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ERAFP - Etablissement de Retraite Additionnelle de la Fonction Publique Pension Scheme

PRI reporting framework 2020

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
Negative/exclusionary screening
Positive/best-in-class screening
Norms-based screening

04.2. Describe your approach to screening for internally managed active fixed income

Sovereign, municipal and supranational bonds are managed in-house. ERAFP's investment team is thus directly in charge of the implementation of the SRI policy defined by the Board. This approach is based on an ESG rating framework comprising ERAFP's five values (Human rights, Social progress, Employee democracy, Environment, Governance and transparency) which are declined into about forty criteria adapted to the specificities of countries and local governments. ERAFP cannot invest in issuers with an ESG score below average (50/100).

Aside from the integration of best in class ESG criteria the Board of Directors decided to add three specific exclusion criteria for sovereign bonds. Are excluded from the investment universe, countries which:

- have not abolished the death penalty,

- practice torture,

- have recourse to child soldiers.

In 2016, ERAFP added in its SRI Charter that it favours States that have ratified the International Labor Organisation's fundamental conventions.

04.3. Additional information. [Optional]


FI 05. Examples of ESG factors in screening process

05.1. Provide examples of how ESG factors are included in your screening criteria.

Type of fixed income

ESG factors

Screening

Description of how ESG factors are used as the screening criteria

During the selection process, all sovereign bonds are evaluated and rated on the 3 social values of the ERAFP's SRI charter for sovereign bonds:
- Social Progress: working conditions, quality of contractual guarantees, investment projects for employment development, promoting individual career choices, forward-looking employment strategy, trends in employment within the country
- Democratic Labour relations: Respect for the rights of trade unions and promotion of social dialogue, Improvement of health and safety conditions, respect for employee representatives, conventional practices
-Rule of law and Human Rights: The absence of discrimination, Freedom of opinion and of expression and respect for all other fundamental rights, preventing forbidden forms of labour, fight against corruption


In addition, with specific regard to States, ERAFP does not invest in the sovereign debt of States that:

- have not abolished the death penalty;

- practice torture;

- use child soldiers

Type of fixed income

ESG factors

Screening

Description of how ESG factors are used as the screening criteria

During the selection process, all sovereign bonds are evaluated and rated on the environmental criteria of the ERAFP's SRI charter for sovereign bonds:

  • Documentation and implementation of an environmental strategy, control of environmental impact, integration of environmental criteria in supply chain, greenhouse gas limitation, biodiversity preservation and internal decision process and stakeholders consultation

Type of fixed income

ESG factors

Screening

Description of how ESG factors are used as the screening criteria

During the selection process, all sovereign bonds are evaluated and rated on the governance criteria of the ERAFP's SRI charter for sovereign bonds:

  • check and balances and political system, external control, reject of tax haven, quality level of relations with population, efficiency of control of the public funds use

05.2. Additional information.


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

          the SRI team reviews the ESG analysis of ERAFP's third-party provider on annual basis
        
Positive/best-in-class screening

other description

          the SRI team reviews the ESG analysis of ERAFP's third-party provider on annual basis
        

06.2. Additional information. [Optional]

ERAFP's risk team also monitors the implementation of ERAFP's SRI charter for sovereign bonds portfolio


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