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Elo Mutual Pension Insurance Company

PRI reporting framework 2020

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You are in Direct - Fixed Income » ESG incorporation in actively managed fixed income » (C) Implementation: Integration

(C) Implementation: Integration

FI 10. Integration overview

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

Within the corporate investments ESG issues are integrated into the investment process on a portfolio manager level. In addition we also use external screening services. An ongoing dialogue and meetings with companies' management teams and in-depth knowledge of the investment targets all reduce the chance of negative surprises and provide an understanding of the kinds of factors that make a good, responsibly operating company, and thus a good investment. Our approach is a mix of quantitative and qualitative. A good scoring improves the overall investment score and a weak ESG rating reduces the attractiveness on the investment.

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

SSA

Corruption Perception Index by Transparency International used for ranking investable universe.

Global Adaptation Index by Dotre Dame University is used to gauge environmental issues within our investable universe.

World Bank's ESG Database

Corporate (financial)

ESG issues are integrated into the investment process on a portfolio manager level. In addition we also use external screening services. An ongoing dialogue and meetings with companies' management teams and in-depth knowledge of the investment targets all reduce the chance of negative surprises and provide an understanding of the kinds of factors that make a good, responsibly operating company, and thus a good investment. Our approach is a mix of quantitative and qualitative. A good scoring improves the overall investment score and a weak ESG rating reduces the attractiveness on the investment. The process is the same for financials and non-financials but governance issues are more in focus.

Corporate (non-financial)

ESG issues are integrated into the investment process on a portfolio manager level. In addition we also use external screening services. An ongoing dialogue and meetings with companies' management teams and in-depth knowledge of the investment targets all reduce the chance of negative surprises and provide an understanding of the kinds of factors that make a good, responsibly operating company, and thus a good investment. Our approach is a mix of quantitative and qualitative. A good scoring improves the overall investment score and a weak ESG rating reduces the attractiveness on the investment.

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
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]


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

Environmental issues are still under development in SSA investments. ND-GAIN Index is being further investigated as a data source. Social and Governance issues fully integrated into SSA investment process.

Corporate (financial)

Within financials it is similar to the description on corporates below but there is more focus put on the governance issues.

Corporate (non-financial)

A starting point is whether there are or have there been serious controversies. If yes we raise the question whether they have been resolved. The ESG factors can vary between sectors.Typical elements within environment would be toxic emissions and waste, water stress, carbon emissions, product carbon footprint and opportunities in clean tech. Social aspect includes labour management, health and safety or product safety. Within Governance the general corporate governance, anti-competitive practicies and Business ethics & fraud. The focus on these issues varies between sectors.

12.3. Additional information.[OPTIONAL]


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