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Munich Re

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.

There is a team of dedicated credit researchers at MEAG in Munich and New York. The credit researchers are obliged to conduct a detailed fundamental credit analysis of the issuer. This involves the evaluation of all available information. As part of this credit analysis, ESG criteria have to be considered. All information available from the MSCI ESG-reports are embedded into the research process and the MSCI ESG rating is part of the final investment memorandum. In addition, the fundamental credit score of the issuer takes into account  ESG risks and opportunities. The investment memorandum has to include an evaluation of ESG criteria being considered and how they have impacted the investment recommendation and credit analysis. Investment summaries are circulated to all fixed income portfolio managers.

MEAG also invests directly in sustainable projects via Infrastructure Debt. In order to select the right projects we integrate the relevant ESG criteria into the analysis/due diligence. The criteria applied depends on the specific project.

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

SSA

In addition to the process described above a minimum ESG-rating applies for sovereigns.

Corporate (financial)

see above

Corporate (non-financial)

see above

Securitised

see above

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
SSA
Corporate (financial)
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 featuresĀ in all internal issuer summaries or similar documents
Other, specify

12.2. Additional information [OPTIONAL]

ESG criteria are integrated at various stages of the investment process. There is a close collaboration with MEAG's stakeholder Munich Re and ERGO with regard to ESG topics. MEAG regularly informs its stakeholders about the progress and about the increased awareness of ESG issues. As its stakeholders define the responsible investment guideline, strict requirements have to be met.

ESG criteria are also applied for funds managed for third parties (e.g. for trusts, churches).

 


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
SSA

Environmental

Social

Governance

Corporate (financial)

Environmental

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.

SSA

For the classification of sovereigns we use the "ESG country-rating" provided by MSCI. The analysis, which helps to assess country's vulnerability to key ESG risks, includes the screening of controversial practices such as use of child labor or regulatory sanctions. In addition the MSG ESG Manager provides insight into a country's political and social stability as well as its engagement in international treaties and conventions.

Corporate (financial)

We use MSCI as an external ESG-research provider. For corporates we have access to all  detailed rating reports. Beyond that we use information we directly obtain from companies and publicly available information about E,S and G issues. It is the task of the investment analysis to evaluate the impact of each criterion to assess the risk profile of the investment.

Corporate (non-financial)

Please see above (Corporate financial)

Securitised

Please see above (Corporate financial)

13.3. Additional information.[OPTIONAL]


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