General asset selection principles have been determined, which apply to all managed portfolios, regardless of whether they are part of the ISR strategy. These are principles that exclude investment in certain economic sectors because of their perverse effects on society. They also define in which countries investment in sovereign debt can be made.
The following principles will be met:
1) Those companies will be excluded from the investment:
to. Manufacturers of weapons, explosives or military vehicles
b. Manufacturers of specific components for the military industry (> 10% revenue)
c. Tobacco manufacturers
d. Other companies with specific income from the tobacco sector (> 30% revenue)
2) The sovereign debt of countries that are classified with a medium or low HDI according to the UN will be excluded from the investment.
For the funds that are part of the ESG strategy, Fonengin ISR and Caja Ingenieros Environment ISR, a company selection model based on integration has been developed that provides greater added value due to the analysis of its extra-financial risks. It starts from the characteristic universes of each of the funds, detailed below, but also takes into account the basic principles of exclusion indicated above.
The fundamental part of the integration model is a process that qualifies how companies are acting in the area of responsibility, so that it is possible to include the ESG risk management carried out by the company in the financial valuation. With the information that the manager obtains through a supplier or in other ways, it determines if it should include an ASG premium in the valuation or, on the contrary, make a discount, for what ends up influencing the decision to include the company in the ESG strategy or in the weight assigned to the position.