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Lombard Odier

PRI reporting framework 2017

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You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes » (A) Implementation: Screening

(A) Implementation: Screening

LEI 06. Types of screening applied

06.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by

Description

Negative/exclusionary screening :

  • Product: firearms (specific funds), GMO (specific funds) and tobacco (specific funds)
  • Activities: Essential food commodities: soja, wheat, rice and corn (all funds), adult entertainment (specific funds), gambling (specific funds), nuclear power generation and related services (specific funds),
  • Country: All the countries sanctionned by UN, EU or Swiss governement.
  • Environmental and social practices and performance: Child labor and child labor through suppliers (specific funds), high and severe social or environmental-related controversies (specific bond funds)
  • Corporate governance: high and severe governance-related controversies (specific bond funds)

Screened by

Description

  • Environmental and social practices and performance: exclusion of the last quintile of worst ESG-scored companies (specific funds)
  • Corporate governance: exclusion of the last quintile of worst ESG-scored companies (specific funds)

Screened by

          The Ottawa Treaty on landmines, the Convention on Cluster Munitions, the Biological and Toxin Weapons Convention, The Chemical Weapons Convention
        

Description

  • Exclusion of companies involved in serious breaches of UN Global Compact Principles (specific funds). These controversies are graduated according to the seriousness of the facts: evaluation of the incident's impact, Degree of the incident exceptionality (sector specific), recurrence level, assessment of the company response, consideration of the company response etc.
  • Exclusion of companies involved in proven breaches of International Labor Organization Conventions: Child labor and child labor through suppliers (specific funds),
  • Other: Exclusion of companies involved in producing or distributing controversial weapons: The Ottawa Treaty on landmines, The Convention on Cluster Munitions, The Biological and Toxin Weapons Convention, The Chemical Weapons Convention (all funds)

06.2. Describe how the screening criteria are established, how often the criteria are reviewed and how you notify clients and/or beneficiaries when changes are made.

Screenings criteria are established in 4 different ways:

  1. Applying our corporate exclusion policies (controversial weapons and "essential food" commodities). A list of companies involved in cluster weapons, depleted uranium, white phosphorus and anti-personal mines manufacturing or distributing is put together by our SRI team with the help of external ESG data provider and is quarterly updated.
  2. Applying criteria to track down Child labor. Child labor is examined directely in the company or through its suply chain. The information is updated on a monthly basis.
  3. Applying screenings based on major breaches of UN Global Compact principles. In order to implement this screening we use a serie of controversy indicators which scales the number, the impact and the seriousness of incidents a company is going through. This screening can be applied through all ESG concerns or through specific E, S or G issues. This information is weekly updated.
  4. Applying screenings using our proprietary ESG scores. Lombard Odier has created an in-house expertise to build customized ESG scores and developed the capacity to test them. The score customization enables us to meet the client values in our scorings. Lombard Odier has set a standard ESG score using its propriatary ESG/CAR methodology to implement screenings when no client guidelines indicate a perticular scoring methodology. The score and its components are updated on a daily basis and enables Lombard Odier to propose different fields of screening: Environment, Social, Governance in a static view, or Consciousness, Actions and Results in a more dynamic view. Any combination of these fields is also available.

We notify clients when changes are made through monthly, quarterly or bi-annual SRI dedicated reports, including information related to scores, positive, negative and norm-based screening. Detailed comments are systematically provided with our reports, together with research and more detailed explanations about companies that went through significant changes.


LEI 07. Processes to ensure screening is based on robust analysis

07.1. Indicate which processes your organisation uses to ensure screening is based on robust analysis.

07.2. Additional information. [Optional]

Thanks to our quantitative data processing platform, all extreme score changes or appearance of potential new exclusions is duely examined on a regular basis.


LEI 08. Processes to ensure fund criteria are not breached (Private)


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