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Baker Gilmore & Associates

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.

Baker Gilmore’s investment process combines fundamentally-driven, subjective forecasting of the key factors driving bond returns with a rigorous approach to portfolio construction and implementation to meet client risk and return objectives. ESG risks and constraints are integrated in most of the investment process steps.

The investment process consists top-down and bottom-up analysis:

1. Top-down: Baker Gilmore has identified a variety of economic and market data that are used to generate its forecasts and to evaluate market conditions.  Interest rates and sector spreads are forecasted, as these are the factors that Baker Gilmore believes to be the dominant influences on portfolio performance. The investment team forecasts these factors through a subjective evaluation of macroeconomic data which contains ESG inputs such as demographics, geopolitics conflicts, regulations, technological innotivation, etc.
 

2. Bottom-up: Once top-down portfolio exposures have been determined, individual securities are purchased or sold to achieve target positions. For corporate bond security selection, Baker Gilmore’s bottom-up fundamental research process focuses on determining credit risk. Risk factors that are analyzed include: management quality, business model, cash flow, bond covenants, industry and red flags. ESG risks are integrated in these key risk factors.

 

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

SSA

For SSA issuers, ESG factors are integrated in Baker Gilmore top-down analysis such as demographics, geopolitics conflicts, regulations, technological innotivation, etc.

Corporate (financial)

Baker Gilmore’s bottom-up fundamental research process focuses on determining credit risk. Risk factors that are analyzed include: management quality, business model, cash flow, bond covenants, industry and red flags. ESG risks are embedded in these risk factors.

Corporate (non-financial)

Baker Gilmore’s bottom-up fundamental research process focuses on determining credit risk. Risk factors that are analyzed include: management quality, business model, cash flow, bond covenants, industry and red flags. ESG risks are embedded in these risk factors.

Securitised

Baker Gilmore’s bottom-up fundamental research process focuses on determining credit risk. Risk factors that are analyzed include: management quality, business model, cash flow, bond covenants, industry and red flags. ESG risks are embedded in these risk factors.

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

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 SSA analysis, ESG factors are integrated in Baker Gilmore top-down analysis. We include ESG inputs to generate our top-down views such as demographics, geopolitics conflicts, regulations, technological innovation, etc.

Baker Gilmore’s bottom-up fundamental research process focuses on determining credit risk. Any ESG risk factors that would affect credit capabilities of a government entity are included in our credit analysis.

Corporate (financial)

Baker Gilmore’s bottom-up fundamental research process focuses on determining credit risk. Risk factors that are analyzed include: management quality, business model, cash flow, bond covenants, industry and red flags. ESG risks are embedded in these risk factors.

Baker Gilmore’s bottom-up fundamental research process focuses on determining credit risk. Any ESG risk factors that would affect credit capabilities of a corporate security are included in our credit analysis.

Corporate (non-financial)

Baker Gilmore’s bottom-up fundamental research process focuses on determining credit risk. Risk factors that are analyzed include: management quality, business model, cash flow, bond covenants, industry and red flags. ESG risks are embedded in these risk factors.

Baker Gilmore’s bottom-up fundamental research process focuses on determining credit risk. Any ESG risk factors that would affect credit capabilities of a corporate security are included in our credit analysis.

.

Securitised

Baker Gilmore’s bottom-up fundamental research process focuses on determining credit risk. Risk factors that are analyzed include: management quality, business model, cash flow, bond covenants, industry and red flags. ESG risks are embedded in these risk factors.

Baker Gilmore’s bottom-up fundamental research process focuses on determining credit risk. Any ESG risk factors that would affect credit capabilities of a corporate security are included in our credit analysis.

13.3. Additional information.[OPTIONAL]


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