

For corporate debt, the Fund subjects investment ideas to the same Responsible Investment Exclusionary Screens and Qualitative Assessments as the Advisor's other US funds. On a case‐by-case basis, the Advisor may alter ESG criteria from the Qualitative Assessment to accommodate debt instruments.

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

SSA

The Parnassus Investments Fixed Income Fund invests in U.S. Treasuries. Parnassus Investments recognizes that there are some social investors who question investing in U.S. Treasuries due to the Government's funding of the Department of Defense. However, the Parnassus screens focus on excluding companies that generate significant revenue from the manufacture of alcohol, tobacco or weapons, companies that have direct gambling operations, companies that generate electricity from nuclear power facilities, and companies with business involvement in Sudan. Since the U.S. Government does not fit those criteria, U.S. Treasuries are available for inclusion in the Parnassus Fixed-Income portfolio as they do not violate the firm's responsible investment policy.

The Fund may also invest in bonds issued by Supranational Organizations, which are subject to the same Responsible Investment Exclusionary Screens as our equity funds.

Corporate (financial)

For corporate debt, the Fund subjects investment ideas to the same Responsible Investment Exclusionary Screens and Qualitative Assessments as the Advisor's other US funds. On a case-by-case basis, the Advisor may alter ESG criteria from the Qualitative Assessment to accommodate debt instruments.

Corporate (non-financial)

For corporate debt, the Fund subjects investment ideas to the same Responsible Investment Exclusionary Screens and Qualitative Assessments as the Advisor's other US funds. On a case-by-case basis, the Advisor may alter ESG criteria from the Qualitative Assessment to accommodate debt instruments.

Securitised

Parnassus Investments will invest primarily in investment grade tranches of residential and commercial mortgage-backed securities, or agencies. We narrow the universe by reviewing the composite loans in different portfolios. Certain portfolios are selected for their overall composition, like high exposure to multi‐family loans and office loans. Other portfolios are avoided, if they have significant exposure to our exclusionary screens. Additional portfolios may be excluded if they have significant exposure to qualitative concerns.

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)
Securitised
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]

Parnassus Investments' responsible investment process begins by applying exclusionary screens to the list of investment ideas approved by a portfolio manager for due diligence. The screens eliminate companies that derive significant revenue from the manufacture of alcohol, tobacco or weapons, or have significant involvement with nuclear power, gambling or Sudan. From this investable universe the investment team then begins its fundamental analysis.

The next step in the responsible investment process is for an issuer or company to undergo a rigorous, proprietary ESG evaluation. ESG research is fully integrated into the investment process such that both fundamental and ESG research analysts are able to identify and address company-specific ESG issues.


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

Securitised

Environmental

Social

Governance

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

SSA

The Parnassus Fixed Income Fund invests in U.S. Treasuries. Parnassus Investments recognizes that there are some social investors who question investing in U.S. Treasuries due to the Government's funding of the Department of Defense. However, the Parnassus screens focus on excluding companies that generate significant revenue from the manufacture of alcohol, tobacco or weapons, companies that have direct gambling operations, companies that generate electricity from nuclear power facilities, and companies with business involvement in Sudan. Since the U.S. Government does not fit those criteria, U.S. Treasuries are available for inclusion in the Parnassus Fixed Income Fund as they do not violate the firm's responsible investment policy.

The Fund may also invest in bonds issued by Supranational Organizations, which are subject to the same Responsible Investment Exclusionary Screens and Qualitative Assessments as the Advisor's other U.S. funds.

Corporate (financial)

For corporate debt, the Fund subjects investment ideas to the same Responsible Investment Exclusionary Screens and Qualitative Assessments as the Advisor's other U.S. funds. On a case‐by-case basis, the Advisor may alter ESG criteria from the Qualitative Assessment to accommodate debt instruments.

Corporate (non-financial)

For corporate debt, the Fund subjects investment ideas to the same Responsible Investment Exclusionary Screens and Qualitative Assessments as the Advisor's other U.S. funds. On a case‐by-case basis, the Advisor may alter ESG criteria from the Qualitative Assessment to accommodate debt instruments.

Securitised

The Parnassus Fixed Income Fund invests in agency mortgage-backed securities. The Fund will invest primarily in investment grade tranches of residential and commercial mortgage-backed securities, or agencies. We narrow the universe by reviewing the composite loans in different portfolios. Certain portfolios are selected for their overall composition, like high exposure to multi‐family loans and office loans. Other portfolios are avoided, if they have significant exposure to our exclusionary screens. Additional portfolios may be excluded if they have significant exposure to qualitative concerns.

16.3. Additional information.[OPTIONAL]


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