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Ålandsbanken

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.

We exclude controversial sectors like tobacco, controversial weapons, pornography, thermal coal and gambling. For the rest of the sectors, companies are rated based on an assesment of their total sustainability (all ESG factors). The funds strive to primarily invest in the 40% best part of the companies. Unrated companies are assessed based on the best available information we can obtain, for instance via Bloomberg. We have also developed an internal ESG-analysis model for analysing issuers who are to small to be covered by big research houses. 

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

Please see previous section for explanation. 

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
Positive/best-in-class 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.

We have a dedicated ESG team, which also includes portfolio management (called “risk takers”). Thus, the portfolio manager who makes the investment decision has all the information needed to advance the process. We do not just look at the financial figures as separated from ESG definition and information set, but they go together throughout the investment decision process. Therefore, there is no 'gap' in the consideration of the ESG factors in relation to the investment decision as a whole. It is important that collective discussion is used to identify the factors that affect valuation and to share responsibility for the construction of the portfolio. There is no difference between ESG analysis and traditional financial statement analysis. Nor is there any difference between the traditional roles of the analyst and the portfolio manager in the team. Team members are all risk takers who share common ESG awareness and knowledge.
 

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

Corporate (financial)

Please see previous answer.

Corporate (non-financial)

Please see previous answer

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 (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)

We use different serviceprovides information on E, S and G on all the issues that are included in the portfolios. We especially look if there are some risks to the downside from one of these and if that could have an impact on repayment ability of the company. The worst case scenario would be a default due to one of these factors. 

Corporate (non-financial)

We use different serviceprovides information on E, S and G on all the issues that are included in the portfolios. We especially look if there are some risks to the downside from one of these and if that could have an impact on repayment ability of the company. The worst case scenario would be a default due to one of these factors. 

12.3. Additional information.[OPTIONAL]


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