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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) 実施:ESG問題の統合

FI 10. Integration overview

10.1. ESGを従来の財務分析に統合するアプローチを説明してください。

It is our firm belief that ESG considerations is essential in order to be able to assess the risks and opportunities which could impact an issuers creditworthiness, both in the short- and long-term. For this reason, we have decided to take a systematic approach to ESG incorporation. During the last 1 ½ year we have been working on a more close collaboration between the fixed income team and ESG team. We have held dedicated workshops focusing on materiality at sector level, as well as discussed ESG in relation to the different characteristics which could influence our credit view (such as pricing, bond maturity and term structure). In particular, we have discussed how different time horizons for certain ESG risks could yield different investment decisions. This work has improved the overall knowledge in the fixed income team and the ESG team. Below follows a more elaborate description of our investment process.

ESG is a standard element in the credit evaluation and investment process. If we do not consider that the ESG risks would fundamentally impact the issuers credit quality or default risk, or if we believe that the bond issuer has the financial strength to mitigate the risks, these risks are not considered in the investment decision. The main goal is to identify potential downside risks, for example to avoid costly scandals that could affect an issuer's ability to repay debt.

  • PM’s inform the ESG team of potentially interesting companies and new issuances. An ESG Due Diligence is conducted to ensure that it meets our minimum requirements, if it is a new issuer which have not been assessed before. The ESG team makes a qualitative assessment of the company's ESG profile and makes a recommendation (positive / neutral / negative outlook). The ESG score from the external service provider, which is a more of a quantitative score, is thus complemented by our own qualitative assessment.
  • We regularly monitor the ESG risks of our bond holdings. The credit analysis is partly built on a four-dimensional assessment of business risk; industry analysis, competitive position, management and country risk. The ESG factors can influence all of these dimensions of the business risk. The PM can decide to notch the business risk up or down, depending on how ESG factors weigh on and impact the credit credentials. These adjustments to the business risk are documented in our internal systems. 
  • We have developed sector specific ESG scorecards including the most material aspects that could affect specific industries. These scorecards have been developed by the ESG-team in collaboration with the portfolio managers, outlining the ESG factors based on their potential risk and importance for the credit valuation. It is the PM’s ultimate responsibility to assess how these factors impacts the pricing of the bond, such as how these risks and / or opportunities may affect the company's cash flow and creditworthiness.
  • If an issuer has high ESG risk rating, and if the ESG team has a negative outlook for the specific issuer, this is discussed at regular meetings with the portfolio team and the ESG team (monthly). If we continue to have a negative view of the company's ESG profile, and do not see the necessary improvements, we can choose to divest. These regular meetings can also be dedicated to a specific sector to discuss which ESG factors we currently deem relevant to the credit assessment. We discuss individual corporates and sectors on a regular basis also to identify any material changes to their ESG profile.
  • We could decide to invest in a company with a high ESG risk, if we consider that the company has the potential to improve or if we believe that we are compensated for the risk. ESG factors are thus evaluated alongside the financial credit metrics.

The strength of our integration process is that we have a close and ongoing dialogue between the ESG team, credit analysts and portfolio managers. Together we form a view and determine the impact of ESG related issues in our bond selection process.

10.2. 投資する債券の各種類に対してESG統合アプローチをどのように調整するのか説明してください。

社債(金融)

See FI 10.1 above. We use sector specific scorecards to identify the most material ESG issues, i.e. issues that are credit relevant.

Examples of material issues which we have a particular focus on in the financial sector-scorecard: climate-related risks, ESG integration, business ethics and compliance, product quality and governance, management incentives and risk & resilience. We believe that these metrics gives a general indication of how corporate financial issuers are positioned.

The scorecard is used by the PM’s both once a year when the credit assessment of each issuer is updated, but also when evaluating a new bond issuer. Sometimes when we lack ESG data, the scorecard is used as a basis for dialogue with the issuer.

The ESG team also makes a qualitative assessment of the company's ESG profile and makes a recommendation (positive / neutral / negative outlook). The ESG data from the external service provider, which is a more of a quantitative score, is thus complemented by our own qualitative assessment.

These metrics are subject to change and are regularly reviewed. But in general we our assessment of corporate (financial) is tilted more towards governance issues.

社債(非金融)

See above. As described for the financial bond issuers, we use sector specific scorecards to identify the most material ESG issues, i.e. issues that are credit relevant.

For example, we have developed scorecards for sectors to which we have a greater exposure in our portfolios such as real estate, transportation and energy & utilities.

The scorecard is used by the PM’s both once a year when the credit assessment of each issuer is updated, but also when evaluating a new bond issuer. Sometimes when we lack ESG data, the scorecard is used as a basis for dialogue with the issuer.

The ESG team also makes a qualitative assessment of the company's ESG profile and makes a recommendation (positive / neutral / negative outlook). The ESG data from the external service provider, which is a more of a quantitative score, is thus complemented by our own qualitative assessment.

10.3. 補足情報 [任意]


FI 11. Integration - ESG information in investment processes

11.1. ESG情報が、通常、投資プロセスの一部としてどのように使用されるのか記載してください。

当てはまるものをすべて選択してください
社債(金融)
社債(非金融)
ESG分析をファンダメンタル分析に組み込んでいる
ESG分析が発行体の内部信用評価を調整するために利用される
ESG分析が予想財務業績および将来キャッシュフロー予測を調整するために利用される
ESG分析が発行体の同業グループと比較したランキングに影響する
発行体のESG債スプレッドおよび同セクター企業に対するその相対価値が、すべてのリスクが織り込まれているか否かを把握するために分析される
各種デュレーション/満期の発行体債券へのESG分析の影響が分析される。
感度分析およびシナリオ分析が、ベースケースとESG組み込み証券評価の差を比較する評価モデルに適用される
ESG分析が、ポートフォリオのウェイティング決定に組み込まれている
会社、セクター、国、通貨が、ESGエクスポージャーの変化およびリスク制限の違反についてモニタリングされる
ESGリスクが大きい証券についてポートフォリオのESGプロファイルが検討され、ベンチマークのESGプロファイルと比較して評価される
その他(具体的に記載してください)

11.2. 補足情報 [任意]

We have developed sector specific ESG scorecards including the most material aspects that could affect specific industries. These scorecards have been developed by the ESG-team in collaboration with the portfolio managers, outlining the ESG factors based on their potential risk and importance for the credit valuation. The scorecard is used by the PM’s both once a year when the credit assessment of each issuer is updated/adjusted. But it is also used by the PM when evaluating a new bond or issuer, alongside other credit-relevant metrics such as the issuer's bond spreads and term structure.

The ESG team use an ESG risk monitoring system to monitor for ESG risks in the portfolio. Changes to the ESG risk exposure and high-risk companies are regularly discussed


FI 12. Integration - E,S and G issues reviewed

12.1. 組織の統合プロセスでESG問題をどのように検討するか示してください。

E(環境)
S(社会)
G(ガバナンス)
社債(金融)

E(環境)

S(社会)

G(ガバナンス)

社債(非金融)

E(環境)

S(社会)

G(ガバナンス)

12.2. 組織の統合プロセスでE/S/G要因を検討する方法を詳しく説明してください。

社債(金融)

E, S and G factors and their underlying indicators are derived from different data providers, and feed into the ESG scorecard used by PM’s.

As a part of our fundamental ESG due diligence and analysis, we always cover the following standard ESG factors; environmental governance, climate change, resource use, human rights, employee relations, CSR strategy and business ethics.

Material issues covered in ESG scorecard (specific for corporate financial issuers) are climate-related risks, ESG integration, business ethics and compliance, product quality and governance, management incentives and risk culture & resilience. In terms of financial bond issuers, the ESG factor relevance is more skewed towards social and governance issues.

社債(非金融)

E, S and G factors and their underlying indicators are derived from different data providers, and feed into the ESG scorecard used by PM’s.

As a part of our fundamental ESG due diligence and analysis, we always cover the following standard ESG factors; environmental governance, climate change, resource use, human rights, employee relations, CSR strategy and business ethics.

The materiality of different ESG factors depend on the particular issuer and industry.

12.3. 補足情報 [任意]


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