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EARNEST Partners

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.
SSA
0 Screening alone
0 Thematic alone
0 Integration alone
0 Screening + integration strategies
90 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
10 No incorporation strategies applied
100%
Corporate (financial)
0 Screening alone
0 Thematic alone
0 Integration alone
0 Screening + integration strategies
75 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
25 No incorporation strategies applied
100%
Corporate (non-financial)
0 Screening alone
0 Thematic alone
0 Integration alone
0 Screening + integration strategies
100 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
0 No incorporation strategies applied
100%
Securitised
0 Screening alone
0 Thematic alone
0 Integration alone
0 Screening + integration strategies
100 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.

EARNEST Partners utilizes an investment philosophy and process grounded in the concept of sustainability. As part of its fundamental review process, the firm assesses the environmental, social and corporate governance risks and opportunities of every company we look to potentially add to the portfolio. Economic empowerment defines and ties together all of the unique U.S. Agency and municipal investing targeted by the strategy, while we believe that the best corporate investments engage in sustainable endeavors as well. Generating more economic activity with fewer resources or providing economically critical services that allow us to function as a society have proven to be sustainable investments. The EARNEST Partners fixed income investment team proactively seeks these types of programs and borrowers. As opportunities that fit within the philosophy and process of the strategy are identified, the investment team vets each idea with the goal of constructing a balanced, diversified strategy of sustainable investments. 

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:

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

03.3. Additional information. [Optional]


(B) Implementation: Thematic

FI 07. Thematic investing - overview (Private)


FI 08. Thematic investing - themed bond processes

08.1. Indicate whether you encourage transparency and disclosure relating to the issuance of themed bonds as per the Green Bonds Principles, Social Bond Principles, or Sustainability Bond Guidelines..

08.2. Describe the actions you take when issuers do not disburse bond proceeds as described in the offering documents.

EARNEST Partners has not encountered an occurrence of this. If this were to occur, we would engage the issuer. 

08.3. Additional information. [Optional]


FI 09. Thematic investing - assessing impact

09.1. Indicate how you assess the environmental or social impact of your thematic investments.

          As part of our on-going fundamental evaluation of each investment, environment and social impacts are evaluated for changes from our initial assessment.
        

09.2. Additional information. [Optional]


(C) Implementation: Integration

FI 10. Integration overview

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

As part of its fundamental review process, the firm assesses the environmental, social and corporate governance risks and opportunities of every issue we look to potentially add to the portfolio.  

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

SSA

For traditional government, agency, and municipal debt the team looks to identify the positive impacts the borrowing will have on the program’s targeted population. 

Corporate (financial)

 Depending on the nature of the borrowing or the underlying business, the review will incorporate different assessments as we evaluate the impacts our lending will have on the population.

Corporate (non-financial)

 Depending on the nature of the borrowing or the underlying business, the review will incorporate different assessments as we evaluate the impacts our lending will have on the population.

Securitised

As part of its fundamental review process, the firm assesses the environmental, social and corporate governance risks and opportunities of every issue we look to potentially add to the portfolio.  Depending on the nature of the borrowing or the underlying business, the review will incorporate different assessments as we evaluate the impacts our lending will have on the population.

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)
Securitised
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

Securitised

Environmental

Social

Governance

12.2. Please provide more detail on how you review E, S and/or G factors in your integration process.

SSA

For traditional government, agency, and municipal debt the team looks to identify the positive impacts the borrowing will have on the program’s targeted population. 

Corporate (financial)

 Depending on the nature of the borrowing or the underlying business, the review will incorporate different assessments as we evaluate the impacts our lending will have on the population.

Corporate (non-financial)

 Depending on the nature of the borrowing or the underlying business, the review will incorporate different assessments as we evaluate the impacts our lending will have on the population.

Securitised

As part of its fundamental review process, the firm assesses the environmental, social and corporate governance risks and opportunities of every issue we look to potentially add to the portfolio.  Depending on the nature of the borrowing or the underlying business, the review will incorporate different assessments as we evaluate the impacts our lending will have on the population.

12.3. Additional information.[OPTIONAL]


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