This report shows public data only. Is this your organisation? If so, login here to view your full report.

Lombard Odier

PRI reporting framework 2020

Export Public Responses
Pdf-img

You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes

実施プロセス

LEI 01. Percentage of each incorporation strategy

01.1. 以下を記載してください。(1)組織でのアクティブ運用上場株式にどのESG組み入れ戦略や組み合わせを使用しているか(2)アクティブ運用している上場株式の戦略または戦略の組み合わせ別内訳

ESG組み入れ戦略 (当てはまるものをすべてお選びください)
アクティブ運用される上場株式に戦略が適用される割合 (推定 +/- 5%)
19.8 %
アクティブ運用される上場株式に戦略が適用される割合 (推定 +/- 5%)
80 %
アクティブ運用される上場株式に戦略が適用される割合 (推定 +/- 5%)
0.2 %
アクティブ運用している上場株式の合計 107%

01.2. 組織が実施しているESG組み入れアプローチ、および、特定のESG組み入れ戦略を選択している場合はその理由を説明してください。

Our sustainable investment framework covers What businesses do (business model and activities) and How businesses operate (business practices). For each dimension, we focus on the most financially material issues to the sector and industry. In our view, both dimensions are essential to better inform investment decision-making 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, is conducted by analysts and portfolio managers, 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: This dimension looks at companies' business practices in relation to their broad ecosystem of stakeholders. This includes metrics relating to environmental, social and governance best practice. 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.

Stewardship:

Based upon intelligence and analysis gained from our dedicated sustainability teams, our asset management unit, LOIM, addresses issues financially material issues 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 material sustainability factors and seek to influence their sustainability positioning in areas we think are weak or where there is room for improvement.

Screening:

We have three levels of negative screening:

1. Group-wide exclusions

Reflecting our Group policy we systematically exclude:

  • Companies involved in 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 at-risk populations. 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 countries, companies, entities or individuals subject to sanctions by the UN, EU, US, Switzerland or local sanctions.

2. SRI Restrictions

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 approval of the relevant CIO and are subject to regular risk review by internal committee.

For active strategies, we also normally look to exclude companies impacted by severe controversies from our responsible investment universe unless there are extenuating circumstances, with lower-level controversies subject to ongoing monitoring.

3. 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.

For internally managed funds, sustainability is a cross-team collaboration between our investment teams and dedicated sustainability experts, allowing us to blend systematic and fundamental analysis at all levels of the investment process. It also enhances our ability to identify risks and opportunities, and turn them into actionable intelligence.

At Lombard Odier, we think about sustainability in portfolio management in two categories:

Sustainability integration:

This includes our high-conviction strategies where sustainability is not the primary alpha driver, but sustainability is integrated to mitigate risk and protect portfolios and enhance returns as the transition unfolds. This manner of positive selection is designed to identify 'best-in-class' companies (i.e. those that display superior management of significant risks and opportunities both in their business model and in their business practices).

For our systematic strategies, ESG and carbon factors are integrated in investment processes through screening, best in class, exclusion-based approaches.

Sustainability-themed:

For our range of sustainability-themed strategies, sustainability is the main driver of alpha. In these strategies our framework can be used for positive selection of a universe of companies that are providing solutions to sustainability-related challenges (such as climate change), and/or those that are transition leaders within their sector or industry. Our high-conviction managers then use this universe as the starting point for further analysis and stock selection.

Our high conviction 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 challenges and their potential impact on sectors/industries. This strong organisational support ensures that our investment team can make forward-looking investment decisions with the highest level of information and, therefore, conviction.

Our risk team provides additional oversight and has a good grasp of sustainability related issues and metrics.

01.3. ESG組み入れ戦略の組み合わせを使用して資産を運用している場合、ESG戦略の組み合わせをどのように使用しているかを簡単に説明してください。 [任意]

The information provided above is reflective of our asset management activities. The approach described above under LEI 01.2 reflects the Group's approach, which is currently implemented at LOIM and in the process of being implemented within the private banking business with the relevant adaptations.


LEI 02. Type of ESG information used in investment decision

02.1. 組織でESG組み入れ戦略に使用しているESG情報およびこの情報の提供者を記載してください。

ESG情報の種類

この情報の提供者を選択してください

この情報の提供者を選択してください

この情報の提供者を選択してください

この情報の提供者を選択してください

この情報の提供者を選択してください

この情報の提供者を選択してください

02.2. ブローカーに対しESG調査結果を提供するよう奨励しているかどうかについて記載してください。

02.4. 補足情報 [任意]

At Lombard Odier, we believe understanding how companies are positioned for the transition to a more sustainable economic model requires a combination of forward-looking, scenario-based data and analysis, with a comprehensive view of the current status quo and historic trends.

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 seek 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. 
 


LEI 03. Information from engagement and/or voting used in investment decision-making

03.1. ESGへのエンゲージメントや(委任状による)議決権行使から得られる情報を投資の意思決定に利用できるプロセスが組織にあるかどうかを記載してください。

03.2. 補足情報 [任意]

For our internally managed assets, our investment teams engage in frequent dialogue with companies based upon the intelligence and analysis gained from our Sustainable Investment Research Stewardship and Strategy (SIRSS) team and ESG Solutions team.  We address issues that have a financially material impact through engagement. We will enter into a dialogue with the company to test and challenge its approach to the sustainability factors we think are most material to its prospects and will seek to influence its sustainability positioning in areas we think there are weaknesses or room for development.

We use recognised global frameworks to guide our voting based on international best-practice (ICGN and OECD principles). We also use Institutional Shareholders Services (Europe) S.A. ("ISS") to provide operational, record-keeping, research and reporting services. ISS prepares written analysis and recommendation of each proxy vote, based on our custom voting guidelines.

We keep centralised data sources that facilitate information sharing and inputs arising from engagement and voting. Indeed, LOIM’s portfolio managers and analysts carry out the vast majority of our engagements, which inherently facilitates the feedback loop into the investment process.

This information is reflective of our asset management activities.


A) 実施:スクリーニング

LEI 04. Types of screening applied

04.1. 組織内でアクティブ運用している上場株式に適用するスクリーニングの種類を記載し、説明してください。

スクリーニングの種類

スクリーニング実行者

説明

Negative/exclusionary screening:

Products:

  • Controversial weapons (all funds). Tobacco (specific funds only).
  • Essential food commodities: soya, wheat, rice and corn (all funds),
  • Products among other categories (specific funds only):  Firearms  and GM

Activities: unconventional oil and gas in activities corresponding to Artic Drilling, Shale Oil & Gas and Tar sands, stem cell research (screened for some specific accounts). We currently follow 10 different non-ethical sectors and are in the process of adding 15 more.

Countries: 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.

Environmental and social practices and performance: Child labor and child labor through suppliers (specific funds), high and severe social or environmental-related controversies

Corporate governance: high and severe governance-related controversies

This information is relfective of our asset management activities. Our private banking business applies the same criteria on discretionary managed mandates and on investment recommendations (i.e. investments that directly depend on Lombard Odier).

スクリーニング実行者

説明

  • Environmental and social practices and performance: exclusion of the last quintile of worst ESG-scored companies (specific funds)
  • Corporate governance: exclusion of the last quintile of worst ESG-scored companies (specific funds)

This information is reflective of our asset management activities.  Our private banking business applies the same criteria on discretionary managed mandates and on investment recommendations (i.e. investments that directly depend on Lombard Odier).

スクリーニング実行者

          The Ottawa Treaty on landmines, the Convention on Cluster Munitions, the Biological and Toxin Weapons Convention, The Chemical Weapons Convention
        

説明

  • Exclusion of companies involved in serious breaches of UN Global Compact Principles (specific funds). These controversies are graduated according to the seriousness of the facts: evaluation of the incident's impact, degree of the incident exceptionality (sector specific), recurrence level, assessment of the company response, consideration of the company response etc.
  • Exclusion of companies involved in proven breaches of International Labor Organization Conventions: Child labor and child labor through suppliers (specific funds),
  • Other: Exclusion of companies involved in producing or distributing controversial weapons: The Ottawa Treaty on landmines, The Convention on Cluster Munitions, The Biological and Toxin Weapons Convention, The Chemical Weapons Convention (all funds)

This information is refelctive of our asset management activities.  Our private banking business applies the same criteria on discretionary managed mandates and on investment recommendations (i.e. investments that directly depend on Lombard Odier).

04.2. スクリーニング基準が変更された場合に顧客や受益者に通知する方法について説明してください。

We notify clients when changes are made through monthly, quarterly or bi-annual SRI dedicated reports, including information related to scores, positive, negative and norm-based screening. Detailed comments are systematically provided with our reports, together with research and more detailed explanations about companies that went through significant changes.


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

05.1. スクリーニングが徹底した分析に基づいていることを確実にするために、組織が使用しているプロセスを選択してください。

05.2. ESGスクリーニング戦略の一環で包括的なESG調査の対象となるアクティブ上場株式ポートフォリオの割合を示してください。

05.3. 第三者のESG評価がスクリーニング目的で更新される頻度を示してください。

05.4. 組織のESGスクリーニングを構築するための組織内リサーチを精査する頻度を示してください。

05.5. 補足情報 [任意]

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.

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. 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 in partnership with a number of external data providers to access raw data, including Exiobase, Sustainalytics, Trucost and Inrate. We are constantly reviewing the quality and scope of data available from external providers given the dynamic and rapid evolution of this space. We view this as a partnership because we also believe it is important to maintain open and regular dialogue with those providers to ensure the data they provide is as up to date and investment relevant as possible. Data from these providers is then fed into our proprietary frameworks and methodology.

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 at all times. This information is also made available to the teams directly 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.

Sustainability is a cross-team collaboration between our investment teams and our dedicated sustainability experts, which allows us to blend systematic and fundamental analysis at all levels of the investment process. This collaborative approach, and our innovative investment platform ensure that we are our investment team can make forward-looking investment decisions with the highest level of information and, therefore, conviction.

Our risk team provides additional oversight and has a good grasp of sustainability related issues and metrics.

These figures and information are reflective of our asset managment activities. Our private banking business is also able to leverage the information and inteligence produced by our dedicated sustainability teams. 


LEI 06. Processes to ensure fund criteria are not breached

06.1. ファンドの基準に違反がないことを確認するために組織が使用しているプロセスを記載してください。

06.2. ファンドのスクリーニング基準に対する違反が判明した場合、これらの違反を是正するために従うプロセスを説明してください。

For our internally managed assets, we have strict policies and procedures in place with respect to the monitoring of funds criteria and restrictions, including ESG limits if any, across the funds and segregated mandates under our management.

Our compliance teams makes sure that all our investment teams respect our Group policy on controversial investment through the pre- and post-trade monitoring of the investment objectives and guidelines (both internal and external such as the fund prospectus and legal documentation).

Once an exception has been identified, it will be classified as either an active or a passive breach and escalated to the relevant investment team for correction.

In the event of a passive or active breach, the Investment Controlling team must notify the relevant portfolio manager of the breach via email, providing details regarding the fund and the violation (date, description, status, related rule). Typically, all passive breaches must be corrected within a 10-day period, whilst all active breaches must be corrected immediately. The Investment Controlling team monitors the breach until its correction, as well as potential reimbursements and the notification to impacted clients/ funds and/ or relevant regulators, where required. The Investment Controlling team will also document all instances of breaches in a log file used to generate statistics for management-reporting purposes, for identifying error trends and implementing corrective measures where applicable, or for reinforcing training within investment teams.

Where an active breach has occurred, this will be escalated to the following individuals within the Firm:

•           The Conducting Officer of the Management Company responsible for Risk and Compliance*

•           Head of Investment Controlling

•           Operational Risk Team

•           Head of Compliance

•           COO and General Counsel

*Only in case of French and Luxembourg based funds

 

06.3. 補足情報 [任意]

This information is reflective of our asset management activities.


B) 実施:テーマ

LEI 07. Types of sustainability thematic funds/mandates

07.1. 組織が運用している、サステナビリティをテーマとするファンドやマンデートの種類を記載してください。

07.2. 組織でのサステナビリティをテーマとしたファンドのプロセスについて説明してください。 [任意]

For our internally managed sustainability themed strategies, sustainability is the main driver of alpha. In these strategies our sustainable investment framework can be used for positive selection of a universe of companies that are providing solutions to sustainability-related challenges (such as climate change), and/or those that are transition leaders within their sector or industry. We also apply exclusions and restrictions as outlined in our answer to LEI 1.2.

Our high-conviction managers then use this universe as the starting point for further analysis and stock selection.

Our investment team follows a systematic and high conviction disciplined approach by selecting sustainable companies within its proprietary thematic universe.

LOIM’s investment approach combines three pillars:

  1. A disciplined financial analysis of the investment universe,
  2. A dedicated review of business practices: the investment team considers extra-financial information provided by our internal ESG Solutions team’s analysis and conducts ad hoc additional investigation for companies with worst practices or worst controversies (or other ESG criteria). As part of this stewardship process, the investment team enters into dialogue with companies to better qualify our ESG-related concerns and monitor improvements.
  3. A fundamental in-depth analysis on business models, corporate strategies, exposure to long-term trends and economic cycles. By conducting in depth analysis, the investment teams assesses how companies defend their economic positions in the face of economic/market threats. We aim to select business models that benefit from strong and long-lasting competitive advantages with positive exposure to structural trends. The team also benefits from our dedicated SIRSS team, which helps monitor and inform investment teams on top-down global issues associated with sustainability challenges and their potential impact on sectors/industries.

This strong organisational support ensures that our investment team can make forward-looking investment decisions with the highest level of information and, therefore, conviction.

In the case of our internally managed sustainability themed strategies, the objective is to focus on companies whose business models and practices are aligned with a specific theme – for example, Responsible Consumption using a framework based on SDG12 (Responsible Consumption and Production). In this case, the strategy places a particular focus on sustainable food, urban systems, supply chains and lifestyle. We identify sustainable companies by considering the potential decoupling between their environmental impact and their economic activity: companies that we think are able to develop their activity and lower their impact  in the same time. We aim at identifying these companies in order to benefit from the potential competitive advantage and risk management they have built around what we expect to be a consumption revolution, expressed by the SDG12.

At the strategy level, sustainability considerations are applied at three levels:

  • Our investment universe systematically excludes the companies that we consider as having the worst ESG scores, based on business practices scores and the most severe controversies.
  • Then companies are individually and specifically selected for their positive exposure to SDG12 challenges. SDG 12 is about responsible consumption and production. In other words, it is about decoupling economic growth from environment footprint. We look for opportunities across Sustainable Food, Sustainable Urban Systems, Sustainable Supply chain and Sustainable Lifestyle.
  • In addition, the investment team will also undertake stewardship activities aligned with one of the key requirements of SDG12 (namely SDG 12.60), to encourage companies to adopt sustainable practices and to integrate sustainability information into their reporting cycle.

At the firm level, Lombard Odier has a non-negotiable, group wide exclusion policy under which investments in companies involved in the production, distribution and usage of controversial weapons are prohibited. Additionally, we will not invest in financial instruments (futures, options, swaps, indices, exchange-traded funds) that could participate in a price speculation of essential food commodities: wheat, rice, maize and soy beans. Also, we exclusively invest in jurisdictions with a clear rule of law. This approach is, of course, also applied to our sustainability themed strategies.

This information is reflective of our asset management activities.

 


C) 実施: 統合

LEI 08. Review ESG issues while researching companies/sectors

08.1. E・S・Gの各要因が投資分析の一環として体系的に調査されている、アクティブ運用の上場株式ポートフォリオの割合を記載してください。

ESG問題

影響を受ける割合
E(環境)

E(環境)

S(社会)

S(社会)

コーポレートガバナンス

コーポレートガバナンス

08.2. 補足情報 [任意]

These figures are reflective of our asset management activities.


LEI 09. Processes to ensure integration is based on robust analysis

09.1. ESG統合が徹底した分析に基づいていることを確実にするために、組織が使用しているプロセスを記載してください。

09.2. 組織の統合戦略の一環で包括的ESG調査の対象になるアクティブ運用上場株式の割合を記載してください。

09.3. ESG統合戦略に使われる第三者のESG評価が更新される頻度を示してください。

09.4. ESG統合戦略に使われる組織内調査を見直す頻度を示してください。

09.5. ポートフォリオ・マネージャーがどのようにしてESG情報を保有し、使っているのか説明してください。

09.6. 補足情報 [任意]

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 at all times. This information is also made available to the teams directly 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.

See our response to LEI 5.5 for further details. 

These figures and information are reflective of our asset management activities.

 


LEI 10. Aspects of analysis ESG information is integrated into

この指標には新しい設問が追加されています。事前に入力されている回答を精査してください。

10.1. 投資分析のどの側面にESG情報を統合しているかを記載してください。

アクティブ運用する上場株式の内投資分析をする割合

アクティブ運用する上場株式の内投資分析をする割合

アクティブ運用する上場株式の内投資分析をする割合

アクティブ運用する上場株式の内投資分析をする割合

アクティブ運用する上場株式の内投資分析をする割合

10.3. ESG情報をポートフォリオの加重にどう統合しているかを説明してください。

​Our proprietary technology platform is used to aggregate sustainability-information and ensure all the necessary sustainability-related information is readily available to our 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 our high-conviction strategies, our sustainability framework is used to systematically screen the investment universe for a given strategy to help identify companies with the strongest potential to generate future growth or gain competitive advantages as the transition to a sustainable economy unfolds.

Our high-conviction portfolio management teams can then use our sustainability-related information to further inform their analysis of companies’ exposure to sustainability-related risks and opportunities. It also informs their dialogue and engagement activity with companies. This intelligence can then be taken into account in the final investment decisions and portfolio weighting.

For our systematic strategies, ESG and carbon metrics are integrated into the investment processes through screening, best-in-class, and exclusion-based approaches, which affects the portfolio weighting.

 

 

10.5. 有価証券の評価に感応度/シナリオ分析をどのように適用しているか説明してください。

Our dedicated sustainability teams analyse the exposure of different sectors and industries to a number of sustainability challenges using a series of scenarios. This is used to provide actionable intelligence on forward-looking risks and opportunities for some investment teams.

In our materiality mapping, we model the exposure of industries to climate change and other megatrends, under 3 different main scenarios:

(1) A business-as-usual scenario, based on current policies

(2) A middle of the road scenario, based on limited improvement in policy ambition (2.6C) with parameters included to adjust this scenario for a "delayed policy response"

(3) A sustainability scenario aligned with the Paris Agreement, based on a temperature increase of 1.8C

The interim conclusions from our materiality analysis highlight that transitional risks increase in the more sustainable, Paris-aligned scenario. Over the longer term, this scenario does, however, feature lower physical risks. In the business-as-usual scenario, transitional costs are lower, but this is offset by the creation of reputational and liability risks, that could pose an existential threat to responsible industries.

10.6. 補足情報 [任意]

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


Top