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Nomura Asset Management Co., Ltd.

PRI reporting framework 2019

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

(A) Implementation: Screening

FI 04. Types of screening applied

04.1. Indicate the type of screening you conduct.

Select all that apply
SSA
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

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.

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?

other description

          Portfolio management systems can be programed to prevent ESG-related exclusions although typically compliance and reporting is the direct responsibility of the investment team.
        
Positive/best-in-class screening

other description

          We aggregate overall portfolio ESG quality based on our proprietary Corporate Credit ESG scores to compare against reference indices and report this regularly to clients.
        
Norms-based screening

other description

          Required to submit fund holdings to an outside Shariah compliance firm on a monthly basis for compliance verification, with quarterly discussions
        

06.2. Additional information. [Optional]


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