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Partners Group AG

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.

In its identification of the most material ESG factors to consider for a given fixed income investment, Partners Group estimates the potential EBITDA impact if a factor is mismanaged. These analyses are then integrated into the financial models for the investments according to the base case, downside, and upside scenarios.

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

Corporate (non-financial)

The approach described above applies to the two types of fixed income that we invest in, corporate (non-financial) and securitized.

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 (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]

Other:

  • As appropriate, cashflows for potential investments are adjusted for material ESG factors.
  • In cases were ESG factors are material, these affect also the risk-return profile of a potential investment.

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 (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 (non-financial)

Partners Group builds on the substantial research base provided by the Sustainability Accounting Standards Board (SASB). SASB has provided industry briefs that justify the short list of 15-25 ESG factors and metrics deemed most material for a given industry. The industry briefs also provide the basis for claiming materiality by identifying which specific aspects of a company's financial performance are affected by a given ESG factor. Partners Group uses these industry briefs to sharpen its ESG analysis and ensure full integration with the evaluation of the overall business case. In particular, for debt investments, we focus on risk factors, rather than on opportunities to create value, given our limited influence. In addition, SASB's materiality map informs our internal ESG due diligence assessment, which investment teams must complete for every potential debt investment and submit in their memo to our investment committee. This assessment systematically identifies the most material ESG factors for a given industry. 

On an annual basis, we review and update our internal database of material ESG factors included in our ESG DD assessment tool to ensure that it is current. We also introduce non-industry-based factors such as geography-based considerations to help sharpen our analysis. For example, in 2019, we added an ESG factor to our assessment tool which analyzes fraud risk based on Transparency International's Corruption Perceptions Index, a geography-based framework.

For ESG monitoring engagement, our Primera Insight tool scans the internet for ESG-related news for our entire portfolio, including debt investments. ESG-related news on our investments are tracked in our internal database. Based on the circumstances, we engage with the sponsor to understand the reported ESG issues and push for improvements. 

12.3. Additional information.[OPTIONAL]


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