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Voya Investment Management

PRI reporting framework 2019

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ESG incorporation in actively managed fixed income

Implementation processes

FI 01. Incorporation strategies applied

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
95 Integration alone
0 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
5 No incorporation strategies applied
100%
Corporate (non-financial)
0 Screening alone
0 Thematic alone
60 Integration alone
35 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
5 No incorporation strategies applied
100%
Securitised
0 Screening alone
0 Thematic alone
95 Integration alone
0 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
5 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 implement screening only when directed specifically by a client. In all asset classes where ESG issues are material, we work to integrate ESG factors into the decision making process. At this time, we do not have any thematic investments but we are working on creating new capabilities that enables clients to align to thematic issues. We do not actively track all of our assets according to the above categories, but the numbers reported are approximate based on available information. 

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:

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
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

We offer a range of ESG capabilities for clients, including the ability to implement ESG screening, where applicable. We, as fiduciaries, do not screen client investments based on our own ESG values, but enable clients to align to their stated values. Clients are able to perform negative screening or norms-based screening on a variety of factors. 

04.3. Additional information. [Optional]


FI 05. Examples of ESG factors in screening process (Not Completed)


FI 06. Screening - ensuring criteria are met

06.1. 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?
Norms-based screening

06.2. Additional information. [Optional]


(C) Implementation: Integration

FI 10. Integration overview

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

We understand that environmental, social and governance (ESG) factors can impact the investment risk and return profiles of our investments. As fiduciaries, we incorporate relevant factors, including these, into our analysis of the long-term performance outlook of a company and the value of its securities. Depending on the particular situation, as part of our assessment of a company’s value, prospects and financial condition, we may consider information about many factors, including, among others, those that are considered ESG, such as exposure to regulation or litigation, labor relations, human rights, product quality and safety, reputation, governance practices, executive compensation, reporting and disclosure, community relations, energy costs and climate impact. Our experienced investors have a deep understanding of the companies in which we invest, and we attempt to take into account all the relevant factors that contribute to an informed investment decision. Intensive research, disciplined processes, and expert portfolio construction are the foundation of our commitment to reliable investing.

With an emphasis on fundamental research and risk management, we aim to help our clients meet their long-term investment objectives with confidence. As part of our values of stewardship and service, Voya Investment Management works closely with clients in order to customize our approach, when necessary and practicable, to meet specific client requirements.

We currently systematically provide ESG data to our fixed income investment teams, including Senior Loans,  to ensure material ESG factors are considered in the investment process, and we have initiated a focused effort to enhance education around ESG factors. Ultimately, it is up to each analyst and PM to make an informed decision, inclusive of material ESG information. We understand the importance of having as broad a set of ESG data as possible, and we are continually evaluating additional sources of ESG information to make informed investment decisions.

As part of Voya IM’s ESG Program, we are working throughout the firm to enhance the systematic integration and understanding of ESG factors in our investment processes, and to create dedicated ESG solution capabilities across all platforms.

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

SSA

As part of our ESG Investment program, we have been systematically advancing our ESG considerations across asset classes and investment teams. This includes our SSA fixed income investment teams. While environmental, social and governance factors have always been considered in our investment process, as material, we have a focused effort to ensure material E, S and G considerations are systematically taken into account in our fundamental investment process as material and relevant by asset class. Through the provision of dedicated third party ESG data and education and training for our teams with the support of a dedicated Head of ESG Investment Strategy, we work to integrate ESG factors into our investment processes. 

Corporate (non-financial)

As part of our ESG Investment program, we have been systematically advancing our ESG considerations across asset classes and investment teams. This includes our Corporate (non-financial) fixed income investment teams, corporate credit and senior loans. While environmental, social and governance factors have always been considered in our investment process, as material, we have a focused effort to ensure material E, S and G considerations are systematically taken into account in our fundamental investment process. Through the provision of dedicated third party ESG data and education and training for our teams with the support of a dedicated Head of ESG Investment Strategy, we work to integrate ESG factors into our investment processes. 

As an example of our senior loan team's approach, we understand that environmental, social and governance (ESG) factors can impact the investment risk and return profiles of all our investments. As fiduciaries, we incorporate relevant factors, including these, into our analysis of the long-term performance outlook of a company and specifically to the value of Senior Loans investments. Depending on the particular situation, as part of our assessment of a company’s value, prospects and financial condition, we may consider information about many factors, including, among others, those that are considered ESG.

Voya Investment Management’s Senior Loan team recognizes the importance of having a deep understanding of the companies in which we invest, and attempt to take into account all the relevant factors that contribute to an informed investment decision. Intensive research, disciplined processes, and expert portfolio construction are the foundation of our commitment to reliable investing. Accordingly, analyzing ESG factors is a developing and increasing part of our mainstream research process. Analysis is done by our dedicated analysts, not just a separate ESG department.  However, our team has the support of a dedicated Voya Head of ESG Investment to help increase the proficiency of our team’s understanding and consideration of ESG factors. Voya IM has partnered with a dedicated ESG data provider to provide systematic ESG data to its investment teams. For the Senior Loan investment universe, external ESG vendor data coverage of borrowers in the leveraged loan market is limited as many are private companies. Consequently, our primary input is the research of our analyst team during the rigorous underwriting process for acquiring loans in these portfolios, which is supplemented by the dedicated external ESG resources. In addition to the raw data, the analysts focus on discussing what is material for the specific investment case and draw clear investment conclusions, inclusive of ESG factors.

Securitised

As part of our ESG Investment program, we have been systematically advancing our ESG considerations across asset classes and investment teams. This includes our securitized investment teams. While environmental, social and governance factors have always been considered in our investment process, as material, we have a focused effort to ensure material E, S and G considerations are systematically taken into account in our fundamental investment process. Through the provision of dedicated third party ESG data and education and training for our teams with the support of a dedicated Head of ESG Investment Strategy, we work to integrate ESG factors into our investment processes. 

10.3. Additional information [OPTIONAL]


FI 11. Integration - ESG information in investment processes

11.1. Indicate how ESG information is typically used as part of your investment process.

Select all that apply
SSA
Corporate (non-financial)
Securitised
ESG analysis is integrated into fundamental analysis
ESG analysis is used to adjust the internal credit assessments of issuers.
ESG analysis is used to adjust forecasted financials and future cash flow estimates.
ESG analysis impacts the ranking of an issuer relative to a chosen peer group.
An issuer's ESG bond spreads and its relative value versus its sector peers are analysed to find out if all risks are priced in.
The impact of ESG analysis on bonds of an issuer with different durations/maturities are analysed.
Sensitivity analysis and scenario analysis are applied to valuation models to compare the difference between base-case and ESG-integrated security valuation.
ESG analysis is integrated into portfolio weighting decisions.
Companies, sectors, countries and currency and monitored for changes in ESG exposure and for breaches of risk limits.
The ESG profile of portfolios is examined for securities with high ESG risks and assessed relative to the ESG profile of a benchmark.
Other, specify

11.2. Additional information [OPTIONAL]


FI 12. Integration - E,S and G issues reviewed

12.1. Indicate the extent to which ESG issues are reviewed in your integration process.

Environment
Social
Governance
SSA

Environmental

Social

Governance

Corporate (non-financial)

Environmental

Social

Governance

Securitised

Environmental

Social

Governance

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

SSA

As part of our ESG integration process, we deploy a range of dedicated ESG resources which, include environmental, social or governance underlying data. This supplements our existing fundamental investment process which also may include material E, S, or G information. Ultimately, it is up to each investment professional to make the best informed investment decision, inclusive of all material information, including ESG data. 

Corporate (non-financial)

As part of our ESG integration process, we deploy a range of dedicated ESG resources which, include environmental, social or governance underlying data. This resources our existing fundamental investment process which also may include material E, S, or G information. Ultimately, it is up to each investment professional to make the best informed investment decision, inclusive of all material information, including ESG data. 

Securitised

As part of our ESG integration process, we deploy a range of dedicated ESG resources which, include environmental, social or governance underlying data. This supplements our existing fundamental investment process which also may include material E, S, or G information. Ultimately, it is up to each investment professional to make the best informed investment decision, inclusive of all material information, including ESG data. 

12.3. Additional information.[OPTIONAL]


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