For certain emerging market SSA strategies, comprehensive in-house developed measures of ESG factors deemed material to sovereign credit quality are used for both Negative Screening and Positive (Best-in-class) Screening. Sovereign issuers are assessed and ranked based on qualitative and quantitative ESG factors to exclude low performing and/or high risk countries from the eligible investment universe on an ongoing basis. Positive Screening for best-in-class ESG assessments among sovereign issuers is also used for portfolio construction in certain cases.
For certain corporate credit strategies, in-house developed ESG scores are used for both negative screening of high ESG risk (lower performing) credits, and positive screening for credits with best-in-class ESG performance.
For certain portfolio strategies managed under Shariah-compliant and Ethical investment guidelines, Normative Screening is applied to exclude sectors such as gambling, alcohol, weapons, and certain types of food production. Negative screening is also applied in such strategies, as standards for Sukuk (fixed income securities compliant with Islamic finance principles) differ across countries, necessitating the exclusion of certain foreign structures that are not deemed compliant with the local standard.