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EDM

PRI reporting framework 2020

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ESG incorporation in actively managed fixed income

Implementation processes

FI 01. Incorporation strategies applied

Indicate (1) Which ESG incorporation strategy and/or combination of strategies you apply to your actively managed fixed income investments; and (2) The proportion (+/- 5%) of your total actively managed fixed income investments each strategy applies to.
Corporate (financial)
0 Screening alone
0 Thematic alone
0 Integration alone
100 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
0 No incorporation strategies applied
100%
Corporate (non-financial)
0 Screening alone
0 Thematic alone
0 Integration alone
100 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
0 No incorporation strategies applied
100%

01.2. Describe your reasons for choosing a particular ESG incorporation strategy and how combinations of strategies are used.

Based on the definitions provided for this section of the questionnaire, we have responded with both "screening" and "integrated". EDM takes a risk-based approach to ESG evaluation. Across all of its strategies the firm examines and weighs environmental, social  and governance challenges which can create undue risk to investor capital. Environmental, Social and Governance (ESG) criteria are based on the concepts of sustainable development and Corporate Social Responsibility (CSR), additionally exclusions are decided on a case-by-case basis in the investment team meetings.

EDM Investment team sets or revises goals for responsible investment and EDM also review performance against its objectives for responsible investment. Chief Investment Officer (CIO), Investment Committee, Portfolio managers, Investment analysts and dedicated responsible investment staff, all of them have oversight and implementation responsibilities for responsible investment to ensure that EDM’s objectives and values are maintained in all its business pursuits.

01.3. Additional information [Optional].


FI 02. ESG issues and issuer research (Private)


FI 03. Processes to ensure analysis is robust

03.1. Indicate how you ensure that your ESG research process is robust:

03.2. Describe how your ESG information or analysis is shared among your investment team.

03.3. Additional information. [Optional]


(A) Implementation: Screening

FI 04. Types of screening applied

04.1. Indicate the type of screening you conduct.

Select all that apply
Corporate (financial)
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

The exclusionary screening is the same for fixed income as in listed equities.

EDM factors ESG issues into the Firm's routine evaluation processes, avoiding companies EDM believes to pose outside ESG risks that can negatively impact the Firm's results as investors. 

EDM's investment process is characterized by in-depth research, analysis and knowledge of target companies. It uses a rigorous approach to identify quality companies that should be capable of generating above average growth on a sustained basis and it is reflected in concentrated portfolios and essentially high risk aversion.

EDM needs to identify material Environmental, Social and Governance (ESG) risks and opportunities of investee companies. This approach offers a broader and complementary assesment of companies in addition to information provided by the traditional fundamental financial analysis.

Following its commitment to responsible investment and the integration of Environmental, Social and Governance (ESG) factors, EDM has adopted a policy that exclude companies deriving their main revenues from controversial weapons, pornography and gambling.

 

04.3. Additional information. [Optional]


FI 05. Examples of ESG factors in screening process (Not Completed)


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
Norms-based screening

06.2. Additional information. [Optional]


(C) Implementation: Integration

FI 10. Integration overview

10.1. Describe your approach to integrating ESG into traditional financial analysis.

As signatories to the PRI, EDM factors ESG issues into our evaluation processes, avoiding companies we believe pose outside ESG risks that can negatively impact our results as investors.  EDM focuses on investing in companies it deems not only creditworthy, but that are also well-run with regard to their ESG exposures.

EDM’s investment team broadly incorporates ESG-related research, particularly as it creates economic risk, into the standardized Credit Reports the team produces.  These reports are shared between portfolio managers and analysts through formal meetings and through ongoing interaction in our open office environment. Constant communication of ideas and results allows for the free flow of questions and supports the maintenance of high research standards.  

As a portfolio manager, EDM has a professional duty to act in the best interests of its clients and to exercise due diligence in its investment process. EDM believes that Environmental, Social and Governance (ESG) factors can be incorporated into its investment and decision-making processes in line with its fiduciary duties.

10.2. Describe how your ESG integration approach is adapted to each of the different types of fixed income you invest in.

Corporate (financial)

ESG analysis is integrated into security weighting decisions and also, portfolio construction decisions. There are no material differences in the ESG integration approach across the Firm's corporate (financial) and corporate (non-financial) holdings.

Corporate (non-financial)

ESG analysis is integrated into security weighting decisions and also, portfolio construction decisions. There are no material differences in the ESG integration approach across the Firm's corporate (financial) and corporate (non-financial) holdings.

10.3. Additional information [OPTIONAL]

EDM focuses primarily on corporate credit and uses a similar ESG integration approach across the Firm's public and private debt strategies.  However, as our private debt strategies focus on smaller, middle-market companies, there are certain broader industry exclusions, such as controversial weapons, pornography and gambling.


FI 11. Integration - ESG information in investment processes

11.1. Indicate how ESG information is typically used as part of your investment process.

Select all that apply
Corporate (financial)
Corporate (non-financial)
ESG analysis is integrated into fundamental analysis
ESG analysis is used to adjust the internal credit assessments of issuers.
ESG analysis is used to adjust forecasted financials and future cash flow estimates.
ESG analysis impacts the ranking of an issuer relative to a chosen peer group.
An issuer`s ESG bond spreads and its relative value versus its sector peers are analysed to find out if all risks are priced in.
The impact of ESG analysis on bonds of an issuer with different durations/maturities are analysed.
Sensitivity analysis and scenario analysis are applied to valuation models to compare the difference between base-case and ESG-integrated security valuation.
ESG analysis is integrated into portfolio weighting decisions.
Companies, sectors, countries and currency and monitored for changes in ESG exposure and for breaches of risk limits.
The ESG profile of portfolios is examined for securities with high ESG risks and assessed relative to the ESG profile of a benchmark.
Other, specify in Additional Information

11.2. Additional information [OPTIONAL]


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

12.1. Indicate the extent to which ESG issues are reviewed in your integration process.

Environment
Social
Governance
Corporate (financial)

Environmental

Social

Governance

Corporate (non-financial)

Environmental

Social

Governance

12.2. Please provide more detail on how you review E, S and/or G factors in your integration process.

Corporate (financial)

EDM applies and supports the principles of a responsible company in its overall management and respect for economic standards and human values through:

- An uncompromising customer service that encompasses the search for performance as well as the guarantee of transparency.
- A human resources management that aims to create a working environment that contributes to the personal and professional fulfilment of our employees.
- A long term vision that allows us to anticipate and limit conflicts of interest.

Corporate (non-financial)

There are no material differences in the ESG integration approach across the Firm's corporate (financial) and corporate (non-financial) holdings.

EDM applies and supports the principles of a responsible company in its overall management and respect for economic standards and human values through:

- An uncompromising customer service that encompasses the search for performance as well as the guarantee of transparency.
- A human resources management that aims to create a working environment that contributes to the personal and professional fulfilment of our employees.
- A long term vision that allows us to anticipate and limit conflicts of interest.

12.3. Additional information.[OPTIONAL]


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