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Beechbrook Capital LLP

PRI reporting framework 2020

You are in Direct - Fixed Income » ESG incorporation in actively managed fixed income

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 (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.

We focus our ESG approach towards a Screening & Integration strategy. As outlined in our ESG Policy, we have a stringent screening process for any new investment opportunity. In addition to early on excluding / best in class screening, we have integrated a stringent bottom-up and top-down credit analysis for every opportunity. 

ESG is a key metric in each analysis and risks and opportunity will be assessed in parallel with conventional credit considerations. 

The scale of the screening and integration differs from opportunity to opportunity and will be tailored to each unique case. For further information, please refer to our ESG policy: http://www.beechbrookcapital.com/media/content/files/beechbrook-capital-esg-policy-may19.pdf 

 

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 (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

We exclude companies from our considerations based on sector, products or services or certain behaviour that we and our investors deem undesirable for moral reasons. This includes e.g. arms manufacturing, illegal economic activity, gambling, etc. 

In addition, we encourage transactions that score well on ESG metrics with the objective of generating positive financial, environmental or social outcomes. 

For further information, please refer to our ESG Policy: http://www.beechbrookcapital.com/media/content/files/beechbrook-capital-esg-policy-may19.pdf

 

 

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

          A dedicated ESG committee is responsible for overseeing the ESG efforts on a regular basis.
        
Positive/best-in-class screening

other description

          A dedicated ESG committee is responsible for overseeing the ESG efforts on a regular basis.
        
Norms-based screening

other description

          A dedicated ESG committee is responsible for overseeing the ESG efforts on a regular basis.
        

06.2. Additional information. [Optional]


(C) Implementation: Integration

FI 10. Integration overview

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

We believe ESG factors are a crucial consideration in investment analysis. In addition, recent academic research suggests that ESG focused investments tend to outperform the overall market. 

We perform thorough analysis throughout the investment process. As such, ESG factors are fully integrated into the decision making. Each potential transaction will be assessed based on fundamental bottom-up analysis. This analysis includes qualitative and quantitative analysis on a macro as well as micro economic level. 

The investment professionals assess ESG-related issues and opportunities at the borrower, industry, fund and Beechbrook-wide levels.

  1. Borrower: from a credit risk perspective, what are the ESG risk/opportunity exposures on a company by company level?
  2. Industry: what are common ESG risks/opportunities prevalent across the borrower’s industry and how are participants actively approaching this?
  3. Fund: assess the existing and potential ESG risks/opportunities across the wider fund portfolio.
  4. Across Beechbrook: review of ESG risks across all Beechbrook’s investment strategies and business activities.

For further information, please refer to our ESG Policy: http://www.beechbrookcapital.com/media/content/files/beechbrook-capital-esg-policy-may19.pdf

 

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

Corporate (non-financial)

Please refer to question FI10.1. Beechbrook does not invest in different types of fixed income investments. 

10.3. Additional information [OPTIONAL]


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 (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 (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 (non-financial)

Please refer to our ESG Policy for a detailed overview of how we systematically analyse Environmental, Social and Governance related aspects: http://www.beechbrookcapital.com/media/content/files/beechbrook-capital-esg-policy-may19.pdf

12.3. Additional information.[OPTIONAL]


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