This report shows public data only. Is this your organisation? If so, login here to view your full report.

Valtion Eläkerahasto

PRI reporting framework 2017

Export Public Responses

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.

Portfolio managers consider ESG issues as part of the overall evaluation of the prospective investment before making the decision. In certain cases, the most opportune time for influencing the asset manager’s and target fund’s principles of operation is the moment when the investment is made.

ESG issues are discussed at meetings between VER’s portfolio managers and fund asset managers even after the investment is made. If any of the companies in the fund’s portfolio fails to meet the ESG standards applied by VER or if its ESG performance raises questions, VER initiates talks with the asset manager or takes other action to influence the fund’s operations. VER may also exit the fund if its portfolio companies fail to satisfy VER’s ESG standards. However, quick exits from private equity, real estate, infrastructure and private credit funds are not usually possible.

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

SSA

VER’s portfolio managers monitor and discuss ESG issues at meetings with the portfolio companies even after the investment is made. If the company fails to meet the ESG standards applied by VER or if its performance raises questions, VER initiates talks with the company or takes other action to influence its behaviour. The primary objective is to improve ESG performance, normally a better alternative than exit, both in terms of promoting responsible action and earning a better return on the investment.

The last option available to VER is divestment if the portfolio company fails to meet VER’s ESG criteria

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
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
SSA

Environmental

Social

Governance

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

SSA

Environmental and social responsibility and good governance are evolving concepts open to interpretation.  From VER’s point of view, the key points are as follows:

Environmental responsibility involves a number of elements. Traditionally, environmental responsibility is understood in terms of protecting the immediate environment from pollution and decay. More recently, the focus has shifted to issues related to climate change and, in particular, the carbon footprint.  Over the past few years, measurement of the carbon footprint and awareness, reporting and efforts to reduce it have been adopted as a standard by pension funds, something that VER also needs to do.

Social responsibility implies a specific obligation to respect and comply with international conventions. For VER, this means the UN Global Compact principles[1] and related international regulations concerning human rights, rights at work, environment and anti-corruption. Additionally, VER seeks to refrain from investing in industries that may involve questionable aspects in terms of social responsibility, such as arms, alcohol, tobacco, gambling and adult entertainment.

Governance calls for transparency and a rational and sustainable organisation of activities. For companies that VER invests in, this means, amongst others, compliance with sound corporate governance principles and respect for the rule of law, not only in environmental and social issues, but also in financial contexts such as corporate law, competition law and taxation. VER does not approve of illegal activities. Even activities that are technically within the law may be at variance with the requirements imposed by VER for good governance, if the activities clearly conflict with the spirit of the relevant regulations, for example in the field of corporate law or taxation.

 

[1] The Universal Declaration of Human Rights, The International Labour Organisation’s Declaration of Fundamental Principles and Rights at Work, The Rio Declaration of Environment and Development and The United Nations Convention Against Corruption.

16.3. Additional information.[OPTIONAL]


Top