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Nomura Corporate Research and Asset Management Inc.

PRI reporting framework 2019

You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

NCRAM believes that consideration of sustainability is congruent with our Strong Horse investment philosophy. ESG analysis helps us to invest in stronger companies, identify improving credits, and avoid defaults.

 

We consider ESG issues to be important factors when analyzing a company’s sustainability and investment prospects, and the study of these issues is incorporated into our investment process. We will consider a company’s record in how they treat the environment, how they treat their employees, how they treat the communities in which they operate, and their impact on their customers. We consider climate change and carbon emissions as part of our environmental risk analysis, and we incorporate a company’s environmental record into our assessment of the issuer. In addition, we will consider their track record in behaving fairly towards bondholders and other investors. To augment our internal research, NCRAM has engaged Sustainalytics to provide external research on ESG factors. NCRAM also has frequent meetings and dialogue with debt issuers, and our analysts and portfolio managers will discuss ESG factors with issuers at those forums.

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

NCRAM ESG Policy

Nomura Corporate Research and Asset Management Inc. (NCRAM) has a strong commitment to responsible and sustainable practices in investing client assets entrusted to us. With regard to client investing, we believe that consideration of sustainability is congruent with our Strong Horse investment philosophy. We incorporate Environmental, Social and Governance (ESG) factors when analyzing an issuer’s sustainability and investment prospects. As we evaluate an investment opportunity, we consider whether the company acts in a sustainable way with regard to the environment and with regard to their employees and other constituents. We also weigh their corporate governance with regard to how they treat shareholders and how they treat bondholders. We engage with issuers when we have ESG concerns. We believe that this helps us to invest in stronger companies and improving credits.

 

NCRAM became a signatory to the United Nations Principles for Responsible Investment (UN PRI) in 2013. NCRAM launched an ESG Global High Yield Strategy in 2018.

 

Key elements of NCRAM’s ESG process include:

 

NCRAM has established an ESG Committee consisting of both investment and non-investment personnel, with the NCRAM CIO acting as the Committee Chairman. Committee members interface with industry groups such as UN PRI as well as other Nomura Asset Management companies to discuss industry developments and best practices for implementation of ESG analysis in investing. The ESG Committee also reflects findings back to the broader investment team.

 

ESG training, led by the CIO and the ESG Committee, is provided to all investment personnel on an annual basis.

 

NCRAM research includes a summary of an issuer’s strengths and risks with regard to ESG factors in new-issue or other introductory credit reports. Analysis of ESG factors is based on both direct communication with the issuer as well as secondary sources.

 

NCRAM has engaged Sustainalytics to provide external research on ESG factors.

 

Analysts and Portfolio Managers (PMs) consider ESG factors in their credit analysis and assess whether the ESG strengths and risks are priced into market yields and spreads.

 

NCRAM offers its separate account clients the ability to customize portfolios based on exclusion lists and other ESG factors, and offers an ESG Global High Yield strategy.

01.6. Additional information [Optional].

          
        
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SG 01 CC. Climate risk (Not Applicable)


SG 02. Publicly available RI policy or guidance documents

New selection options have been added to this indicator. Please review your prefilled responses carefully.

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

02.3. Additional information [Optional].

NCRAM is glad to provide a copy of our ESG policy to clients and prospects, on request.


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

NCRAM's employees are bound by a strict Code of Ethics. This Code of Ethics is intended to address three fundamental principles that must guide the personal investment activities of the directors, officers and employees of the firm in light of their fiduciary duties: place the interests of our clients first; avoid taking inappropriate advantage of position; and personal investing must avoid even the appearance of a conflict.

 

The Code of Ethics provides principles of conduct on matters that relate to ethical business standards including, but not limited to, conflicts of interest, gifts and entertainment, document retention, confidentiality and anti-money laundering practices. Complying with this code, and local laws and regulations is a condition of employment. Any violation may be cause for disciplinary action, including termination.

 

The firm’s Code of Ethics states that all outside business activities must receive the prior written approval from Compliance. Access Persons and investment personnel are prohibited from serving on the board of directors or other governing boards of a publicly traded entity, except with prior written authorization from the Compliance Department. In the event of such authorization, Compliance considers the imposition of appropriate procedures to prevent the misuse of material non-public information or investment restrictions.

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios

04.1. Indicate if your organisation has a process for identifying and managing incidents that occur within portfolio companies.

04.2. Describe your process on managing incidents

NCRAM believes that ESG concerns rarely arise suddenly. More typically, an issuer may be identified as having high ESG risk, and then subsequent events occur that highlight or underscore existing risk factors. However, if an ESG concern does arise unexpectedly, NCRAM PMs and credit analysts work together to understand the impact on the credit and any affected portfolios. We may seek to engage with the company to improve its practices, or we may choose to exit the position. NCRAM’s philosophy involves active management of our portfolios, and our open architecture environment allows us to respond quickly in cases of ESG risk events.


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