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Aktia Bank p.l.c.

PRI reporting framework 2018

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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.

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

We apply negative screens to corproate bonds in accordance with Aktia's Responsible Investment Principles. We observe material effects of ESG factors in investments in both government and corporate bonds, which is in the best interest of our investors.

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

          Relevant information is assessed by the fixed income team.
        

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

          Material information is assessed by the PM's and analysts.
        

03.3. Additional information. [Optional]


(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

In accordance with Aktias Principles of Responsible Investments, we do not invest in companies whose main activity is in the following acitivities: weapons production, gambling, tobacco. We also do not invest in companies that employs child labor.

Norms based screening is used as a basis for our engagement activities.

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.

Our negative screens are mandated by our responsible investments policy.

05.3. Additional information. [Optional]


FI 06. Examples of ESG factors in screening process (Not Completed)


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

          Unclear cases are reviewed by the fixed income team.
        
Norms-based screening

other description

          Companies are monitored by our third party service provider regarding use of child labor.
        

07.2. Additional information. [Optional]


(C) Implementation: Integration

FI 11. Integration overview

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

Material effects from ESG factors that impact the financial outlook and prospects of companies and countries are accounted for in our valuation and investment process.

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

SSA

We observe the following factors when assessing government bonds from a responsibility perspective: political practices, government strength, social development, economic and financial stability, ability to withstand external shocks, and willingness to reform. A deficiency in any single factor does not in itself cause a negative investment decision. However, deficiencies in several factors, in combination with a regressive policy, can lead to a country being excluded from our investment portfolios. Through instrument selection we can decide when we finance a specific state directly, and when we support some specific development project for example through multinational development programs.

Corporate (financial)

Effects of environmental, social and governance factors are observed as an integrated part in the investment process. Positive factors in this respect are for example opportunities arising from trends related to the environment and the development of society, which can benefit leading companies. Negative factors relate for example to how companies manage environmental, social and governance related risks in their activities. We identify ESG-risks and possibilities, and thereby create a better ground for sound investment decisions.

Corporate (non-financial)

Effects of environmental, social and governance factors are observed as an integrated part in the investment process. Positive factors in this respect are for example opportunities arising from trends related to the environment and the development of society, which can benefit leading companies. Negative factors relate for example to how companies manage environmental, social and governance related risks in their activities. We identify ESG-risks and possibilities, and thereby create a better ground for sound investment decisions.

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)
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
SSA

Environmental

Social

Governance

Corporate (financial)

Environmental

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.

SSA

Factors such as political practices, strength of governance structure, level of corruption, social progress, economical and financial stability, and willingness to improve in these aspects over the longer term, are considered when assessing expected risk and return of investments. No factor in itself leads to buying / selling / including / excluding the bonds of any particular country. Instead, the overall picture of the ESG characteristics of a country, in combination with it's economical and financial prospects, can lead to it being excluded on a tactical or strategic horizon from our investment portfolios.

Corporate (financial)

Environmental, governance- or stakeholder related issues that impact the level of risk of the different companies are considered when material.

Corporate (non-financial)

Environmental, governance- or stakeholder related issues that impact the level of risk of the different companies are considered when material.

13.3. Additional information.[OPTIONAL]


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