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British Columbia Investment Management Corporation

PRI reporting framework 2019

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Outputs and outcomes

FI 17. Financial/ESG performance

17.1. Indicate whether your organisation measures how your incorporation of ESG analysis in fixed income has affected investment outcomes and/or performance.

Select all that apply
SSA
Corporate (financial)
Corporate (non-financial)
We measure whether incorporating ESG impacts portfolio risk.
We measure whether incorporating ESG impacts portfolio returns.
We measure the ESG performance/profile of portfolios (relative to the benchmark).
None of the above

17.2. Describe how your organisation measures how your incorporation of ESG analysis in fixed income has affected investment outcomes and/or ESG performance. [OPTIONAL]

 

Impact on return: As we believe incorporating ESG considerations will add to long-term value, it is difficult to quantify performance and outcomes.

During the reporting year, BCI calculated the carbon footprint of its fixed income portfolio, and compared the results to that of the performance benchmark. We did not include sovereign bonds in this exercise.

17.3. Additional information.[OPTIONAL]


FI 18. Examples - ESG incorporation or engagement

18.1. Provide examples of how your incorporation of ESG analysis and/or your engagement of issuers has affected your fixed income investment outcomes during the reporting year.

ESG issue and explanation

Environmental, Social

Integrating ESG analysis into our investment process helped avoid making an investment in a company that filed for bankruptcy just months later.  The company was a gas and electric energy company in the United States that was facing potential liabilities associated with causing wildfires that destroyed homes and claimed many lives

Impact on investment decision or performance

Our analysis determined that the environmental and social risks were elevated for this issuer.  This combined with an unfavourable regulatory environment were sufficient means for rejecting the potential investment. 

ESG issue and explanation

Governance

Impact on investment decision or performance

By integrating ESG into our investment process we avoided losses by electing not to invest into a waste management business.  The company had engaged in an aggressive debt-funded acquisition strategy whereby they presented the market with some non-standard add backs to certain well-known financial measures of creditworthiness.   One of the company’s prior acquisitions had been embroiled in a corruption scandal involving bribes paid to municipal officials that the company had failed to uncover during their due diligence.  In 2018, the company’s bonds performed poorly, were downgraded by rating agencies as financial metrics worsened.   Our concerns about the company’s governance was the primary reason for passing on the potential investment.

18.2. Additional information.


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