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Vinci Partners Investimentos Ltda.

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.

Today we have three strategies for private credit. They are: (i) corporate credit, focused on large corporate debt; (ii) structured credit, which focuses on investment in credit rights of small and medium-sized companies (iii) long-term credit, which includes investments in fixed-income real estate (Certificates of Real Estate Receivables or debentures backed by real estate guarantees) and renewable energy ( debentures of renewable energy generation, energy efficiency transmission, among others). In view of the particularities of each type of fund, we divided the analysis into three segments.

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)

For our corporate credit funds, the analysis process will follow a similar path to equity, using sector questionnaires based on public information and assigning a rating of one to one hundred based on primarily public information and comprises the following steps:

1. The first step consists of a materiality assessment, where we filter the environmental, social and corporate governance issues relevant to the companies we are analyzing. Themes considered non-relevant or non-material are downgraded.

2. Then, using sectoral ESG assessment questionnaires, we evaluate the main indicators and metrics of the companies, based on public information. The questionnaires were developed using some of the main sustainability standards for company analysis. From these questionnaires, we were also able to identify critical gaps and recurrent ESG controversies, which can be further explored later.

The information to carry out these analyzes comes especially from annual and sustainability reports of companies, providers of financial and sustainability information, direct questions from our analysts to the companies analyzed, as part of our traditional research process, as well as news.

3. In the subsequent stage, we assign an overall score and theme for the companies analyzed, ranging from one to one hundred. This score is a summary of the companies' ESG performance, which allows us to create sectoral and general rankings.

4. Finally, the ESG analysis is integrated into our investment analysis based on the following actions:

  • Veto investment on debt of assets / issuers with insufficient ESG performance;
  • Limitation on the portfolio's exposure to assets / issuers with ESG performance below the established limit;
  • In-depth analysis and quantification of the critical ESG themes identified;

10.3. Additional information [OPTIONAL]

N/D


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]

In addition, in our credit products we seek to promote positive practices in the market through investments in securities that have a positive socio-environmental impact, such as green, social and sustainability bonds. In addition, we were selected as managers of the first renewable energy fund in Brazil


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)

Our approach to integrating ESG into credit funds comprises the following steps:

1. The first step consists of a materiality assessment, where we filter the environmental, social and corporate governance issues relevant to the companies we are analyzing. Themes considered non-relevant or non-material are downgraded.

2. Then, using sectoral ESG assessment questionnaires, we evaluate the main indicators and metrics of the companies, based on public information. The questionnaires were developed using some of the main sustainability standards for company analysis. From these questionnaires, we were also able to identify critical gaps and recurrent ESG controversies, which can be further explored later.

The information to carry out these analyzes comes especially from annual and sustainability reports of companies, providers of financial and sustainability information, direct questions from our analysts to the companies analyzed, as part of our traditional research process, as well as news.

12.3. Additional information.[OPTIONAL]

N/D


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