Our investment processes currently take into account certain ESG factors. Good companies typically have good business practices in corporate governance, environmental and social issues. Whilst the investment team takes these issues into account as part of the fundamental analysis, these criteria are not the main criteria for the investment team to exclude or include positions in the portfolio. That said, there are certain tools and data sources at the disposal of the team which aid in the decision-making process.
ESG data is available within our proprietary portfolio management tool, PAMFolio. These have been available to the investment team since 2014 and include for example:
- ISS Governance scores and reports
- Sustainalytics Controversy scores, Corporate governance scores, ESG Risk ratings (covering all three of E, S and G), product involvement and respective reports
- CFRA Creative Accounting reports
- Carbon data (direct emsissions and fossil fuel reserves)
Rating alerts have been put in place by the Fixed Income Risk Team so that our team is quickly able to detect a deterioration (or improvement) in these scores. These alerts take the form of an automatic daily report sent by email to all investment teams, tailored to their respective universe, and any further investigation can be carried out by examining the historical data in the Fixed Income Risk Team’s Tableau database.
In terms of hard exclusions, we systematically exclude companies that are involved in cluster ammunition, anti-personnel landmines, chemical & biological weapons as defined by the Pictet Group Directive on Controversial Weapons. Country exclusions are also defined by a Pictet Group directive and enforced using a pre-trade check in PAMFolio.