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RBC Global Asset Management

PRI reporting framework 2019

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You are in Direct - Fixed Income » ESG incorporation in actively managed fixed income » Implementation processes

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
0 Integration alone
99 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
1 All three strategies combined
0 No incorporation strategies applied
100%
Corporate (financial)
0 Screening alone
0 Thematic alone
0 Integration alone
99 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
1 All three strategies combined
0 No incorporation strategies applied
100%
Corporate (non-financial)
0 Screening alone
0 Thematic alone
0 Integration alone
99 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
1 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.

We believe that ESG factors can impact the financial performance of the corporate and sovereign issuers in which we invest. We integrate ESG factors within our investment processes with the aim of enhancing our pricing and management of risk. BlueBay has enhanced its fixed income ESG integration and our various fixed income teams took meaningful strides in 2018 to further integrate ESG factors into their respective investment processes.

A combination of screening and integration is applied to our designated socially responsible strategies. These strategies have been specifically designed to screen out companies that manufacture products and/or provide services that socially responsible investors may wish to avoid, or have poor ESG practices. In addition to a negative screen, integration is used to assess the remaining companies to ensure that relevant ESG factors are appropriately addressed. Please see FI 01.3 for additional information regarding our firm-wide screens.

Thematic investing is applied in our Access Capital Community Investment strategy and RBC Impact Bond strategy in the U.S., which aim to deliver competitive returns while simultaneously having a positive social and/or environmental impact through their investments.

Beyond norms-based screens, BlueBay applies ESG-based exclusionary screens to pooled funds and for interested clients.

01.3. Additional information [Optional].

RBC GAM also employs norms-based screening to all of its investments.  No RBC GAM investment team will knowingly invest in companies associated with the production, use or distribution of anti-personnel land mines or cluster munitions. These exclusions only apply when we control the investment policy for a portfolio. For mandates where we do not control the investment policy, our clients may request different exclusions or no exclusions. We have engaged an independent third party research provider to provide us with a list of companies that should be excluded on the basis of this policy, which is updated monthly.

Where there are full economic sanctions that prohibit any financial dealings with a foreign state, including investment in entities operating under the authority of the foreign state, we will not invest in securities that fall within the sanctions. Where sanctions have been imposed against foreign countries that do not prohibit financial dealings we will identify and assess any risk and consider whether the investment would still be in the best interests of our clients.

As a result, the majority of our AUM in fixed income falls under the combined 'Screening + Integration' ESG incorporation strategy based on the Reporting Framework's incorporation strategy definitions.


FI 02. ESG issues and issuer research

02.1. Indicate which ESG factors you systematically research as part of your analysis on issuers.

Select all that apply
SSA
Corporate (financial)
Corporate (non-financial)
Environmental data
Social data
Governance data

02.2. Indicate what format your ESG information comes in and where you typically source it

Indicate who provides this information  

specify description

          Company itself, other stakeholders (e.g. NGOs, academia, regulators)
        

Indicate who provides this information  

specify description

          Company itself, other stakeholders (e.g. NGOs, academia, regulators)
        

Indicate who provides this information  

specify description

          Company itself, other stakeholders (e.g. NGOs, academia, regulators)
        

Indicate who provides this information  

specific description

          Company itself, other stakeholders (e.g. NGOs, academia, regulators)
        

Indicate who provides this information  

specify description

          Company itself, other stakeholders (e.g. NGOs, academia, regulators)
        

02.3. Provide a brief description of the ESG information used, highlighting any differences in sources of information across your ESG incorporation strategies.

We have engaged a number of external research firms to provide specialized ESG research which we use in conjunction with our own internal analysis. This research provides us with information on ESG risks and opportunities relevant to specific issuers, industries, and countries and also provides us with broad-based thematic research relevant to general ESG themes.

In addition, our fixed income teams conduct robust country and issuer-level research, including an analysis of ESG factors that may be material to their investments. Their analysis relies on information produced by multiple outlets, including NGOs, ESG research providers and traditional media sources. In addition, direct engagement plays a key role in the assessment and identification of ESG risks and opportunities.

BlueBay uses combination of internal and external resources for ESG-related data, which is derived from a range of providers and stakeholders.

02.4. Additional information. [Optional]


FI 03. Processes to ensure analysis is robust

03.1. Indicate how you ensure that your ESG research process is robust:

specify description

          BlueBay interacts with industry peers in order to obtain further information on best practices that can complement its internal efforts
        

03.2. Describe how your ESG information or analysis is shared among your investment team.

          BlueBay's ESG team actively participates in cross-desk sector analyst forums, sharing insights and views
        

03.3. Additional information. [Optional]

Our investment teams continue to develop their respective ESG integration processes, with enhancements being made each year. For instance, our Canadian Fixed Income team has now embedded ESG content into all internal issuer reports and, to complement its ESG analysis, our Global Fixed Income and Currencies team has created an "ESG Watch" group to discuss and aggregate ESG research, trends and developments.

All of our investment teams have access to comprehensive ESG research and are incorporating ESG factors into their investment decision making. Further, we integrate ESG scores into our standard and proprietary trade management software/applications. BlueBay has a framework to assess ESG investment risk and incorporates ESG information as a standard item in issuer investment related documentations in its private debt business. Similarly, our High Yield Bond team in Toronto incorporates an analysis of ESG factors into its security selection due diligence investment process and the monitoring of portfolio investments. 


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