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Lombard Odier

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.
SSA
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 (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.

For our active internally managed strategies, we have developed a proprietary approach designed to assess which issuers are well-positioned to benefit from the transition to a sustainable economy based on these core principles:

  • Focusing on credit quality to embed a greater degree of safety - this allows us to improve diversification and better protect portfolios during periods of volatility.
  • Further mitigating risk by assessing extra-financial factors including environmental, social and governance (ESG) criteria.
  • Considering the resilience of the portfolio to the physical and transition risks associated with climate change - this leads us to prioritise companies with a lower carbon intensity to reduce the carbon exposure of the portfolio, and add exposure to climate-aligned, social and sustainability bonds.

We also have three levels of negative screening: our Group-wide exclusions on controversial weapons, essential food commodities, and any seurities sanctioned by the UN, EU, US, Switzerland or relevant local sanctions; SRI restrictions on tobacco, thermal coal and unconventional oil & gas; and additional values-based exclusions/restrictions specific to individual funds and/or clients upon request. 

Further information on our approach is outlined below.

01.3. Additional information [Optional].

Our sustainable investment framework

Lombard Odier's sustainable investment framework covers two dimensions of corporate sustainability: What businesses do (their business model and activities) and How businesses operate (their business practices). For each dimension, we focus on the most financially material issues to the sector and industry. We believe both dimensions are essential to better inform investment decisions based on in-depth, forward-looking analysis of how well companies are positioned for the transition to a sustainable economy.

Assessing the What - business model and activities: This analysis, conducted by our Sustainable Investment Research Strategy and Stewardship (SIRSS) team, combines top-down, macroeconomic analysis with bottom-up approaches to assess:

  • the exposure of different sectors/industries to risks& opportunities arising from sustainability dynamics, including climate change scenarios, the macroeconomic world view, energy and mobility forecasts, for example;
  • the susceptibility of each sector/industry to those risks& opportunities, including what business strategies exist to mitigate the risks or capture the opportunities, climate mitigation & adaptation, new innovative/disruptive technologies, and company preparedness.

Assessing the How - business practices: Our ESG Solutions team analyses 115 data points using our proprietary 'CAR' methodology (Consciousness, Action, Results), which enables us to differentiate between the 'talkers', 'doers', and 'achievers', and identify companies that are making measurable progress in the transition to more sustainable business practices. We also look at the same data points to assess alignment of business practices with the 17 UN Sustainable Development Goals. Our analysis of business practices also looks at companies' exposure to controversies, which occur when companies breach internationally accepted standards or norms as defined by the United Nations Global Compact Principles. In our view, controversies could have a major impact on a company's reputation and lead to lower market performance. Our assessment of business practices also looks at certain impact metrics, including companies' carbon and water intensity.

Given the challenges the world faces today, we believe the analysis of sustainability-related risks in sovereign bonds is now essential. Although our macro criteria already incorporates some societal and political criteria, we incorporate ESG considerations into our investment process at the fundamental analysis level. Our sovereign analysts will look at the potential impact of environmental, social and governance issues in countries' ability to repay its debt. They use the UN's 17 Sustainable Developments Goals (SDGs) as a framework.

Stewardship:

Based upon the intelligence and analysis gained from our dedicated sustainability teams, we address issues that are financially material at the systemic-, sector- or company level through engagement and voting, either directly or through collaborative initiatives. We enter into a dialogue with companies to test and challenge their approach to the sustainability factors we think are most material to their prospects and will seek to influence their sustainability positioning in areas we think are weak or where there is room for improvement.

We place great importance on being active stewards with debt issuers, and believe the characteristics of corporate credit lend themselves especially well to stewardship. In particular, engaging in dialogue with companies is critical to assessing creditworthiness because it improves our understanding of the issuer’s risk profile.

When it comes to exercising our equity voting rights, we will look to form an aggregated view across our asset classes as much as possible. As such, our voting is often reflective of the engagement views and objectives of our fixed income teams.

Screening:

We have three levels of negative screening:

  • Group-wide exclusions:
    • Reflecting our Group policy on controversial investments, we systematically exclude: Companies involved in the production or distribution of controversial weapons. Lombard Odier does not invest in companies that produce, trade or store controversial weapons (anti-personnel mines, cluster weapons, biological and chemical weapons, depleted uranium, white phosphorus).
    • Financial instruments directly linked to essential food commodities. Stable food prices are a crucial component of food security for many populations at risk. As we are concerned about the potential impact of commodities investments on the volatility of essential food prices, Lombard Odier has decided to permanently exclude all financial instruments (futures, options, swaps, indices, exchange-traded funds) that invest in essential foods (wheat, rice, corn, and soybeans).
    • Securities relating to any countries, companies, entities or individuals subject to sanctions by the UN, EU, US and/or Switzerland, as well as relevant local sanctions.

  • SRI Restrictions: In addition to the above we believe certain companies and sectors are unsustainable in the long term and should be subject to exclusion in actively managed funds. Companies in the tobacco, thermal coal, and unconventional oil& gas sectors are subject to thresholds to determine whether they are excluded. These restrictions are imposed on a 'comply or explain' basis whereby a stock that falls within the threshold will be flagged to the manager. These exclusions can only be over-ridden with the approvals of the relevant CIO and are subject to regular risk review by internal committee. For active strategies, we would also normally look to exclude companies impacted by the most severe controversies from our responsible investment universe unless there are extenuating circumstances, with lower-level controversies subject to ongoing monitoring.
  • Additional exclusions / Restrictions: In some cases, our strategies may apply additional values-based exclusions or restrictions that are individual to the fund, or to individual client mandates upon request.

The above mentioned figures and information are reflective of our asset management activities. Our private banking business applies the same criteria regarding Screening for discretionary managed and advisory portfolios. 


FI 02. ESG issues and issuer research

02.1. Indicate which ESG factors you systematically research as part of your analysis on issuers.

Select all that apply
SSA
Corporate (financial)
Corporate (non-financial)
Environmental data
Social data
Governance data

02.2. Indicate what format your ESG information comes in and where you typically source it

Indicate who provides this information  

Indicate who provides this information  

Indicate who provides this information  

Indicate who provides this information  

Indicate who provides this information  

02.3. Provide a brief description of the ESG information used, highlighting any differences in sources of information across your ESG incorporation strategies.

We use a wide range of in-house and external research techniques and sources to collect, verify, enhance and analyse large amounts of raw data at the most granular level possible. This is critical in making sure our data and analysis is truly investment relevant so we can construct portfolios that aim to capture opportunities and mitigate risks created by sustainability dynamics.

Our in-house research includes using advanced/alternative technological methodologies to collect and aggregate data from a wide range of sources including geospatial data, governmental and non-governmental organisations, international organisations, data aggregation platforms and the media, for example.

We also work with a number of external providers to access raw data, including Exiobase, Sustainalytics, Trucost and Inrate. We constantly review external providers' data given the dynamic and rapid evolution of this space. We believe it is important to maintain open and regular dialogue with our providers to ensure their data is as investment relevant as possible.

Our ESG data for countries is collected and updated by our internal dedicated sustainability teams from a wide range of sources including but not limited to: World Bank, UN Treaty Collection, International Labour Organization, Transparency International, Amnesty International, The World Factbook, World Resource Institute etc.

02.4. Additional information. [Optional]

During 2019 we developed our data and analysis capabilities significantly, adding coverage of new companies as well as the scope of sustainability issues analysed. In particular, we have been working to enhance our forward-looking dataset to improve our scenario analysis and enhance our understanding of industry/sector level exposure to material forward-looking sustainability challenges.

2019 saw the significant expansion of our active ownership capabilities, notably with the introduction of our SIRSS team. In 2019 we hired Dr Christopher Kaminker to develop a team with a specific focus on helping to identify the key macro risks and opportunities related to sustainability, as well as developing new investment strategies, and incorporating and managing the firm's processes around stewardship.

Since his arrival, Christopher has bolstered his team, which now comprises eight sustainability experts with an average of 12 years' experience across a broad variety of disciplines including investment banking, macroeconomics, lifecycle analysis, data science, stewardship and communications. The team's expertise is also broad, reflecting the complex, multi-faceted nature of sustainability challenges, including structuring sustainable financing solutions, policy, economics, climate change, circular economy, carbon pricing, and environmental engineering. In addition, the team includes two leading experts on mobility, which is a cross-cutting theme in the transition to a sustainable economy.

The above mentioned figures and information are reflective of our asset management activities.


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]

The quality and robustness of our sustainability-related data is of paramount importance to us because it enhances our ability to identify risks and opportunities. We work with huge amounts of raw data and take the governance and maintenance of our sustainability datasets and tools very seriously. We are constantly working to ensure our research and analysis is based on robust, verifiable, cutting edge data and techniques to ensure we are fully capturing the complex, multi-faceted nature of sustainability dynamics, and using this to provide actionable intelligence to our portfolio management teams.

Our proprietary technology platform, which is common to all our internal portfolio management teams, is used to aggregate sustainability-information and ensure all the necessary sustainability-related information is readily available to the portfolio management teams. This information is also made available via their Bloomberg terminals. As a result sustainability is tightly coupled to our portfolio management and construction process: sustainability figures can be monitored precisely overtime and used to trigger investment decisions but also serve for reporting purposes.

This information is reflective of our asset management activities.


(A) Implementation: Screening

FI 04. Types of screening applied

04.1. Indicate the type of screening you conduct.

Select all that apply
SSA
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

1. Negative screening: We have three levels of negative screening, including: our Group-wide exclusions on controversial weapons and soft food commodities, exclusions of securities subject to sanctions by the UN, EU, US and/or the Swiss government; SRI restrictions on tobacco, thermal coal and unconventional oil & gas; and additional values-based exclusions/restrictions specific to individual funds and/or clients upon request. (For further information please see FI 01.3)

2. Positive/best-in-class screening: Positive selection is designed to identify 'best in class' companies (i.e. companies displaying superior management of significant ESG risks - such as the consumption of resources, climate change, fair governance or other key social issues). Our proprietary, innovative and dynamic ESG/CAR approach (Consciousness, Action, Results) aims to differentiate those companies simply claiming good intentions from those which demonstrate actual results from actions undertaken. We have developed a similar tool for sovereign bonds.

3. Norm-based screening: exclusion of companies that breach internationally agreed standards or norms (i.e. child labour and other complicit violations of human rights as defined by the United Nations Global Compact principles)

04.3. Additional information. [Optional]

The information provided above is reflective of our asset management activities. Our private banking business applies the negative screening criteria to discretionary managed and advisory portfolios.


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

Investment restriction in companies deriving more than 10% (included) of their revenues from thermal coal extraction or power generation.

Type of fixed income

ESG factors

Screening

Description of how ESG factors are used as the screening criteria

Exclusion of securities relating to any countries, companies, entities or individuals subject to sanctions by the UN, EU, US and/or Switzerland, as well as relevant local sanctions.

Type of fixed income

ESG factors

Screening

Description of how ESG factors are used as the screening criteria

We aim to mitigate the portfolio risk by excluding issuers with exposure to the most severe controversies as defined by the United Nations Global Compact Principles.

05.2. Additional information.

This information is reflective of our asset management activities.


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]

Our proprietary technology platform, which is common to all our internal portfolio management teams, is used to aggregate sustainability-information and ensure all the necessary sustainability-related information is readily available to the portfolio management teams. This information is also made available via their Bloomberg terminals. As a result sustainability is tightly coupled to our portfolio management and construction process: sustainability figures can be monitored precisely overtime and used to trigger investment decisions but also serve for reporting purposes.

Our ESG Solutions team integrates information received from our ESG data providers related to exclusions, restrictions and controversies into our proprietary data-management platform and communicates this directly to our investment teams and our risk management teams. Exclusions, restrictions and controversies are screened through our pre-trade filters and subject to on-going monitoring.

Risk management (internally managed funds): Our Operational & Counterparty Risk teams consists of experienced professionals covering counterparty risks and operational risks and are completely independent from the portfolio managers. We have a three layered-process for risk-management oversight related to sustainability:

  • SRI Restrictions on tobacco, thermal coal, and unconventional oil & gas and severe controversies - Lombard Odier has introduced restrictions related to investments in companies whose revenues derive from tobacco, thermal coal, or unconventional oil & gas above certain thresholds for their actively managed public funds. The same approach is applied to companies impacted by the most severe controversies. The list of companies affected by these restrictions is updated daily, and the risk management team discusses and reviews these holdings with portfolio managers on a weekly basis. These holdings are also subject to review by the Stewardship Committee, which includes a senior representative from the risk management team.
  • Monitoring exposure to issuers ranked in the bottom two ESG quartiles on a GICS sector level 2 basis. Additional scrutiny is given to holdings with ESG ratings in the third or fourth quartiles relative to their GICS sector level 2 peers. The risk management team discusses holdings with below-average ratings with portfolio management teams to ensure the appropriate mitigation of ESG-related risks are being taken within the fund.
  • Monitoring overall portfolios compliance with the investment process using internal benchmarks to compare holdings. The internal benchmarks screen out names that are considered Low ESG as well as the most severe controversies. The risk management team uses this to encourage managers either to improve their ESG rating or to engage with companies for change or improved sustainability disclosure.

This information is reflective of our asset management activities.


(C) Implementation: Integration

FI 10. Integration overview

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

For our active internally managed strategies, we have developed a proprietary approach designed to assess which issuers are well-positioned to benefit from the transition to a sustainable economy based on these core principles:

  1. Focusing on credit quality to embed a greater degree of safety - this allows us to improve diversification and better protect portfolios during periods of volatility.
  2. Further mitigating risk by assessing extra-financial factors including environmental, social and governance (ESG) criteria.
  3. Considering the resilience of the portfolio to the physical and transition risks associated with climate change - this leads us to prioritise companies with a lower carbon intensity to reduce the carbon exposure of the portfolio, and add exposure to climate-aligned, social and sustainability bonds.

Our proprietary technology platform, which is common to all our internal portfolio management teams, is used to aggregate sustainability-information and ensure all the necessary sustainability-related information is readily available to the portfolio management teams. This information is also made available via their Bloomberg terminals. As a result sustainability is tightly coupled to our portfolio management and construction process: sustainability figures can be monitored precisely overtime and used to trigger investment decisions but also serve for reporting purposes.

For fundamental analysts, this extra financial information is not used to define hard exclusion rules but rather to ensure that our conviction is taking into account all those criteria. Ad hoc investigation work is then conducted with the possibility of additional interactions with the relevant companies.

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

SSA

The integration of ESG information into investment decisions has historically been prevalent in equities and corporate bonds. By contrast, there has been little discussion on the integration of this type of information for sovereign bonds. Given the challenges the world faces today, we believe the analysis of these risks in sovereign bonds is now essential. Although our macro criteria already incorporates some societal and political criteria, we incorporate ESG considerations into our investment process at the fundamental analysis level. Our sovereign analysts will look at the potential impact of environmental, social and governance issues on a country's ability to repay its debt. They use the UN's 17 Sustainable Developments Goals (SDGs) as a framework.

Corporate (financial)

When it comes to corporate bonds, we have developed a two-stage research and analysis process in recognition of the immediate and material risks poor business practices can present for a company's creditworthiness. This approach allows us to identify and mitigate these increasingly acute risks.

We start our assessment with a disciplined analysis of business practices taking into account:

1. ESG/CAR scoring: As described above, we use our own methodology to score companies based on 115 distinct, identifiable and credible data points to analyse whether they are aligned with best practices in terms of ESG, and whether they are making progress in transitioning to more sustainable business practices. Our portfolio management and research teams can then use this non-financial information alongside their financial analysis to assess the investment case of the company.

2. Controversies: A company's exposure to controversies in the short term is a strong signal that it is not focused on best business practices over the long term. We therefore look at companies' exposure to controversies, and the severity of those issues, as a means of managing portfolio risk.

3. Impact metrics: The transition to a low-carbon global economy has reached a tipping point, therefore, we believe it is essential to assess climate risks and decarbonize our portfolios. To that end, we want to increase the resilience of our portfolios by favouring companies with demonstrably lower carbon intensity than their peers to reduce carbon exposure. In addition, whenever possible, we also want to favour companies issuing climate-aligned bonds. This best in class approach is applied to the companies' respective sectors.

This analysis provides an outline for a quality-based portfolio tilted towards companies with better ESG/CAR scores, lower carbon intensity and with fewer controversies.

Next, our credit analysts carry out an in-depth forward-looking fundamental analysis into the sustainability of companies' business practices and business models / activities. This is a critical step, in our view, as it means our analysts can better understand the relevance of these factors for companies, identify any inconsistencies and challenge issuers directly. Our active strategies use common tools that enable the diffusion of extra-financial information provided by the ESG solutions team, for example. The team also benefits from our dedicated SIRSS team, which helps monitor and inform investment teams on top-down global issues associated with sustainability dynamics and their potential impact on sectors/industries.

We believe green, social and sustainability bonds play an important role in enabling capital-raising and investment for projects designed to increase the resilience of the global economy to climate change, and to mitigate climate risk by avoiding carbon emissions. In turn, they increase the resilience of portfolios to climate risk and help drive the investment opportunity associated with the transition to a net-zero emissions economy. As a result, we believe green, social and sustianability bonds enable us to better position portfolios for the climate transition while also creating a positive social and environmental impact.

We also believe green, social and sustainability bonds are an important financial articulation of a company’s sustainability strategy, and companies that issue these bonds are therefore likely to be better positioned as the transition to a sustainable economy continues to accelerate. 

Corporate (non-financial)

When it comes to corporate bonds, we have developed a two-stage research and analysis process in recognition of the immediate and material risks poor business practices can present for a company's creditworthiness. This approach allows us to identify and mitigate these increasingly acute risks.

We start our assessment with a disciplined analysis of business practices taking into account:

1. ESG/CAR scoring: As described above, we use our own methodology to score companies based on 115 distinct, identifiable and credible data points to analyse whether they are aligned with best practices in terms of ESG, and whether they are making progress in transitioning to more sustainable business practices. Our portfolio management and research teams can then use this non-financial information alongside their financial analysis to assess the investment case of the company.

2. Controversies: A company's exposure to controversies in the short term is a strong signal that it is not focused on best business practices over the long term. We therefore look at companies' exposure to controversies, and the severity of those issues, as a means of managing portfolio risk.

3. Impact metrics: The transition to a low-carbon global economy has reached a tipping point, therefore, we believe it is essential to assess climate risks and decarbonize our portfolios. To that end, we want to increase the resilience of our portfolios by favouring companies with demonstrably lower carbon intensity than their peers to reduce carbon exposure. In addition, whenever possible, we also want to favour companies issuing climate-aligned bonds. This best in class approach is applied to the companies' respective sectors.

This analysis provides an outline for a quality-based portfolio tilted towards companies with better ESG/CAR scores, lower carbon intensity and with fewer controversies.

Next, our credit analysts carry out an in-depth forward-looking fundamental analysis into the sustainability of companies' business practices and business models / activities. This is a critical step, in our view, as it means our analysts can better understand the relevance of these factors for companies, identify any inconsistencies and challenge issuers directly. Our active strategies use common tools that enable the diffusion of extra-financial information provided by the ESG solutions team, for example. The team also benefits from our dedicated SIRSS team, which helps monitor and inform investment teams on top-down global issues associated with sustainability dynamics and their potential impact on sectors/industries.

We believe green, social and sustainability bonds play an important role in enabling capital-raising and investment for projects designed to increase the resilience of the global economy to climate change, and to mitigate climate risk by avoiding carbon emissions. In turn, they increase the resilience of portfolios to climate risk and help drive the investment opportunity associated with the transition to a net-zero emissions economy. As a result, we believe green, social and sustianability bonds enable us to better position portfolios for the climate transition while also creating a positive social and environmental impact.

We also believe green, social and sustainability bonds are an important financial articulation of a company’s sustainability strategy, and companies that issue these bonds are therefore likely to be better positioned as the transition to a sustainable economy continues to accelerate. 

10.3. Additional information [OPTIONAL]

This information is reflective of our asset management activities.


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
SSA
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]

The information provided above is reflective of our asset management activities.


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
SSA

Environmental

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.

SSA

Our proprietary model has been designed for measuring governments' alignment with the Human and Environmental Rights standards and Sustainable Development Goals as defined by the United Nations .

The goals are broad and interdependent, yet each has a separate list of targets to achieve. The SDGs cover environmental, social and economic development issues including poverty, hunger, health, education, global warming, gender equality, water, sanitation, energy, urbanization, environment and social justice. There is a large amount of data publicly available that measures the contributions of governments toward the SDGs (World Bank, UN agencies, NGOs (Amnesty International, Transparency, Climate Action Tracker), research institutes (Yale University). We have selected the data of greater quality and that has been updated on a regular basis. The indicators collected are of a different nature (positive or negative, absolute or relative). All of them have been calibrated in our scoring system and rescaled between 0 and 100 points to make them more easily comparable.

We have aligned our analysis to our ESG/CAR corporate view. We want to focus on indicators of concrete results achieved by governments pursuing the SDGs, but we also want to measure their commitments and efforts on each aspect. Each indicator is tagged according to their ESG and SDG themes, and to their "CAR" materiality.

On the consciousness side, we analyse the commitments of governments through their signatures and/or ratifications of UN international treaties. For example, we follow the main international negotiation cycles on climate (e.g. UN Framework Convention on Climate Change, Kyoto protocol, Paris Agreement). On the action side, we analyse governments' regulatory quality and budget allocation (e.g. share of budget spent on education or health, investments in renewable energy sources). On the result side, we use mainly performance indices and indicators related to the SDGs (e.g. on environment, social progress, good governance, corruption etc.).

Corporate (financial)

The factors we consider for each part of the ESG evaluation include :

Environment :

  • Emission reduction
  • Natural resource reduction
  • Product innovation

Social :

  • Respect for human rights
  • Impact on communities
  • Client/Product responsibility
  • Diversity in the workplace
  • Health and safety
  • Training and career development

Governance:

  • Board of directors composition, independence, diversity, skills and knowledge base
  • Executive directors remuneration policy and yearly remuneration outcomes 
  • Non-executive directors fees' structure
  • Shareholders' rights
  • Strategy integration

Corporate (non-financial)

The factors we consider for each part of the ESG evaluation include :

Environment :

  • Emission reduction
  • Natural resource reduction
  • Product innovation

Social :

  • Respect for human rights
  • Impact on communities
  • Client/Product responsibility
  • Diversity in the workplace
  • Health and safety
  • Training and career development

Governance:

  • Board of directors composition, independence, diversity, skills and knowledge base
  • Executive directors remuneration policy and yearly remuneration outcomes 
  • Non-executive directors fees' structure
  • Shareholders' rights
  • Strategy integration

12.3. Additional information.[OPTIONAL]

The information provided above is reflective of our asset management activities.


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