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Income Research & Management

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.

SSA
0 Screening alone
0 Thematic alone
85 Integration alone
15 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
0 No incorporation strategies applied
Corporate (financial)
0 Screening alone
0 Thematic alone
85 Integration alone
15 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
0 No incorporation strategies applied
Corporate (non-financial)
0 Screening alone
0 Thematic alone
85 Integration alone
15 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.

We integrate ESG analysis into all SSA and Corporate credit research.  Approximately 15% of our AUM incorporates various SRI screens.

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

          Peer review performed among Analysts and Portfolio Managers
        

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

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
SSA
Corporate (financial)
Corporate (non-financial)
Securitised
Negative/exclusionary screening
Positive/best-in-class screening
Norms-based screening

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

We apply negative screens based upon client guidelines utilizing vendor data integrated into our order management and compliance systems.  We also perform sector-level benchmarking to identify leaders and laggards which is incorporated in the credit selection process.

04.3. Additional information. [Optional]


FI 05. Negative screening - overview and rationale

05.1. Indicate why you conduct negative screening.

SSA

SSA

Corporate (financial)

Corporate (fin)

Corporate (non-financial)

Corporate (non-fin)

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

We apply negative screens based upon client guidelines.

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?
Positive/best-in-class screening

07.2. Additional information. [Optional]


(C) Implementation: Integration

FI 11. Integration overview

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

We consider Environmental, Social, and Governance factors during our credit review process and believe issuers that exhibit elevated/lowered levels of key ESG risks have more/less volatile credit spreads and have a greater/lesser potential for negative credit events. Our integrated approach is applied to all new credits and existing holdings such that ESG considerations are evaluated concurrent with traditional credit analysis such that it is a holistic risk assessment.


Environmental, Social, and Governance factors are broken down into 10 key themes. Those key themes are further segmented into 32 key issues. Our Analysts identify which key issues are most relevant for each sector they cover. Key metrics are then mapped for the aforementioned key issues at the sub-sector level. Key metrics are used to benchmark credits against their peers.

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

SSA

See above, our approach is consistent across SSA and Corporate categories.

Corporate (financial)

See above, our approach is consistent across SSA and Corporate categories.

Corporate (non-financial)

See above, our approach is consistent across SSA and Corporate categories.

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]


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
Corporate (financial)
Corporate (non-financial)

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

SSA

Analysis of each E, S, and G factors are performed by our Municipal Analysts and summarized in routinely published research notes as a component of the fundamental credit research process.

Corporate (financial)

Mandatory analysis of each E, S, and G factors are performed by our Credit Analysts and summarized in routinely published research notes as a component of the fundamental credit research process.

Corporate (non-financial)

Mandatory analysis of each E, S, and G factors are performed by our Credit Analysts and summarized in routinely published research notes as a component of the fundamental credit research process.

13.3. Additional information.[OPTIONAL]


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