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MAKALANI MANAGEMENT COMPANY (PTY) LTD

PRI reporting framework 2020

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.

Makalani‚Äôs approach to examining and managing ESG risks and potential value creation opportunities into investments made through its funds.  As such, proper ESG assessment will highlight risks (investments to avoid) as well as opportunities (investment that greater potential than what is priced in by the wider market).  Hence, ESG analysis complements traditional investment analysis when making investment or divestment decisions. 

We would never make any investment or divestment decision by only considering financial analysis or only considering ESG analysis.   

 

 

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

SSA

We assess over 150 environmental, social and governance factors in conducting our ESG analysis to identify risk and opportunities of particular investments.

For example, we consider some of the following factors as more relevant to SSA:

Environmental: Agriculture, biodiversity, energy resources and management, natural disasters, pollution etc.

Social: Demographics, education, income inequality, health levels, human rights etc.

Governance: Corruption, international relations, financial reporting, regulatory effectiveness, rule of law etc.

Corporate (financial)

We assess over 150 environmental, social and governance factors in conducting our ESG analysis to identify risk and opportunities of particular investments.

For example, we consider some of the following factors as more relevant to Corporate (Financial) securities:

Environmental: Cimate change, waste management etc.

Social: Income inequality, product responsibility etc.

Governance: Audit practices, incentive structure etc. 

Corporate (non-financial)

We assess over 150 environmental, social and governance factors in conducting our ESG analysis to identify risk and opportunities of particular investments.

For example, we consider some of the following factors as more relevant to Corporate (Non-Financial) securities:

Environmental: Supply chain, air pollution etc.

Social: Health and safety, diversity etc.

Governance: Board independence and expertise, investors rights etc. 

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

We assess over 150 environmental, social and governance factors in conducting our ESG analysis, some of which are more relevant to SSA.  This provides our team with an indication of the ESG risk or opportunity which is then used as part of the investment selection and portfolio construction processes.

Corporate (financial)

We assess over 150 environmental, social and governance factors in conducting our ESG analysis, some of which are more relevant to corporate (financial).  This provides our team with an indication of the ESG risk or opportunity which is then used as part of the investment selection and portfolio construction processes.

Corporate (non-financial)

We assess over 150 environmental, social and governance factors in conducting our ESG analysis, some of which are more relevant to corporate (non-financial).  This provides our team with an indication of the ESG risk or opportunity which is then used as part of the investment selection and portfolio construction processes.

12.3. Additional information.[OPTIONAL]

We are happy to provide you with a comprehensive list all of the ESG factors that we use to identify ESG risks and opportunities. 


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