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Community Capital Management, INC.

PRI reporting framework 2018

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

(C) Implementation: Integration

FI 11. Integration overview

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

We seek to: invest in high quality, well-researched bonds that have positive societal impacts, requiring transparency into the specific use of the proceeds, and measurement of their anticipated corresponding impact;
actively manage the portfolio to take advantage of opportunities and reduce unnecessary risks; build a portfolio that keeps risks lower, income higher, and diversification benefits better than the broad investment grade bond market.  Each of the bonds must meet our stringent impact and financial criteria.  We need to be able to measure, monitor, and track the positive-based impact outcomes of every bond.

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

Corporate (non-financial)

The team focuses on the ability for the borrower to meet its debt obligations.  This is done by analyzing the offering statements and corresponding financial information, and then discussions with the banker/issuer to get further insight or clarifications.  Emphasis is placed on redemption features and/or covenants, any credit enhancements, and the sources that will be used for the payment of interest and repayment of principal. The process also serves as a verification of the purpose of the project to ensure that the impact criteria are indeed met. We need to have transparency into the use of the bond's proceeds to ensure the funds raised will provide provide environmental and social outcomes that can be measured, monitored, and tracked.  Each bond goes through our rigorous research process which includes impact and financial analysis and is tagged by geography and with one or more of our seventeen impact themes.  

Securitised

The team focuses on the voluntary and non-voluntary principal prepayments and any potential delinquencies. For single family agency MBS, our focus on low-to-moderate income borrowers has historically provided more consistent prepayment protection than what external pricing models would suggest, alleviating some of the issues around accelerated cashflows when rates fall and generating better total returns.We need to have transparency into the use of the bond's proceeds to ensure the funds raised will provide provide environmental and social outcomes that can be measured, monitored, and tracked.  Each bond goes through our rigorous research process which includes impact and financial analysis and is tageed by geography and with one or more of our seventeen impact themes. 

11.3. Additional information [OPTIONAL]


FI 12. Integration - ESG information in investment processes

12.1. Indicate how ESG information is typically used as part of your investment process.

Select all that apply
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

12.2. Additional information [OPTIONAL]


FI 13. Integration - E,S and G issues reviewed

13.1. Indicate the extent to which ESG issues are reviewed in your integration process.

Environment
Social
Governance
Corporate (non-financial)

Environmental

Social

Governance

Securitised

Environmental

Social

Governance

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

Corporate (non-financial)

When capturing impact for fixed income securities, we employ a proprietary quantitative and qualitative
approach to understand what each bond is financing and to report on its multiple positive-based outcomes.
Quantitative data can include the number of jobs created or the number of affordable housing
units as well as dollar amounts invested in impact themes. Qualitative research is the “story,” so to speak,
which includes detailed explanations of what the bond is financing. This data and research is primarily
focused on four subsectors of the bond market – single family agency mortgage-backed securities (MBS),
agency commercial mortgage-backed securities (CMBS), taxable municipals, and asset-backed securities
(ABS) – where we can identify, record, and track the environmental and social activity that each transaction
supports.

Securitised

When capturing impact for fixed income securities, we employ a proprietary quantitative and qualitative
approach to understand what each bond is financing and to report on its multiple positive-based outcomes.
Quantitative data can include the number of jobs created or the number of affordable housing
units as well as dollar amounts invested in impact themes. Qualitative research is the “story,” so to speak,
which includes detailed explanations of what the bond is financing. This data and research is primarily
focused on four subsectors of the bond market – single family agency mortgage-backed securities (MBS),
agency commercial mortgage-backed securities (CMBS), taxable municipals, and asset-backed securities
(ABS) – where we can identify, record, and track the environmental and social activity that each transaction
supports.

13.3. Additional information.[OPTIONAL]


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