*Combination of the above mentioned strategies: Through the combination of screening and integration strategies, we reduce in an efficient manner the probability of failing to identify ESG-related issues involving our investments. By first applying the screening strategy, dismissing companies linked with undesired industries is straight-forward and does not require any time-consuming process. In a second step, only if the potential borrowing company fulfilled the screening criteria, integrating the ESG factors in the investment analysis allows to analyse in more detail the compliance of that company to the ESG principles.
Patrimonium applies exclusion criteria on the following industries:
e.g. Weapons & Ammunition manufacturing
e.g. Oil and Gas exploration, Coal, Nuclear energy
e.g. Tobacco, Alcohol
e.g. Pelts, animal testing
e.g. Prostitution, Gambling, Pornography
Furthermore, land as a resource captures full attention from Patrimonium. Indeed, activities requiring deforestation imply alarming climate risks as well as further potential issues (endangered animal species, biodiversity reduction or confrontation with native tribes living in the affected regions). Patrimonium refuses to finance companies linked with activities requiring direct deforestation.
Patrimonium also carefully investigates methane emissions and potential gas leaks linked to the activities of our loan candidates. For example, energy producers using fracking methods represents a risk of methane leak which Patrimonium considers as too high to bear. Consequently, fracking is included in the list of industries that are out of our investment universe.
To integrate the ESG analysis into our investment decision, Patrimonium’s analysts assess various relevant ESG factors for each ESG dimension. A sub- score is first obtained for each ESG dimension and then, an overall ESG score is computed based on the three sub-scores. See below various examples of ESG factors contributing to the sub-scores:
- Company’s negative impact on water
- Company’s waste
- To which extent does the company’s product harms by anyway its consumers
- Negative impact of the company’s activity on the community (public health endangered, force to relocate populations, activity linked with nuisance)
- Shareholders’ background
- Occurrence and extent of extraordinary payments to executives of the company