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CI Investments Inc.

PRI reporting framework 2020

You are in Direct - Fixed Income » ESG incorporation in actively managed fixed income

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.

CI Investments has chosen an ESG integration strategy for our actively managed fixed income investments as we believe that this approach to responsible investment has the potential to generate the best risk adjusted returns for our funds. Furthermore, while certain sectors and companies will not be excluded due to ESG factors alone, CI Investments is committed to exclusionary screening with respect to companies involved in activities associated with the production, use or distribution of anti-personnel landmines and/or cluster munitions across the funds in which CI Investments directly controls the investment strategy.

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:

specify description

          CI Investments' Responsible Investment Analyst provides on-demand ESG research support to all in-house portfolio management teams.
        

03.2. Describe how your ESG information or analysis is shared among your investment team.

          Documentation of reviews of flagged holdings are shared across each investment team through Bloomberg.
        

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

CI Investments has exclusionary criteria related to two product involvement areas. We will not knowingly directly invest in companies associated with the production, use or distribution of anti-personnel landmines or cluster munitions. This restriction applies to all actively managed funds where CI Investments directly controls the investment strategy of the fund. Company involvement in these activities is determined by our third-party ESG research and data provider, Sustainalytics.

These product involvement areas were selected by CI Investments as investment exclusions in recognition of the prohibitions contained within the United Nations Anti-Personnel Landmines Convention and the United Nations Convention on Cluster Munitions. 

04.3. Additional information. [Optional]


FI 05. Examples of ESG factors in screening process (Not Completed)


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

06.2. Additional information. [Optional]

On a quarterly basis, CI Investments receives a list of companies involved in landmines and cluster munitions from Sustainalytics. These are uploaded as restrictions on our pre-trade system, Charles River, and sent out to each in-house team directly. Furthermore, the lists are sent to all external sub-advisors, who are expected to update (if applicable) their pre-trade systems on a quarterly basis with the restrictions.


(C) Implementation: Integration

FI 10. Integration overview

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

CI Investments incorporates ESG factors into our investment strategies through ESG integration and exclusionary screening (in the case of anti-personnel landmines and cluster munitions). 

Investment Exclusions:

Each quarter, CI Investments' third-party ESG research and data provider, Sustainalytics, provides a list of companies who participate in activities that are deemed to be essential to the proper manufacturing, functioning and use of anti-personnel landmines and cluster munitions. This list is provided to all in-house portfolio management teams as well as external sub-advisors by CI Investments' Compliance Department. These companies are also hardwired into CI Investments' pre-trade system, Charles River, meaning that any trades of these securities are restricted. CI Investments' external subadvisors are required to hard wire the companies into their pre-trades systems. Any security holdings on this list, if held, are required to be divested immediately.

Anti-personnel landmines and cluster munitions were specifically selected as investment exclusions in recognition of the prohibitions contained within the United Nations Anti-Personnel Landmines Convention and the United Nations Convention on Cluster Munitions.

ESG Integration

CI Investments' in-house portfolio management teams - Signature Global Asset Management, Cambridge Global Asset Management, Harbour Advisors, Sentry Investments, CI First Asset Investment Management and CI Multi-Asset Management - consider ESG factors alongside financial factors in their decision-making processes. We have established set of minimum ESG ranking criteria to guide our portfolio managers in this process; these are based on Sustainalytics' company ESG risk ratings:

Company is involved in severe and/or very severe controversies
Company is assessed as having a high or severe degree of ESG risk
Company is ranked within the bottom 25th percentile in terms of ESG risk

CI Investments views these criteria as indicative of material factors for an investment decision. Controversies can be a strong indicator of a company's performance and preparedness in a given area. The combination of the degree of ESG risk and a company's percentile score provides an indication provides an indication of the ESG performance of a company, both from an absolute and relative perspective.

CI Investments' Responsible Investment Team has also worked collaboratively with each in-house Portfolio Management Team to establish materiality thresholds, based on the weighting of a particular security or issuer within a given fund.

Each quarter, CI Investments' Responsible Investment Analyst provides each in-house portfolio manager with a customized ESG portfolio screen of their managed funds. The screens include the following information:

Security holding names
Holdings' overall ESG risk rating
Holdings' ESG risk percentile score
Holding's highest controversy level
Security weighting in the fund

Any holdings that do not meet the minimum ESG ranking criteria listed above are flagged for each portfolio manager by the Responsible Investment Analyst. If the holding is deemed to be material, as identified by the pre-determined materiality thresholds of each Portfolio Management Team, a review and documentation process is triggered where the portfolio manager is required to review material companies' ESG performance, risks and opportunities using Sustainalytics' online research platform. Following review, each portfolio manager must document their findings and conclusions and share this with his or her portfolio management team through Bloomberg. There is no sharing across different portfolio management teams. The review and documentation process is monitored by CI's Responsible Investment Team and Compliance Department.

To support the ongoing integration of ESG factors into the investment decision-making process, overall ESG risk ratings, ESG risk percentile scores and highest controversy levels are available for all in-house portfolio management teams through Bloomberg so that they may view ESG data in conjunction with financial metrics. In addition, CI Investments' Responsible Investment Analyst is available to all in-house portfolio managers and analysts for on-demand support and guidance. 

CI Investments elected to incorporate ESG factors by way of integration alongside financial factors due to the belief that this method offers the greatest ability to reduce risk and better asses growth potential and future stock performance. This is aligned with CI Investments' objectives of achieving the best risk-adjusted returns for our funds.

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

Corporate (financial)

CI Investments has not established an ESG integration approach specific to corporate financial fixed income investments.

Corporate (non-financial)

CI Investments has not established an ESG integration approach specific to corporate non-financial fixed income investments.

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)

Internally managed corporate financial fixed income investments are screened every quarter by CI Investments' Responsible Investment Analyst. Any holdings that do not meet our minimum ESG ranking criteria are flagged for each in-house portfolio manager, triggering a review and documentation process. 

Corporate (non-financial)

Internally managed corporate non-financial fixed income investments are screened every quarter by CI Investments' Responsible Investment Analyst. Any holdings that do not meet our minimum ESG ranking criteria are flagged for each in-house portfolio manager, triggering a review and documentation process. 

12.3. Additional information.[OPTIONAL]


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