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Intermediate Capital Group plc

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
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

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

The fixed income investment process at ICG is a thorough bottom-up research driven process, where ESG issues are incorporated into our investment research and decision-making processes. In our process:

We identify relevant (or potentially relevant) ESG issues in the investment research conducted by our analysts. We assess the financial significance of these issues as an integral part of our process of determining the risk and returns of the investment in question, and also consider non-financial matters which may be of significance including ethical and reputational considerations. This analysis, as part of our wider research process, informs our willingness to invest and/or the terms on which we are willing to invest.

We present this research to our Investment Committees for approval, where it is reviewed and discussed and further investigation may be requested from the analysts.

If we decide to invest, the material ESG issues identified in our initial research (or any that arise thereafter) are monitored on an ongoing basis by our analysts and, where appropriate, discussed with Investment Committees.

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

          The Investment Committee’s role is to test the robustness of our analysis. Submissions to IC are required to include an analysis of ESG factors.
        

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

03.3. Additional information. [Optional]

During 2017 we began systematically recording ESG information within our internal monitoring database for the liquid corporate fixed income strategies across Europe and Australia, and this will be extended to our illiquid corporate fixed income strategy in 2018. ESG factors are a standard item on Tear Sheets and in our Quarterly Portfolio Reviews. In 2017 we also introduced ESG analysis as a standard item for committee meetings in our liquid fixed income strategy in the US (it already being standard across the rest of the platform).

Within ICG-Longbow, we developed a database of sustainability indicators for the real estate assets held as security for our investments during 2017, including energy performance and fire risk assessments.  This database is available to all investment professionals for review and is updated regularly.


(C) Implementation: Integration

FI 11. Integration overview

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

The fixed income investment process at ICG is a thorough bottom-up research process, where ESG issues are incorporated into our investment research and decision-making processes. In our processes:

We identify relevant (or potentially relevant) ESG issues in the investment research conducted by our analysts. Where necessary we may use external consultants or request external due diligence be conducted on a particular issue. We assess the financial significance of these issues as an integral part of our process of determining the risk and returns of the investment in question. This analysis, as part of our wider research process, informs our willingness to invest and/or the terms on which we are willing to invest. This analysis is bottom-up and case-by-case for each issuer.

We present this research to our Investment Committees for approval, where it is reviewed and discussed and further investigation may be requested from the analysts.

If we decide to invest, the material ESG issues identified in our initial research (or any that arise thereafter) are monitored by our analysts and, where appropriate, discussed with investment committees.  As monitoring is a key component of our analytical process, we include ESG information and updates in our quarterly portfolio review discussions and are progressively rolling out ESG factors within our internal databases (see 03.3 above).

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)

Our fixed income strategies invest in almost 100% non-financial corporates, hence the above description applies to this sector.

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 features in all internal issuer summaries or similar documents
Other, specify

12.2. Additional information [OPTIONAL]

Refer 11.1


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)

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

Corporate (non-financial)

Each of the factors must be addressed in our investment research and presented to Investment Committee. Analysts are given training and guidance on what to look for and are ultimately responsible for identifying and researching these factors in preparation for the Investment Committee discussions. 

13.3. Additional information.[OPTIONAL]


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