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Edmond de Rothschild Asset Management (France) (EDRAM)

PRI reporting framework 2018

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

(A) Implementation: Screening

FI 04. Types of screening applied

04.1. Indicate the type of screening you conduct.

Select all that apply
SSA
Corporate (financial)
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

Our investments in corporate issuers apply a negative screening approach (used systematically across all the asset management company's funds) based on an  exclusion of companies whose business is in any way related to cluster bombs and anti-personnel mines.

In addition, we  have developed a positive screening based on a best-in-universe approach for the Eurozone corporate debt issuers. It is applied ex-ante in one credit bonds SRI fund. Consequently, this corporate bond fund has implemented a systematic incorporation of ESG analysis within its investment process. The ESG screening criteria has been established according to our in-house proprietary approach following a survey of existing data frameworks (see answer FI 03.3.). The criteria and their weightings are reviewed annually by the RI team.

At last, a negative screening is implemented for the sovereign/corporate debt issuers according to the main global legal constraints such as countries under embargoes, that finance terrorism, subject to financial sanctions or still are part of the money laundering blacklist.

04.3. Additional information. [Optional]

In terms of external communications regarding changes made to Edmond de Rothschild Asset Management (France)'s ESG research model, all relevant publications are updated regularly on our website in the "Responsible Investment" section (http://www.edmond-de-rothschild.com/site/France/en/asset-management/our-expertise/socially-responsible-investment ), accessible to all stakeholders and clients who wish to follow the updates made to our SRI investment and research process. In addition, Edmond de Rothschild Asset Management (France) launched a new publication dedicated to SRI, "The SRI Chronicles", in 2013. This public newsletter can also include information on any changes made to the ESG/SRI investment process.

Finally, in the context of Edmond de Rothschild Asset Management (France)'s management of SRI mandates, the Investment and Extra-Financial Investment Committees organised for institutional investors provide an appropriate venue for disclosing any information or discussing any changes made to Edmond de Rothschild Asset Management (France)'s SRI research or investment process.


FI 05. Negative screening - overview and rationale

05.1. Indicate why you conduct negative screening.

SSA

SSA

Corporate (financial)

Corporate (fin)

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

All our investments in corporate issuers apply a negative screening approach (used systematically across all the asset management company's funds) based on an  exclusion of companies whose business is in any way related to cluster bombs and anti-personnel mines, in accordance with the Oslo Treaty and the Ottawa Convention signed by the French Government.

Beyond this product -based exclusions of companies whose business is any way related to cluster bombs and anti-personnel mines - in compliance with an internal policy applicable to all Edmond de Rothschild Asset Management (France)'s funds (managed in house or sub-advised) - there is neither a sector or thematic-driven exclusion/inclusion bias, nor a geographic (within the euro zone) or market cap bias in Edmond de Rothschild Asset Management (France)'s SRI funds.

A negative screening is applied for the sovereign and corporate debt issuers according to the main global legal constraints such as countries under embargoes, that finance terrorism, subject to financial sanctions or still are part of the money laundering blacklist

05.3. Additional information. [Optional]

Our complete negative screening process implemented on the exclusion of Cluster Bombs and Anti-personnel landmines

Edmond de Rothschild Asset Management (France) has implemented a policy excluding issuers involved in the production of cluster bombs and anti-personnel mines from all of the UCITS/AIF and mandates it manages.

The list of issuers involved in the production of cluster bombs and anti-personnel mines is drawn up at least once a year by the RI management team, in cooperation with the Chief Investment Officer. This list  is based on internal research and publicly-available lists (PGGM, Norwegian pension fund, Australian pension fund, etc.)

At the Voting and Engagement Committee, which meets at least twice a year, this list is submitted by the RI investment team and reviewed and validated, as appropriate, by the Committee. The Committee's minutes include the validation of the list and its composition. It is circulated to all the Investment teams, to the Executive Board and to Internal Control and Compliance.

After validation by the Voting and Engagement Committee, the list is e-mailed by Internal Control and Compliance to the Risk Department so that the latter can update the setting of the pre-trade limit in the Dimension front office tool. This limit applies to all of the portfolios managed by Edmond de Rothschild Asset Management (France). It lists the stocks prohibited from the investment universe of the funds managed by Edmond de Rothschild Asset Management (France). Once the list has been programmed, the fund manager may no longer transmit an order on this issuer.

 

Our complete negative screening process implemented for both the corporate and  sovereign debt issuers

Edmond de Rothschild Asset Management (France) has drawn up a list of banned countries for which it is necessary to obtain prior approval from Internal Control and Compliance Department of the Edmond de Rothschild Asset Management (France) before making any investments. As a result, this list of banned countries has an impact in the authorisation of our investment for the equities, corporate and sovereign debt.

Nearly 30 countries appearing on this list are subject to an embargo put in place by the United States and Europe or have been subject to financial sanctions or to asset freezes.

Some countries are formally prohibited (5 countries under embargo, i.e. Cuba, Iran, Syria, North Korea and Sudan), while others are placed under a close monitoring: this triggers an analysis on a case by case basis by the internal control and compliance department which authorizes or prohibits the investment within the day.

In order to enforce this screening, systematic pre-trade blocking limits have been set up in the Dimension front office tool: this pre-trade block limit is set in all cases, except for the sovereign debt of the following countries (i.e. Ukraine, Russia, Egypt, Iraq, Tunisia, Bosnia & Herzegovina) due to a lack of sanctions.


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?
Positive/best-in-class screening

other description

          Periodic auditing/checking of the organisations RI funds by external part
        

07.2. Additional information. [Optional]

Controls of Negative screening process

=>The exclusion of Cluster Bombs and Anti-personnel landmines for the Credit bond management

After validation by the Voting and Engagement Committee, the list of issuers involved in the production of cluster bombs and anti-personnel mines is e-mailed by Internal Control to the Risk Department so that the latter can update the setting of the pre-trade limit in the Dimension tool. This limit applies to all of the portfolios managed by Edmond de Rothschild Asset Management (France). It lists the issuers prohibited from the investment universe of the funds managed by Edmond de Rothschild Asset Management (France). Once the list has been programmed, the fund manager may no longer transmit an order on this issuer.

 

=>Negative screening for the Sovereign and Corporate debt management

Edmond de Rothschild Asset Management (France) has drawn up a list of banned countries for which it is necessary to obtain prior approval from internal control or from the Compliance Department of the Edmond de Rothschild Group before making any investments. Nearly 30 countries appearing on this list are subject to an embargo put in place by the United States and Europe or have been subject to financial sanctions or to asset freezes. In order to enforce this screening, pre-trade blocking limits have been set up in the Dimension front office tool (See details in 05.3.).

 

 

​ Edmond de Rothschild Asset Management (France)'s Compliance and Internal Control team carries out regular controls on the investment process and ESG analysis methodology implemented for the Edmond de Rothschild Euro Sustainable Credit  fund. These reviews involve ensuring that  at least 90% of the portfolio holdings is documented (stock factsheets) and has received an internal ESG rating and that the exlusion rate is above 20% of the universe..

Finally, the transparency and thoroughness of our ESG research methodology is audited by third parties such as EY France (within the new SRI labelling process launched  and supported by the French Finance Ministry and awarded for the credit SRI fund Edmond de Rothschild Euro Sustainable Credit.  


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