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LBPAM La Banque Postale Asset Management

PRI reporting framework 2019

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

(C) Implementation: Integration

FI 10. Integration overview

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

All ESG scores are integrated into the traditional financial tool named Pegase. This score is supported by an ESG qualitative comment that helps credit financial analysts to better understand ESG risks and opportunities related to the issuer.

In addition, a monthly meeting was implemented in June 2018 where RI and credit analyst discuss issuers at risk from an ESG perspective. 

We have develop a dedicated tool to assess green bonds. This scoring tool is based on 2 axes: one axe analyses the overall climat/ environmental strategy ofthe issuer, while the 2nd axe focuses on the effective impact of the green bond. The score relies on various weighted qualitative and quantitative KPI. Scorings range from 1 to 10. Issues that scored between 8 and 10 are not considered as green assets within LBPAM.

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

SSA

We apply the same ESG criteria for all type of issuers. However according to their sector we change the weight per pilar of our GREaT framework. 

 

Corporate (financial)

We apply the same ESG criteria for all type of issuers. However according to their sector we change the weight per pilar of our GREaT framework. For example for financial issuers, the governance pillar is 35%, for sustainable ressources is 15%, energy transition is 25% and local territories is 25%. We also identified if sectors face more risks than opportunities and this has impacts in our rating score. 

Corporate (non-financial)

We apply the same ESG criteria for all type of issuers. However according to their sector we change the weight per pilar of our GREaT framework. For example for each non-financial sector, we adopt a dedicated weight per pillar according to the most relevant ESG risks and opportunities identified. We also determined if sectors face more risks than opportunities and this impacts our rating score. As a consequence, the energy, materials and transport sectors have less (40%) companies with a rating between 1 and 5. On the contrary, sectors which provide solutions have mmore issuers ranked between 1 and 5 (60%).

Securitised

We apply the same ESG criteria for all type of issuers. However according to their sector we change the weight per pilar of our GREaT framework. 

10.3. Additional information [OPTIONAL]

For Infrastructure, Real estate and private debt, we have developed a dedicated ESG questionnaire based on our GREaT approach. The assessment is roll-out in every due-diligence pre-approval and is used as an input in the investment decision process.

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 (financial)
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]

We have 3 main ways of integrating ESG into FI investment decisions:

  1. We have an ESG scoring tool that supports the portfolio weighting decision process (AGIR).
  2. Monthly committees are held between RI and deks analysts to discuss the most material ESG risks for credit worthiness
  3. Finally, we analyse the issuer yield curve and potential relative value of green bond vs vanilla bonds to find out if there is a potential greenium. 

 

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 (financial)

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

We apply the same ESG criteria for all type of issuers. However according to their sector we change the weight per pilar of our GREaT framework. 

Corporate (financial)

We apply the same ESG criteria for all type of issuers. However according to their sector we change the weight per pilar of our GREaT framework. For example for financial issuers, the governance pillar is 35%, for sustainable ressources is 15%, energy transition is 25% and local territories is 25%. We also identified if sectors face more risks than opportunities and this has impacts in our rating score. 

Corporate (non-financial)

We apply the same ESG criteria for all type of issuers. However according to their sector we change the weight per pilar of our GREaT framework. For example for each non-financial sector, we adopt a dedicated weight per pillar according to the most relevant ESG risks and opportunities identified. We also determined if sectors face more risks than opportunities and this impacts our rating score. As a consequence, the energy, materials and transport sectors have less (40%) companies with a rating between 1 and 5. On the contrary, sectors which provide solutions have mmore issuers ranked between 1 and 5 (60%). 

Securitised

We apply the same ESG criteria for all type of issuers. However according to their sector we change the weight per pilar of our GREaT framework. 

12.3. Additional information.[OPTIONAL]

For Infrastructure, Real estate and private debt, we have developed a dedicated ESG questionnaire based on our GREaT approach. The assessment is roll-out in every due-diligence pre-approval and is used as an input in the investment decision process.
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