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KBC Asset Management NV

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
90 Screening alone
0 Thematic alone
0 Integration alone
10 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
0 No incorporation strategies applied
100%
Corporate (financial)
90 Screening alone
0 Thematic alone
0 Integration alone
10 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
0 No incorporation strategies applied
100%
Corporate (non-financial)
90 Screening alone
0 Thematic alone
0 Integration alone
10 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
0 No incorporation strategies applied
100%

01.2. Describe your reasons for choosing a particular ESG incorporation strategy and how combinations of strategies are used.

For all our funds we apply both exclusions and norms based screening.

We offer a best-in-class strategy within sustainable investments, both for government bonds (best 50% based on 15 indicators for developed markets, best 25% based on 14 indicators for emerging markets) and corporates (best 40% based on >100 indicators).

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.

          Investment staff is informed by every ESG update (frequency: +/- monthly)
        

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
SSA
Corporate (financial)
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

·       For all funds we use exclusion (of controversial weapons, agro crops and livestock, countries with controversial regimes) and norms based screening (exclusion of UN Global Compact worst offenders)

·       For our sustainable funds we exclude moreover all weapons, tobacco, gambling, fur and speciality leather, adult entertainment, fossil fuels, UN Global Compact offenders, companies with activities in countries with controversial regimes.

·       BIC company screening (best 40% based on >100 indicators) and BIC countries screening (best 50% based on 15 indicators) of Developed markets, best 25% based on 14 indicators of Emerging markets)

 

04.3. Additional information. [Optional]


FI 05. Examples of ESG factors in screening process (Private)


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]


(C) Implementation: Integration

FI 10. Integration overview

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

For all our FI funds we apply both exclusions and norms based screening.

For sustainable FI investments we offer Best-in-class funds (countries and corporates).

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

SSA

For all our SSA FI funds we apply exclusion of countries with controversial regimes. We offer BIC FI government bonds funds based on both a BIC developed and emerging countries screening model.

Corporate (financial)

For all our Corporate FI funds we apply exclusion (of controversial weapons, agro crops and livestock,
countries with controversial regimes) and norms based screening (exclusion of UN Global Compact worst offenders).

We offer BIC FI corporate bonds funds based on a BIC developed and emerging markets corporates screening model + exclusion of all weapons, tobacco, gambling, fur and speciality leather, adult entertainment, fossil fuels, UN Global Compact offenders and companies with activities in countries with controversial regimes.

Corporate (non-financial)

For all our Corporate FI funds we apply exclusion (of controversial weapons, agro crops and livestock,
countries with controversial regimes) and norms based screening (exclusion of UN Global Compact worst offenders).

We offer BIC FI corporate bonds funds based on a BIC developed and emerging markets corporates screening model + exclusion of all weapons, tobacco, gambling, fur and speciality leather, adult entertainment, fossil fuels, UN Global Compact offenders and companies with activities in countries with controversial regimes.

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 (financial)
Corporate (non-financial)
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]


ESG analysis and the investment process are kept strictly separate. Positive financial arguments can never compensate for negative non-financial performance


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

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

SSA

Our Best-in-class government bonds screening model is based on 15 indicators, covering E, S and G subjects.

Corporate (financial)

Our Best-in-class corporate bonds screening model is based on >100 indicators, covering E, S and G subjects.

Corporate (non-financial)

Our Best-in-class corporate bonds screening model is based on >100 indicators, covering E, S and G subjects.

12.3. Additional information.[OPTIONAL]


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