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Liontrust Investment Partners LLP

PRI reporting framework 2019

You are in Direct - Fixed Income » ESG incorporation in actively managed fixed income » (C) Implementation: Integration

C) 実施:ESG問題の統合

FI 10. Integration overview

10.1. ESGを従来の財務分析に統合するアプローチを説明してください。

The Sustainable Investment team use a Sustainability Matrix to determine the eligibility of a company for inclusion in our funds. Their screening criteria are incorporated into the Sustainability Matrix rating for a company. The Sustainability Matrix helps to analyse how sustainable and responsible a company is. They analyse the product sustainability and management quality of each investee company in which screening and thematic ESG incorporation are also factored in. Product sustainability (rated from A to E): Assesses the extent to which a company's core business (the products or services it offers) helps or harms society and/or the environment. An 'A' rating indicates a company whose products or services contribute to sustainable development (e.g. renewable energy); an 'E' rating indicates a company whose core business is in a conflict with sustainable development (e.g. tobacco). Management quality (rated from 1 to 5): Assesses whether a company has appropriate structures, policies and practices in place for managing its environmental, social and governance risks/impacts. Management quality in relation to the risks and opportunities represented by potentially material social, environmental and governance issues are graded from 1 (excellent) to 5 (very poor). Companies need to be categorised C3 or higher in order to gain access to our Sustainable Future Corporate Bond Fund, whilst anything rated D3 and above is eligible for the Monthly Income Bond Fund (Institutional clients with segregated funds are able to tailor the Matrix cut-off according to their own thresholds). To help with the rating process, their analysts maintain a set of guidelines that provide further guidance on what influences how we rate companies using our sustainability matrix for each sector. The sector guidelines also highlight the potentially material environmental, social and governance issues that we expect management to be addressing and provide an indication of what we consider to be good practice. The Sustainability Matrix rating of the company is integrated into the fundamental analysis of the investee company.

The teams’ research has identified 20 areas of long-term growth within our economies. They believe that companies exposed to our themes (More efficient; Safer and more resilient; Healthier and with higher quality of life) tend to be better managed, exhibiting greater stability and lower risk, which we believe are key drivers of long term bond returns.

More efficient

Improving the efficiency of energy use; Increasing electricity from renewable sources; Improving management of water; Improving industrial processes and food production; Increasing waste treatment and recycling; Making transport more efficient.

Safer and more resilient

Enhancing digital security; Assuring better supply chains; Improving auto safety; Leading ESG management; Saving for the future; Insuring a sustainable economy; Increasing financial resilience.

Healthier and with higher quality of life

Providing affordable healthcare; Enabling innovation in healthcare; Building better cities; Providing education; Enabling healthier lifestyles; Connecting people; Delivering healthier foods.

In-house research is supported and supplemented by several external ESG information sources. Sustainalytics provides in depth reports on sectors/industries, as well as ESG ratings, Governance Metrics and ESG controversies reports for individual companies. MSCI provide carbon reports, analysing the carbon emissions of the overall funds and their constituent holdings. Ethical Screening also provide reports assessing companies against our internal screening criteria, and run regular checks to ensure invested companies remain within these screening thresholds. The team also consults an independent external advisory committee which meet three times per year made up of a panel of industry leaders and academics, who provide guidance and expertise in key areas of environmental and social impact. Whilst also drawing on information from company meetings, broker research, ISS Governance reports, academia and non-governmental organisations.

The team analyses how a company's ESG factors affect its valuation. For example, the team assesses relevant factors like pollution incidents, staff satisfaction and carbon emissions. Companies which have integrated these issues generally tend to have higher quality management and therefore, they are more likely to prosper from a business perspective.

The team uses a sustainability matrix based on product sustainability (A-E) and management quality (1-5). For product sustainability, the team assesses how a company's product or area of business helps or harms society and/or the environment. For example, an 'A' rating could be awarded to a company involved in renewable energy or education. An 'E' rating would be assigned to a firm that conflicts with the principles of sustainable development, for example, a tobacco company. For management quality, the team assesses a company's practices, policies and structure relating to its environmental impact as well as social and governance related issues. A firm with excellent practices would be graded 1, whilst one with poor management practices would be a 5. For a company to be considered for inclusion in the Sustainable Future Corporate Bond Fund and the European Corporate Bond fund must rank C3 or higher on the matrix, whereas for the Monthly Income Bond Fund D3 or higher is eligible.

This assessment is then combined with traditional fundamental credit analysis, through our credit templates. The templates look at fundamental metrics such as relative valuation, SWOT analysis and company financials to determine how robust or risky an investment is, and how the company's management of ESG issues impacts upon each metric. For example a key driver of long-term bond returns is the effective management of tail-risk, and identifying companies that have strong governance and management scores helps us to avoid issues where the tail-risk is underpriced.

The following document outlines the Sustainable Fixed Income investment process and how they integrate ESG factors: https://www.liontrust.co.uk/handlers/DownloadDocumentsHandler.lion?itemids=8ef3fc44-bcd3-45f5-92f1-4daf758b254a

10.2. 投資する債券の各種類に対してESG統合アプローチをどのように調整するのか説明してください。

SSA

The Sustainable Fixed Income team ESG approach to securitisations is consistent with that detailed in FI 10.1. 

Liontrust’s Global Fixed Income team consider ESG-related risks as part of their bottom up investment process, but do not screen, filter or engage with individual companies on ESG factors. For credit decision-making, they use their PRISM research template. The ‘S’ in PRISM stands for ‘Sustainability’ and the ‘M’ stands for ‘Motivations’. In these sections, they explore how ESG-related risks might impact the credit quality of individual borrowers. This assist to form a view around the risk versus reward characteristics of the individual investment. They believe the priorities within their PRISM template, gives something of a quality bias. For example, they prefer listed over non-listed business due, in part, to greater likelihood of transparency and better governance standards.

社債(金融)

The Sustainable Fixed Income team within Corporate financials apply the same methodology as above, however focus on sector specific ESG factors. For example within the banks sector they favour the more traditional savings & lending banks over investment banks. Factors that we consider, include capital liquidity & risk, governance, environmental issues, social issues and product governance. For UK Banks they would review evidence of bad corporate behaviour, law breaches in areas such as mis-selling, LIBOR fixing, money laundering and breaking sanctions.

Liontrust’s Global Fixed Income team consider ESG-related risks as part of their bottom up investment process, but do not screen, filter or engage with individual companies on ESG factors. For credit decision-making, they use their PRISM research template. The ‘S’ in PRISM stands for ‘Sustainability’ and the ‘M’ stands for ‘Motivations’. In these sections, they explore how ESG-related risks might impact the credit quality of individual borrowers. This assist to form a view around the risk versus reward characteristics of the individual investment. They believe the priorities within their PRISM template, gives something of a quality bias. For example, they prefer listed over non-listed business due, in part, to greater likelihood of transparency and better governance standards.

社債(非金融)

The Sustainable Fixed Income team apply the same approach to non-financial organisations; however different sector specific ESG issues are taken into consideration. In the retail sector we favour companies where they place strong emphasis on sustainable sourcing, auditing of their supply chain, robust labour practices and healthy eating. Where as in the utilities sector they favour power companies with a higher renewable exposure, over traditional fossil fuel burning generators due to emissions issues.

Liontrust’s Global Fixed Income team consider ESG-related risks as part of their bottom up investment process, but do not screen, filter or engage with individual companies on ESG factors. For credit decision-making, they use their PRISM research template. The ‘S’ in PRISM stands for ‘Sustainability’ and the ‘M’ stands for ‘Motivations’. In these sections, they explore how ESG-related risks might impact the credit quality of individual borrowers. This assist to form a view around the risk versus reward characteristics of the individual investment. They believe the priorities within their PRISM template, gives something of a quality bias. For example, they prefer listed over non-listed business due, in part, to greater likelihood of transparency and better governance standards.

証券化商品

The Sustainable Fixed Income team ESG approach to securitisations is consistent with that detailed in FI 10.1. As whole business securitisation structures can be used by companies in various industry sectors, each securitisation is assessed on its own merits using the approach detailed in FI 10.1.

All Liontrust funds have no or very limited exposure to securitised debt.

10.3. 補足情報 [任意]


FI 11. Integration - ESG information in investment processes

11.1. ESG情報が、通常、投資プロセスの一部としてどのように使用されるのか記載してください。

当てはまるものをすべて選択してください
SSA
社債(金融)
社債(非金融)
証券化商品​
ESG分析をファンダメンタル分析に組み込んでいる
ESG分析が発行体の内部信用評価を調整するために利用される
ESG分析が予想財務業績および将来キャッシュフロー予測を調整するために利用される
ESG分析が発行体の同業グループと比較したランキングに影響する
発行体のESG債スプレッドおよび同セクター企業に対するその相対価値が、すべてのリスクが織り込まれているか否かを把握するために分析される
各種デュレーション/満期の発行体債券へのESG分析の影響が分析される。
感度分析およびシナリオ分析が、ベースケースとESG組み込み証券評価の差を比較する評価モデルに適用される
ESG分析が、ポートフォリオのウェイティング決定に組み込まれている
会社、セクター、国、通貨が、ESGエクスポージャーの変化およびリスク制限の違反についてモニタリングされる
ESGリスクが大きい証券についてポートフォリオのESGプロファイルが検討され、ベンチマークのESGプロファイルと比較して評価される
その他(具体的に記載してください)

11.2. 補足情報 [任意]

The Sustainable Investment team use a Sustainability Matrix to determine the eligibility of a company for inclusion in their funds. Their screening criteria are incorporated into the Sustainability Matrix rating for a company. The Sustainability Matrix helps to analyse how sustainable and responsible a company is. They analyse the product sustainability and management quality of each investee company in which screening and thematic ESG incorporation are also factored in. Product sustainability (rated from A to E): Assesses the extent to which a company's core business (the products or services it offers) helps or harms society and/or the environment. An 'A' rating indicates a company whose products or services contribute to sustainable development (e.g. renewable energy); an 'E' rating indicates a company whose core business is in a conflict with sustainable development (e.g. tobacco). Management quality (rated from 1 to 5): Assesses whether a company has appropriate structures, policies and practices in place for managing its environmental, social and governance risks/impacts. Management quality in relation to the risks and opportunities represented by potentially material social, environmental and governance issues are graded from 1 (excellent) to 5 (very poor). Companies need to be categorised C3 or higher in order to gain access to our Sustainable Future Corporate Bond Fund, whilst anything rated D3 and above is eligible for the Monthly Income Bond Fund (Institutional clients with segregated funds are able to tailor the Matrix cut-off according to their own thresholds). To help with the rating process, their analysts maintain a set of guidelines that provide further guidance on what influences how they rate companies using their sustainability matrix for each sector. The sector guidelines also highlight the potentially material environmental, social and governance issues that they expect management to be addressing and provide an indication of what we consider to be good practice. The Sustainability Matrix rating of the company is integrated into the fundamental analysis of the investee company.

The teams’ research has identified 20 areas of long-term growth within our economies. They believe that companies exposed to their themes (More efficient; Safer and more resilient; Healthier and with higher quality of life) tend to be better managed, exhibiting greater stability and lower risk, which they believe are key drivers of long term bond returns.

More efficient

Improving the efficiency of energy use; Increasing electricity from renewable sources; Improving management of water; Improving industrial processes and food production; Increasing waste treatment and recycling; Making transport more efficient.

Safer and more resilient

Enhancing digital security; Assuring better supply chains; Improving auto safety; Leading ESG management; Saving for the future; Insuring a sustainable economy; Increasing financial resilience.

Healthier and with higher quality of life

Providing affordable healthcare; Enabling innovation in healthcare; Building better cities; Providing education; Enabling healthier lifestyles; Connecting people; Delivering healthier foods.

In-house research is supported and supplemented by several external ESG information sources. Sustainalytics provides in depth reports on sectors/industries, as well as ESG ratings, Governance Metrics and ESG controversies reports for individual companies. MSCI provide carbon reports, analysing the carbon emissions of the overall funds and their constituent holdings. Ethical Screening also provide reports assessing companies against their internal screening criteria, and run regular checks to ensure invested companies remain within these screening thresholds. The team also consults an independent external advisory committee which meet three times per year made up of a panel of industry leaders and academics, who provide guidance and expertise in key areas of environmental and social impact. Whilst also drawing on information from company meetings, broker research, ISS Governance reports, academia and non-governmental organisations.

The team analyses how a company's ESG factors affect its valuation. For example, the team assesses relevant factors like pollution incidents, staff satisfaction and carbon emissions. Companies which have integrated these issues generally tend to have higher quality management and therefore, they are more likely to prosper from a business perspective.

The team uses a sustainability matrix based on product sustainability (A-E) and management quality (1-5). For product sustainability, the team assesses how a company's product or area of business helps or harms society and/or the environment. For example, an 'A' rating could be awarded to a company involved in renewable energy or education. An 'E' rating would be assigned to a firm that conflicts with the principles of sustainable development, for example, a tobacco company. For management quality, the team assesses a company's practices, policies and structure relating to its environmental impact as well as social and governance related issues. A firm with excellent practices would be graded 1, whilst one with poor management practices would be a 5. For a company to be considered for inclusion in the Sustainable Future Corporate Bond Fund and the European Corporate Bond fund must rank C3 or higher on the matrix, whereas for the Monthly Income Bond Fund D3 or higher is eligible.

This assessment is then combined with traditional fundamental credit analysis, through their credit templates. The templates look at fundamental metrics such as relative valuation, SWOT analysis and company financials to determine how robust or risky an investment is, and how the company's management of ESG issues impacts upon each metric. For example a key driver of long-term bond returns is the effective management of tail-risk, and identifying companies that have strong governance and management scores helps them to avoid issues where the tail-risk is underpriced.

The following document outlines the Sustainable Fixed Income investment process and how they integrate ESG factors: https://www.liontrust.co.uk/handlers/DownloadDocumentsHandler.lion?itemids=8ef3fc44-bcd3-45f5-92f1-4daf758b254a

All Liontrust funds have no or very limited exposure to securitised debt.

 

 


FI 12. Integration - E,S and G issues reviewed

12.1. 組織の統合プロセスでESG問題をどのように検討するか示してください。

E(環境)
S(社会)
G(ガバナンス)
SSA

E(環境)

S(社会)

G(ガバナンス)

社債(金融)

E(環境)

S(社会)

G(ガバナンス)

社債(非金融)

E(環境)

S(社会)

G(ガバナンス)

証券化商品

E(環境)

S(社会)

G(ガバナンス)

12.2. 組織の統合プロセスでE/S/G要因を検討する方法を詳しく説明してください。

SSA

As described in the additional information section below, the Sustainable Investment Fixed Income team consider a number of ESG factors in their integration process. These vary from governance aspects (gender balance of the board, number & independence of non-execs), pay & remuneration, contracts to carbon footprint, safety records etc. These factors will be reviewed on an on-going basis and/or at the time of the issuers' results. 

Liontrust’s Global Fixed Income team consider ESG-related risks as part of their bottom up investment process, but do not screen, filter or engage with individual companies on ESG factors. For credit decision-making, they use their PRISM research template. The ‘S’ in PRISM stands for ‘Sustainability’ and the ‘M’ stands for ‘Motivations’. In these sections, they explore how ESG-related risks might impact the credit quality of individual borrowers. This assist to form a view around the risk versus reward characteristics of the individual investment. They believe the priorities within their PRISM template, gives something of a quality bias. For example, they prefer listed over non-listed business due, in part, to greater likelihood of transparency and better governance standards.

All Liontrust funds have no or very limited exposure to securitised debt.

社債(金融)

As described in the additional information section below, the Sustainable Investment Fixed Income team consider a number of ESG factors in their integration process. These vary from governance aspects (gender balance of the board, number & independence of non-execs), pay & remuneration, contracts to carbon footprint, safety records etc. These factors will be reviewed on an on-going basis and/or at the time of the issuers' results. 

Liontrust’s Global Fixed Income team consider ESG-related risks as part of their bottom up investment process, but do not screen, filter or engage with individual companies on ESG factors. For credit decision-making, they use their PRISM research template. The ‘S’ in PRISM stands for ‘Sustainability’ and the ‘M’ stands for ‘Motivations’. In these sections, they explore how ESG-related risks might impact the credit quality of individual borrowers. This assist to form a view around the risk versus reward characteristics of the individual investment. They believe the priorities within their PRISM template, gives something of a quality bias. For example, they prefer listed over non-listed business due, in part, to greater likelihood of transparency and better governance standards.

社債(非金融)

As described in the additional information section below, the Sustainable Investment Fixed Income team consider a number of ESG factors in their integration process. These vary from governance aspects (gender balance of the board, number & independence of non-execs), pay & remuneration, contracts to carbon footprint, safety records etc. These factors will be reviewed on an on-going basis and/or at the time of the issuers' results. 

Liontrust’s Global Fixed Income team consider ESG-related risks as part of their bottom up investment process, but do not screen, filter or engage with individual companies on ESG factors. For credit decision-making, they use their PRISM research template. The ‘S’ in PRISM stands for ‘Sustainability’ and the ‘M’ stands for ‘Motivations’. In these sections, they explore how ESG-related risks might impact the credit quality of individual borrowers. This assist to form a view around the risk versus reward characteristics of the individual investment. They believe the priorities within their PRISM template, gives something of a quality bias. For example, they prefer listed over non-listed business due, in part, to greater likelihood of transparency and better governance standards.

証券化商品

As described in the additional information section below, the Sustainable Investment Fixed Income team consider a number of ESG factors in their integration process. These vary from governance aspects (gender balance of the board, number & independence of non-execs), pay & remuneration, contracts to carbon footprint, safety records etc. These factors will be reviewed on an on-going basis and/or at the time of the issuers' results. 

Liontrust’s Global Fixed Income team consider ESG-related risks as part of their bottom up investment process, but do not screen, filter or engage with individual companies on ESG factors. For credit decision-making, they use their PRISM research template. The ‘S’ in PRISM stands for ‘Sustainability’ and the ‘M’ stands for ‘Motivations’. In these sections, they explore how ESG-related risks might impact the credit quality of individual borrowers. This assist to form a view around the risk versus reward characteristics of the individual investment. They believe the priorities within their PRISM template, gives something of a quality bias. For example, they prefer listed over non-listed business due, in part, to greater likelihood of transparency and better governance standards.

All Liontrust funds have no or very limited exposure to securitised debt.

 

12.3. 補足情報 [任意]

The Sustainable Investment team use a Sustainability Matrix to determine the eligibility of a company for inclusion in their funds. Their screening criteria are incorporated into the Sustainability Matrix rating for a company. The Sustainability Matrix helps to analyse how sustainable and responsible a company is. They analyse the product sustainability and management quality of each investee company in which screening and thematic ESG incorporation are also factored in. Product sustainability (rated from A to E): Assesses the extent to which a company's core business (the products or services it offers) helps or harms society and/or the environment. An 'A' rating indicates a company whose products or services contribute to sustainable development (e.g. renewable energy); an 'E' rating indicates a company whose core business is in a conflict with sustainable development (e.g. tobacco). Management quality (rated from 1 to 5): Assesses whether a company has appropriate structures, policies and practices in place for managing its environmental, social and governance risks/impacts. Management quality in relation to the risks and opportunities represented by potentially material social, environmental and governance issues are graded from 1 (excellent) to 5 (very poor). Companies need to be categorised C3 or higher in order to gain access to our Sustainable Future Corporate Bond Fund, whilst anything rated D3 and above is eligible for the Monthly Income Bond Fund (Institutional clients with segregated funds are able to tailor the Matrix cut-off according to their own thresholds). To help with the rating process, their analysts maintain a set of guidelines that provide further guidance on what influences how they rate companies using their sustainability matrix for each sector. The sector guidelines also highlight the potentially material environmental, social and governance issues that they expect management to be addressing and provide an indication of what we consider to be good practice. The Sustainability Matrix rating of the company is integrated into the fundamental analysis of the investee company.

The teams’ research has identified 20 areas of long-term growth within our economies. They believe that companies exposed to their themes (More efficient; Safer and more resilient; Healthier and with higher quality of life) tend to be better managed, exhibiting greater stability and lower risk, which they believe are key drivers of long term bond returns.

More efficient

Improving the efficiency of energy use; Increasing electricity from renewable sources; Improving management of water; Improving industrial processes and food production; Increasing waste treatment and recycling; Making transport more efficient.

Safer and more resilient

Enhancing digital security; Assuring better supply chains; Improving auto safety; Leading ESG management; Saving for the future; Insuring a sustainable economy; Increasing financial resilience.

Healthier and with higher quality of life

Providing affordable healthcare; Enabling innovation in healthcare; Building better cities; Providing education; Enabling healthier lifestyles; Connecting people; Delivering healthier foods.

In-house research is supported and supplemented by several external ESG information sources. Sustainalytics provides in depth reports on sectors/industries, as well as ESG ratings, Governance Metrics and ESG controversies reports for individual companies. MSCI provide carbon reports, analysing the carbon emissions of the overall funds and their constituent holdings. Ethical Screening also provide reports assessing companies against their internal screening criteria, and run regular checks to ensure invested companies remain within these screening thresholds. The team also consults an independent external advisory committee which meet three times per year made up of a panel of industry leaders and academics, who provide guidance and expertise in key areas of environmental and social impact. Whilst also drawing on information from company meetings, broker research, ISS Governance reports, academia and non-governmental organisations.

The team analyses how a company's ESG factors affect its valuation. For example, the team assesses relevant factors like pollution incidents, staff satisfaction and carbon emissions. Companies which have integrated these issues generally tend to have higher quality management and therefore, they are more likely to prosper from a business perspective.

The team uses a sustainability matrix based on product sustainability (A-E) and management quality (1-5). For product sustainability, the team assesses how a company's product or area of business helps or harms society and/or the environment. For example, an 'A' rating could be awarded to a company involved in renewable energy or education. An 'E' rating would be assigned to a firm that conflicts with the principles of sustainable development, for example, a tobacco company. For management quality, the team assesses a company's practices, policies and structure relating to its environmental impact as well as social and governance related issues. A firm with excellent practices would be graded 1, whilst one with poor management practices would be a 5. For a company to be considered for inclusion in the Sustainable Future Corporate Bond Fund and the European Corporate Bond fund must rank C3 or higher on the matrix, whereas for the Monthly Income Bond Fund D3 or higher is eligible.

This assessment is then combined with traditional fundamental credit analysis, through their credit templates. The templates look at fundamental metrics such as relative valuation, SWOT analysis and company financials to determine how robust or risky an investment is, and how the company's management of ESG issues impacts upon each metric. For example a key driver of long-term bond returns is the effective management of tail-risk, and identifying companies that have strong governance and management scores helps them to avoid issues where the tail-risk is underpriced.

The following document outlines the Sustainable Fixed Income investment process and how they integrate ESG factors: https://www.liontrust.co.uk/handlers/DownloadDocumentsHandler.lion?itemids=8ef3fc44-bcd3-45f5-92f1-4daf758b254a


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