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Grupo Fineco

PRI reporting framework 2020

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You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes » (A) Implementation: Screening

(A) Implementation: Screening

LEI 04. Types of screening applied

04.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by

Description

We do not invest in companies whose main revenues come from:

- Nuclear weapons
- Alcohol and tobacco
- Adult-oriented contents
- Companies which don’t recognize and respect human rights

- Companies whose activities intentionally harm the environment

Screened by

Description

While "best-in-class" criteria is been left as minority in our listed equity universe (only for "Fon Fineco Inversion Responsable, FI"), we combine it in that fund with more accurate ESG integration as explained earlier.

Screened by

          Paris Agreement
        

Description

We have written emails to companies that we wanted to include in our portfolio but they are not under the UN Global Compact. We received responses from all the Investors Relations of those companies and we have included some of those companies since their responses not to be necessarily in the UN Global Compact were convincing for us.

04.2. Describe how you notify clients and/or beneficiaries when changes are made to your screening criteria.

The screening criteria are proposed by the Head of ESG Investment to the portfolio managers and the Head of Asset Allocation. After they approve it, the criteria is shared with the Investment Committee, which might suggest changes to the criteria.

There is constant dialogue among the analysts, portfolio managers, Head of ESG Investments and the asset allocator to fine tune the process. They get together on a quarterly basis to analyse the funds’ criteria and they are analysing how to expand the ESG criteria into the rest of the mutual funds and portfolios.

The constant dialogue between all participants is really important to have their own conclusions about the impact of negative screening, best-in-class, thematic and ESG integration into the fund and portfolio management. It is a learning process that generates continuos challenges and doubts how to solve specific issues that have no clear answer (such as how much room we have to give to engagement by a fund manager when a company shows little improvement). They review how the funds have performed compared with a predetermined benchmark and may suggest changes to improve ESG integration in the portfolio, as well as performance and risk.

When changes in the fund criteria are made, clients are not able to revoke them but, legally they are given a month to decide whether they remain in the fund or the switch to another one (without any costs in this case). 


LEI 05. Processes to ensure screening is based on robust analysis

05.1. Indicate which processes your organisation uses to ensure ESG screening is based on robust analysis.

05.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your ESG screening strategy.

05.3. Indicate how frequently third party ESG ratings are updated for screening purposes.

05.5. Additional information. [Optional]

In 2019 we have given two important steps:

- First, the creation of an ESG committee with independent members that monitor de evolution of ESG implementation in Fineco and the management of controversies by different portfolio managers

- Second, the creation of working teams (four teams for the time being but they are going to be expanded to other sectors) with external experts in order to improve our analysis capacities in relation to detecting megatrends, ESG variables that can be critical to specific economic sectors, etc.


LEI 06. Processes to ensure fund criteria are not breached (Private)


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