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Impax Asset Management

PRI reporting framework 2019

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You are in Direct - Fixed Income » ESG incorporation in actively managed fixed income » (A) Implementation: Screening

(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

ESG is integrated into fixed income strategies to enhance our credit analysis:

•Avoidance of ESG laggards. ESG-analysis helps avoid companies with unacceptable ESG risks and/or operating in industries at risk in the transition to a more sustainable economy; unacceptable credit risk. 

•Enhanced Risk Management. ESG-analysis provides additional insights into companies’ ability to manage operational and reputational risks and minimize exposure to disrupted industries. Analysis is key to managing credit risk, primary input into portfolio construction.

•Identifying well-positioned companies. ESG-analysis helps identify companies positioned to benefit from the transition to a more sustainable economy.

Further, our fixed income strategies seek to avoid investment in companies with:

  • involvement in the manufacture or sale of weapons (including firearms);
  • manufacturing of tobacco products;
  • primary business in coal mining and production;
  • sole or majority of operations in oil sands;
  • reliance on coal, in the case of utilities, above national average, unless company has demonstrated significant commitment to renewables and is reducing dependence on coal.

We consider the revenue and activity to determine company involvement in weapons manufacturing. We exclude companies involved in the manufacture of cluster munitions, landmines and nuclear weapons - regardless of revenues - due to their indiscriminate nature.

04.3. Additional information. [Optional]


FI 05. Examples of ESG factors in screening process

05.1. Provide examples of how ESG factors are included in your screening criteria.

Type of fixed income

ESG factors

Screening

Description of how ESG factors are used as the screening criteria

Residential PACE ABS securities were screened out based on available information about the industry’s lending practices and the lack of nation-wide consumer protection laws. The PACE industry has been heavily criticized for unscrupulous lending practices in recent years.

Type of fixed income

ESG factors

Screening

Description of how ESG factors are used as the screening criteria

Duke Energy Green Bonds were screened out because we have identified Duke Energy as a company involved in significant and sustained environmental and social controversies, mainly related to its operation of coal ash storage facilities.

Type of fixed income

ESG factors

Screening

Description of how ESG factors are used as the screening criteria

Deutsche Bank (all securities) has been screened out for investment based on the company’s operating history and compliance record. Between 2015-2017, the bank has paid out about $10 billion in fines, settlements and pay-outs—the highest of its peer group.

05.2. Additional information.


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?
Positive/best-in-class screening
Norms-based screening

06.2. Additional information. [Optional]


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