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Patrimonium Asset Management 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.

The analysis of ESG risk is a main element of the whole investment process. Within the initial screening of an investment opportunity, a red-flag analysis is conducted in order to identify potential ESG risk factors. In case of existing ESG-issues which do not lead yet to an immediate rejection of the investment opportunity, the relevant topic becomes a crucial part of the subsequently conducted due diligence analysis. For given investments, ESG compliance is widely ensured by several elements structured in the loan contracts which is internally monitored on a regularly basis.

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)

We invest into one asset class, hence there is no differenciation.

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]


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)

The analysis of the ESG is not only conducted on the legal issuer (borrowing entity) of the credit facility but on the whole group.  

Environmental Issue: We evaluate:

- the company’s negative impact on climate during the whole production process,

- its waste production (non-degradable waste, waste management),

- its negative impact on water,

- its negative impact on land,

- its polluting emissions (methane, CO2)

Social Issue: In a first step, we evaluate the social issues which can be inferred from the available documentation. Then, we evaluate the likelihood that

- the worker conditions are insufficient (unhealthy, unsafe work environment, no diversity, unequal opportunities, no development opportunities)

- the human rights are not honoured by the company

- the community is negatively impacted by the company’s activities (public health endangered, force to relocate populations, activity linked with nuisance)

- the product or service provided by the company harms by anyway its consumers (unhealthy, unsafe product, integrity, data privacy of consumers not considered)

Governance Issue: In a first step, we evaluate the governance issues which can be inferred from the available documentation. Then, we assess the likelihood that:

- the company is fiscally not clean / involved with money laundering,

- the executives receive inadequate pays,

- corruption interferes within the company business,

- the nomination process of directors in not in the best interest of the company (advisory board structure),

- the cyber security aspect is neglected by the company

As company level data concerning ESG issues are usually not disclosed, we assess the likelihood of each risk elements based on the information we have regarding the industry, country, assets, shareholder structure, product, raw materials, etc. related to the analysed company.

If an ESG-related issue cannot be excluded, we further investigate the relevant elements until sufficient information is provided to evaluate the situation.

12.3. Additional information.[OPTIONAL]


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