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Nippon Life Insurance Company

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

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.

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

Maintaining an awareness of the mission and public nature of the life insurance business, the Company prohibits investing in or financing companies that manufacture cluster munitions, biological weapons, antipersonnel landmines or chemical weapons, for example.

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?

06.2. Additional information. [Optional]


(B) Implementation: Thematic

FI 07. Thematic investing - overview (Private)


FI 08. Thematic investing - themed bond processes

08.1. Indicate whether you encourage transparency and disclosure relating to the issuance of themed bonds as per the Green Bonds Principles, Social Bond Principles, or Sustainability Bond Guidelines..

08.2. Describe the actions you take when issuers do not disburse bond proceeds as described in the offering documents.

We have embraced a policy of conducting dialogue with issuers and encouraging them to disclose information. If we do not see any improvement made by the issuer, we will consider selling the investment.

08.3. Additional information. [Optional]

We request issuers to provide reporting on the items of FI 09.1 and we monitor those items, but we have not made this reporting systematically compulsory.


FI 09. Thematic investing - assessing impact

09.1. Indicate how you assess the environmental or social impact of your thematic investments.

09.2. Additional information. [Optional]

We request issuers to provide reporting on the items of FI 10.1 and we monitor those items, but we have not made this reporting systematically compulsory.


(C) Implementation: Integration

FI 10. Integration overview

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

We have integrated the following analyses into traditional financial analysis: analysis of the impact of ESG-related risks on the long-term financial strength and creditworthiness of companies; and analysis of the risk of the materialization of a sharp deterioration in creditworthiness due to the occurrence of a material ESG risk. We incorporate ESG information when analyzing bond issues, when making investment decisions and when conducting monitoring.

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

SSA

We have integrated the following analyses into traditional financial analysis: analysis of the impact of ESG-related risks on the long-term financial strength and creditworthiness of issuers; and analysis of the risk of the materialization of a sharp deterioration in creditworthiness due to the occurrence of a material ESG risk. We incorporate ESG information when analyzing bond issues, when making investment decisions and when conducting monitoring.

Corporate (financial)

We have integrated the following analyses into traditional financial analysis: analysis of the impact of ESG-related risks on the long-term financial strength and creditworthiness of companies; and analysis of the risk of the materialization of a sharp deterioration in creditworthiness due to the occurrence of a material ESG risk. We incorporate ESG information when analyzing bond issues, when making investment decisions and when conducting monitoring.

Corporate (non-financial)

We have integrated the following analyses into traditional financial analysis: analysis of the impact of ESG-related risks on the long-term financial strength and creditworthiness of companies; and analysis of the risk of the materialization of a sharp deterioration in creditworthiness due to the occurrence of a material ESG risk. We incorporate ESG information when analyzing bond issues, when making investment decisions and when conducting monitoring.

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]


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

We incorporate ESG information when analyzing bond issues, when making investment decisions and when conducting monitoring. In addition to information disclosed by companies, we refer to ESG ratings and scores and reports of external ESG research firms.

In addition, we indicate the ESG ratings scores and ratings of external ESG research firms in the "Overview of Issuer and Investment Research Report" and various monitoring documents, all of which are prepared when making investment decisions. We address bond issues with particularly low ratings scores by having in-house analysts assigned to such bond issues conduct meticulous research and provide comments on their assessments.

Corporate (financial)

We incorporate ESG information when analyzing bond issues, when making investment decisions and when conducting monitoring. In addition to information disclosed by companies, we refer to ESG ratings and scores and reports of external ESG research firms.

In addition, we indicate the ESG ratings scores and ratings of external ESG research firms in the "Overview of Issuer and Investment Research Report" and various monitoring documents, all of which are prepared when making investment decisions. We address bond issues with particularly low ratings scores by having in-house analysts assigned to such bond issues conduct meticulous research and provide comments on their assessments.

Corporate (non-financial)

We incorporate ESG information when analyzing bond issues, when making investment decisions and when conducting monitoring. In addition to information disclosed by companies, we refer to ESG ratings and scores and reports of external ESG research firms.

In addition, we indicate the ESG ratings scores and ratings of external ESG research firms in the "Overview of Issuer and Investment Research Report" and various monitoring documents, all of which are prepared when making investment decisions. We address bond issues with particularly low ratings scores by having in-house analysts assigned to such bond issues conduct meticulous research and provide comments on their assessments.

12.3. Additional information.[OPTIONAL]


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