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Pictet Asset Management

PRI reporting framework 2020

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ESG incorporation in actively managed listed equities

Implementation processes

LEI 01. Percentage of each incorporation strategy

01.1. Indicate which ESG incorporation strategy and/or combination of strategies you apply to your actively managed listed equities; and the breakdown of your actively managed listed equities by strategy or combination of strategies.

ESG incorporation strategy (select all that apply)

Percentage of active listed equity to which the strategy is applied — you may estimate +/- 5%
2 %
Percentage of active listed equity to which the strategy is applied — you may estimate +/- 5%
88 %
Percentage of active listed equity to which the strategy is applied — you may estimate +/- 5%
10 %
Total actively managed listed equities 204%

01.2. Describe your organisation’s approach to ESG incorporation and the reasons for choosing the particular strategy/strategies.

At Pictet Asset Management we offer a complete spectrum of investment solution that incorporate ESG factors in multiple ways. These include:

1. ESG Integration into long-only strategies (eg equity & fixed fincome long only strategies). This is driven by our conviction that ESG considerations can help us make better long-term investment decisions.

2. Best-in-class strategies (eg European Sustainable Equities, Emerging Sustainable Equities, Swiss Sustainable Equities, Global Sustainable Credit, Sustainable EMD Blend). These are designed for clients who wish to actively support and benefit from superior corporate responsability.

3. Environmenta/ Social thematic strategies (eg Global Environmental Opportunities, Nutrition, Clean Energy, Timber, Water, Smart City, Biotech, Health). These offer the possibility to invest in products and services that provide solutions to environmental problems. ESG factors are fully integrated into company analysis.

In all three cases we apply a firm-wide exclusion of companies involved in controversial weapons.

01.3. If assets are managed using a combination of ESG incorporation strategies, briefly describe how these combinations are used. [Optional]

"Screening alone" include strategies which implement a best-in-class approach. Additionally, we apply a firm-wide exclusion of companies involved in controversial weapons.

"Screening and integration strategies" include our conventional strategies which integrate ESG factors into their investment decision process and exclude companies involved in controversial weapons. Additionally, we apply a firm-wide exclusion of companies involved in controversial weapons.

"All three strategies combined" include our Environmental & Social thematic strategies. These invest in companies with clear and strategic exposure to companies that contribute to solve environmental / social challenges through innovation, technology and intelligent use of natural resources. ESG considerations are integrated in the fundamental analysis of companies and have a direct impact on the holding weights in the portfolio. Additionally, we apply a firm-wide exclusion of companies involved in controversial weapons.

 


LEI 02. Type of ESG information used in investment decision (Private)


LEI 03. Information from engagement and/or voting used in investment decision-making (Private)


(A) Implementation: Screening

LEI 04. Types of screening applied

04.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by

Description

  • All Pictet Asset Management: Exclusions of controversial weapons (anti-personnel landmines and cluster munitions)
  • Sustainable equities funds: Armament, nuclear, tobacco, gambling, GMOs, adult entertainment
  • Sustainable corporate fixed income funds:gaming, tobacco, alcohol, adult entertainment, defence
  • Environmental thematic funds: ad-hoc exclusions depending on strategy (e.g. GMO, coal/oil, weapons)

Screened by

Description

Best-in-class strategies also apply negative/exclusionary screens.

Screened by

Description

We subscribe to controversy analysis of around12'000 companies. Key areas covered include Environment Supply Chain Incidents, Operations Incidents, Product & service Incidents, Business Ethics Incidents, Governance Incidents, Public Policy Incidents, Customer Incidents, Special Supply Chain Incidents and Society & Community Incidents. Companies with the worst ratings are deemed to be in breach with the UN Global Compact Principles, UN Guiding Principles on Business and Human Rights, International Labor Organization Conventions and United Nations Convention Against Corruption.

04.2. Describe how you notify clients and/or beneficiaries when changes are made to your screening criteria.

Screening criteria are reviewed on a regular basis  in line with new ESG issues (e.g. Industry standards, policy and regulatory developments) and communicated through our standard marketing material.


LEI 05. Processes to ensure screening is based on robust analysis

05.1. Indicate which processes your organisation uses to ensure ESG screening is based on robust analysis.

          Whenever we identify a problem we systematically feed it back to our research provider for corrective and preventive action.
        

05.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your ESG screening strategy.

05.3. Indicate how frequently third party ESG ratings are updated for screening purposes.

05.5. Additional information. [Optional]


LEI 06. Processes to ensure fund criteria are not breached (Private)


(B) Implementation: Thematic

LEI 07. Types of sustainability thematic funds/mandates

07.1. Indicate the type of sustainability thematic funds or mandates your organisation manages.

07.2. Describe your organisation’s processes relating to sustainability themed funds. [Optional]

Our environmental / social theme funds integrate ESG considerations into the investment process in three ways.

  1. A strict theme definition by which we only invest in companies with clear and strategic exposure to the underlying environmental/ social theme (typically above 20%).
  2. Furthermore, we integrate ESG consideration in our assessment of management quality and business franchise. Investment managers use a variety of sources for this purpose.
  3. Systematic and theme-specific exclusions (eg weapons, coal etc.)

(C) Implementation: Integration of ESG factors

LEI 08. Review ESG issues while researching companies/sectors

08.1. Indicate the proportion of actively managed listed equity portfolios where E, S and G factors are systematically researched as part of your investment analysis.

ESG issues

Proportion impacted by analysis
Environmental

Environmental

Social

Social

Corporate Governance

Corporate Governance

08.2. Additional information. [Optional]


LEI 09. Processes to ensure integration is based on robust analysis

09.1. Indicate which processes your organisation uses to ensure ESG integration is based on robust analysis.

09.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your integration strategy.

09.3. Indicate how frequently third party ESG ratings that inform your ESG integration strategy are updated.

09.5. Describe how ESG information is held and used by your portfolio managers.

09.6. Additional information. [Optional]


LEI 10. Aspects of analysis ESG information is integrated into (Private)


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