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

TriLinc Global, LLC

PRI reporting framework 2018

You are in Direct - Fixed Income » ESG incorporation in actively managed fixed income

ESG incorporation in actively managed fixed income

Implementation processes

FI 01. Incorporation strategies applied

01.1. Indicate 1) Which ESG incorporation strategy and/or combination of strategies you apply to your actively managed fixed income investments; and 2) The proportion (+/- 5%) of your total actively managed fixed income investments each strategy applies to.

Corporate (non-financial)
0 Screening alone
0 Thematic alone
0 Integration alone
0 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
100 All three strategies combined
0 No incorporation strategies applied
100%

01.2. Describe your reasons for choosing a particular ESG incorporation strategy and how combinations of strategies are used.

As an impact fund sponsor, TriLinc seeks to demonstrate the power of the capital markets in solving some of the world's pressing socioeconomic and environmental challenges. TriLinc incorporates the combination of 1) sustainable investment themes; 2) negative, positive, and norms-based screens; and 3) ESG and impact factors into the investment and monitoring process as the most effective way to foster capitalism for good.

01.3. Additional information [Optional].


FI 02. ESG issues and issuer research (Private)


FI 03. Processes to ensure analysis is robust

03.1. Indicate how you ensure that your ESG research process is robust:

specify description

          For the sponsored funds, TriLinc obtains third party review of specific data on borrower companies whose loans are in the portfolio over one year.
        

03.2. Describe how your ESG information or analysis is shared among your investment team.

          Investment team members participate in the Sustainability and Impact Committee.
        

03.3. Additional information. [Optional]

For the sponsored funds, the ESG and Impact review is incorporated into the Credit Memorandum for each borrower.


(A) Implementation: Screening

FI 04. Types of screening applied

04.1. Indicate the type of screening you conduct.

Select all that apply
Corporate (non-financial)
Negative/exclusionary screening
Positive/best-in-class screening
Norms-based screening

04.2. Describe your approach to screening for internally managed active fixed income

For the sponsored funds, TriLinc requires prospective portfolio companies to adhere to the IFC Exclusion List and to complete ESG and impact screens. TriLinc's in-country investment partners oversee the completion of the screens. TriLinc's Impact & ESG Analysts prepare an Initial Sustainability and Impact Review on each investment, which includes information from the potential borrower company’s ESG and impact screens; the company’s sustainability report (if available); any environmental and social impact assessments that have been undertaken by third-parties and government institutions; desktop research on the company, industry, and country of operation; standards, best practices and certifications established by local and international oversight bodies; and an assessment of sustainability risks and opportunities.  The Review is evaluated by TriLinc's Sustainability and Impact Committee. Prospective borrower companies must pass both the credit analysis and the Initial Sustainability and Impact Review in order to be eligible for financing. Aspects of the Review are  incorporated into the Credit Memorandum and all ESG and Impact data are maintained in TriLinc's integrated investment database.

04.3. Additional information. [Optional]


FI 05. Negative screening - overview and rationale

05.1. Indicate why you conduct negative screening.

Corporate (non-financial)

Corporate (non-fin)

05.2. Describe your approach to ESG-based negative screening of issuers from your investable universe.

Prospective portfolio companies must adhere to the International Finance Corporation's Exclusion List.  TriLinc believes that a disciplined investment process that incorporates environmental, social, and governance screening and impact metrics can enhance risk-adjusted returns through identifying and mitigating potential risks.

05.3. Additional information. [Optional]


FI 06. Examples of ESG factors in screening process (Private)


FI 07. Screening - ensuring criteria are met

07.1. 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?

other description

          In-country investment partners must monitor portfolio company activities and promptly report any activities that appear on the IFC Exclusion List.
        
Positive/best-in-class screening

other description

          In-country investment partners must monitor borrowers and promptly report any material ESG criteria violation. TriLinc obtains a third party assurance of specific ESG data.
        
Norms-based screening

other description

          In-country investment partners must monitor borrowers and promptly report any material violation of local/international norms or certifications.
        

07.2. Additional information. [Optional]


(B) Implementation: Thematic

FI 08. Thematic investing - overview (Private)


FI 09. Thematic investing - themed bond processes

09.1. Indicate whether you encourage transparency and disclosure relating to the issuance of themed bonds as per the Green Bonds Principles, Social Bond Principles, or Sustainability Bond Guidelines..

09.2. Describe the actions you take when issuers do not disburse bond proceeds as described in the offering documents.

N/A - This section does not apply to TriLinc, as TriLinc does not invest in bonds or other securities, but rather makes direct loans to companies.

09.3. Additional information. [Optional]


FI 10. Thematic investing - assessing impact

10.1. Indicate how you assess the environmental or social impact of your thematic investments

          TriLinc requires annual updates on borrowers' ESG/Impact metrics and issues a Sustainability and Impact Report, with third party review of specific data points.
        

10.2. Additional information. [Optional]


(C) Implementation: Integration

FI 11. Integration overview

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

All of TriLinc's investments incorporate ESG and impact factors, based on the conviction that strong ESG policies and practices are a key component of risk management, and that specific practices, such as water conservation, waste reduction, and energy efficiency, can generate quantifiable cost savings.

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)

In the sponsored funds, TriLinc makes direct loans to SMEs, either as trade finance facilities or term loans. All companies must pass ESG screens, independently of the type of financing they receive.

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)
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]

Certain references in this section (e.g. "credit ratings," "issuers") do not apply to TriLinc, as TriLinc does not invest in bonds or other traded securities, but rather makes direct loans to privately held companies.


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

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

Corporate (non-financial)

For the sponsored funds, as part of the credit application process and annually thereafter, borrowers attest to their environmental, social, and governance practices, such as inclusive human resource management policies, energy savings, and waste reduction, among others.

During the impact and ESG review process, the Investment Team inquires about the company’s environmental and social policies, procedures, and certifications, which are typically sector and geography specific, and collects any environmental and social impact assessments that have been undertaken by third-parties and governmental institutions. All of TriLinc’s borrowers must be in compliance with the IFC Exclusion List, attest compliance to local environmental, labor, and corporate governance laws, and represent that they will, as appropriate, work towards international best practice standards for ESG issues. An Initial Sustainability and Impact Review (“ISIR”) is conducted on each investment, which includes information from the potential borrower company’s ESG and impact screens; the company’s sustainability report (if available); desktop research on the company, industry, and country of operation; standards, best practices and certifications established by local and international oversight bodies; and an assessment of sustainability risks and opportunities.

TriLinc intentionally selects investments with potential to improve society while still generating competitive returns.

13.3. Additional information.[OPTIONAL]

In addition to meeting TriLinc's Exclusion and ESG requirements, borrower companies must self-identify one or more impact metric(s), using the Global Impact Investng Network's Impact Reporting and Investment Standards, and commit to providing baseline data and annual updates for as long as the loan is in TriLinc's portfolio.


Top