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Mirova

PRI reporting framework 2020

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You are in Direct - Fixed Income » ESG incorporation in actively managed fixed income

アクティブ運用している債券におけるESGの組み入れ

実施プロセス

FI 01. Incorporation strategies applied

以下を記載してください。 (1)組織でアクティブ運用する債券投資について、どのESG組み入れ戦略や組み合わせを使用しているか(2)各戦略が適用されるアクティブ運用債券投資合計の割合(+/- 5%)
SSA
0 スクリーニングのみ
0 テーマのみ
0 統合のみ
0 スクリーニング + 統合戦略
0 テーマ + 統合戦略
0 スクリーニング + テーマ戦略
100 3つの戦略すべての組み合わせ
0 組み入れ戦略を適用していない
100%
社債(金融)
0 スクリーニングのみ
0 テーマのみ
0 統合のみ
0 スクリーニング + 統合戦略
0 テーマ + 統合戦略
0 スクリーニング + テーマ戦略
100 3つの戦略すべての組み合わせ
0 組み入れ戦略を適用していない
100%
社債(非金融)
0 スクリーニングのみ
0 テーマのみ
0 統合のみ
0 スクリーニング + 統合戦略
0 テーマ + 統合戦略
0 スクリーニング + テーマ戦略
100 3つの戦略すべての組み合わせ
0 組み入れ戦略を適用していない
100%

01.2. 特定のESG組み入れ戦略を選択している理由と、使用する戦略の組み合わせを説明してください。

Mirova’s fixed income approach can be described as a conviction-based management combined with an active, medium-term allocation approach, which enables to capture opportunities within economic cycles and attractive valuation.  Security selection is at the heart of the process. We prioritize positive investment such Green and Social Bonds and issuers assisting the development of the Sustainable Development Goals.

Mirova has therefore defined proprietary ESG analysis methodologies suited to each category of issuers, so as to screen the investment universes in a relevant way (for further details, please refer to FI.01.3 and FI 04.03). It combines positive and negative screening, a thematic approach and systematic ESG integration.

Screening : Mirova has developed a comprehensive RI approach that combines positive and negative screenings.

Thematic: Mirova’s search to reconcile positive environmental, social, and financial impacts translates to a major investment in promotion and assistance for sustainability bonds, a key part of its fixed-income strategy, focusing on green, social and sustainability bonds.

Integration :For all bonds, an ESG integration analysis is performed, leading even to the exclusion of certain green, sustainability or social bonds where the sustainability opportunities are considered insufficient or sustainability risks are considered too high.

For more details, see below:

01.3. 補足情報 [任意]

Screening : Mirova has developed a comprehensive RI approach that combines positive and negative screenings.

 Screening criteria, whether positive (thematic filter) or negative (ESG filter), are established by Mirova’s in-house RI research department.

In concrete terms, for each issuer or project, the RI research team produces a Sustainability Opinion, which assesses whether the investment is compatible with the UN Sustainable Development Goals. The team’s guiding philosophy is publicly available on Mirova’s website*. The formation of this Sustainability Opinion relies on two main assessments. 

- The Sustainability Opportunities Exposure which assesses the compatibility of the company’s business model with sustainable development themes. The level of exposure is calculated in terms of the environmental or social benefits presented by an activity in comparison to a business-as-usual scenario.

- The Sustainability Risks Review, which evaluates how a company addresses environmental and social challenges, regardless of the quality of its business model. It also includes an in-depth analysis of companies’ exposition to severe and repeated controversies (major violations of the UN Global Compact and OECD principles, controversial weapons)

The “Sustainability Opportunities Exposure” is merged with the “Sustainability Risk Review Opinion” to form the overall “Sustainability Opinion”, defined on a 5-level scale:  “Negative”, “Risk”, “Neutral”, “Positive” and “Committed”. Only issuers rated “Neutral”, “Positive” or “Committed” are eligible for investment at Mirova. We thus prioritize positive investment such Green and Social Bonds and issuers assisting the development of the Sustainable Development Goals. (See question FI 04.3 for more details).

Thematic: Mirova’s search to reconcile positive environmental, social, and financial impacts translates to a major investment in promotion and assistance for sustainability bonds, a key part of its fixed-income strategy. Debt instruments offer a variety of possibilities for financial innovation in response to sustainable development issues. The most important of these are green and social bonds, which provide an ideal solution for investors seeking to make an impact. These bonds finance projects with the intent of generating positive environmental and/or social impacts. As these bonds ensure a direct link between projects and financing, they provide all issuers with the opportunity to have their low-carbon activities financed by bond investors and to benefit from improved visibility of these projects.

 Since its inception, Mirova has encouraged the development of the green and social bond market through its research, active participation in international market institutions (Green Bond Principles and Climate Bonds Initiative) and French market institutions (TEEC Label, Paris Europlace), regular, constructive dialogue with market players, and, of course, its investment efforts.

 In providing fixed-income solutions either wholly or mostly comprised of investments in green and social bonds, Mirova reinforces this position. In fact, since the creation of the company, the portion of green and social bonds held in Mirova’s portfolios has risen steadily. Today, these bonds represent more than 1,2Bn€, which represents more than 60% of Mirova’s fixed income AUM (worldwide, green and social bonds represent about 0,5% of the total fixed income market), (A1)

Integration: For all bonds, an ESG integration analysis is performed, leading even to the exclusion of certain green, sustainability or social bonds where the sustainability opportunities are considered insufficient or sustainability risks are considered too high. This systematic ESG review is applied to all bonds, including sovereign bonds, for which Mirova developed a specific module in its internal research and analysis methodology.


FI 02. ESG issues and issuer research

02.1. 発行体に対する分析の一部として体系的に調査するESG要因を明示してください。

SSA
社債(金融)
社債(非金融)
環境データ
社会的データ
ガバナンスデータ

02.2. 入ってくるESG情報のフォーマットと主な情報源を明示してください。

この情報の提供者を説明してください
この情報の提供者を説明してください
この情報の提供者を説明してください
この情報の提供者を説明してください
この情報の提供者を説明してください

具体的に記載してください

          31 ESG indicators public and trustworthy sources (World Bank, OECD, WRO, WRI, BP Energy Statistics, etc.)
        

02.3. 使用されているESG情報を簡単に説明してください。ESG組み入れ戦略全体における情報源の違いを明らかにしてください。

Mirova's Research is a collaborative process. Interactions between portfolio managers and ESG analysts are constant: they share views and opinions on assets during regular internal committees (e.g. ESG monthly committees, ad hoc meetings for each issuance), and also share a common, proprietary and internal tool “OCTAVE”. This collegial modus operandi fosters cross-teams exchanges and enables them to challenge each other’s opinions.

As regards RI Research, the analysis is conducted by a team comprised of 10 ESG analysts. They draw on the following sources of information:

Publicly available data: corporate annual / sustainable development reports, academic research, NGO reports, press, etc.
Regular exchanges with different stakeholders: issuers, trade unions, NGOs, scientific community (notably through the partnership with Cambridge University), National Contact Points for the OECD Guidelines for Multinational Enterprises.
External research: sell-side analysts (such as CA CIB, Natixis etc.), ESG rating agencies (ISS ESG, Ethix, Carbone 4, Beyond Ratings, etc.).
Specific meetings with Green and Social bonds issuers

These various sources are aggregated based on a proprietary methodology that enables different levels of in-house monitoring depending on the issuer’s weight in Mirova’s portfolio, notably for corporate issuers (Core and standard universes, explained in FI.02.4).

 

02.4. 補足情報 [任意]

A comment on each type of ESG information mentioned above in 02.2 is set forth below:

-Raw ESG Company data: raw ESG data and KPIs are collected by the in-house RI research team, either directly from issuers (sustainable development reports, annual reports, meetings or calls with CSR department or Investor Relations Deparment, etc.) or by proxy through intermediaries such as sell-side analysts or extra-financial ratings agencies. 

-ESG factor analysis: One of the primary roles of Mirova’s RI research team is to further understand  major sustainability issues and transpose them to investment-context, so as to determine to what extent business industries are exposed to risks and/ or opportunities related to sustainability. To this end, the RI analysts regularly perform thematic studies on issues relevant to sustainable development, as well as “Focus papers” that address more specific topics. In order to produce these materials, the RI Research team team relies on:

=> A broad spectrum of sources (among which academic reseach, sell-side analysis and extra-financial ratings agencies, which also produce thematic publications).

-Issuer-level analysis: the sustainability assessment of corporate issuers is performed by the RI research team on the basis of:

Their own investigations, which for the main corporate issuers included in the “Core Universe”* entails meetings with the issuers involved, as well as engagement actions when areas for improvement are identified.
Systematic meetings with Green and Social bonds issuers in order to analyse all the Green and Social Bonds in whichwe are invested
Secondary sources such as the ratings of external research providers.

-Sector-related analysis and ratings: The RI research team undertakes analysis that cover sector-related ESG risks; these analyses notably draw on sectorial analysis from sell-side analysts as well as from extra-financial ratings agencies.

-Country-related analysis or ratings: Mirova’s in-house RI Research team has defined and applies its own methodology to assess the ESG profiles of countries. This proprietary approach is based on 31 ESG indicators obtained from public and trustworthy sources (World Bank, OECD, WRO, WRI, BP Energy Statistics, etc.) Mirova chose these indicators based on how well they represent the different pillars under environment, social and governance. Furthermore, Mirova’s approach places an emphasis on energy & climate-related issues. In addition to the overall “Sustainable Impact Opinion” assigned to each sovereign issuer based on the 31 ESG indicators mentioned above, the RI Research team draws on the expertise of the specialized rating agency “Beyond Ratings” to perform a specific “Energy & Climate Risk Scoring”.

Although ESG analysis is mainly carried out by the in-house research team, the Fixed Income management team is highly knowledgeable in RI and ESG issues. Marc Briand, head of fixed income and portfolio manager, and his team, are frequent speakers on green bond seminars and conferences . They are often present in meetings with issuers when speaking about ESG issues and ask ESG questions themselves. We also hold a meeting once a month whereby the ESG and fixed income team talk about the different ESG issues and portfolio management challenges there are.  A regular update on market liquidity is also published on Mirova's website. This high level of experience in ESG issues enables an optimum ESG Integration in Mirova's fixed income investment processes.

* As regards corporate issuers specifically, the RI research team has implemented two types of coverage regarding sustainability analysis:

Core scope, mostly made up of issuers held in portfolio: good knowledge of the issuer (or event extensive for the main holdings), regular monitoring/updates and validation/review of ISS ESG's analyses on a quarterly basis (ISS ESG is Mirova’s main external research partner), meetings with companies, etc.
Standard scope, i.e. all other corporate issuers: the analysis is fully delegated to ISS ESG.

 

 


FI 03. Processes to ensure analysis is robust

03.1. 組織のESG調査プロセスの堅牢性を確保する方法を記載してください。

03.2. ESG情報または分析を投資チーム内で共有する方法を記載してください。

03.3. 補足情報 [任意]

To ensure the robustness of the ESG analysis, Mirova has built up strong RI Research capacity: its RI Research team has developed proprietary Sustainability Assessment methodologies suited to each category of issuers.

The RI Research team conducts its own investigations. The issuers included in this “Core Universe” (issuers held in portfolios), as well as sustainability bond issuers, are contacted to better understand their practices and discuss areas for improvement, as part of Mirova’s engagement approach.

To ensure a broad coverage, Mirova also relies on various providers carefully selected for the quality of their ESG analysis.  ISS ESG and Beyond ratings are the main research partners, respectively for corporate and sovereigns issuers. The ESG analysis carried out on issuers held in Mirova’s portfolio is systematically undertaken or validated internally.

The frequency of updates varies depending on the importance of the issuer in Mirova’s portfolios. Each Green and Social bond ‘s analysis is updated on an annual basis.

Periodic reviews of the quality of the research are also carried out by third-parties (EY in 2014 and 2015;  EY annual review of investment processes for Mirovas’ SRI and TEEC labels), 2018 French market authorities (AMF) SPOT audit, regular internal audits (BPCE, Natixis IM). 


A) 実施:スクリーニング

FI 04. Types of screening applied

04.1. 実施するスクリーニングの種類を記載してください。

当てはまる項目を全てを選択してください
SSA
社債(金融)
社債(非金融)
ネガティブ/ 排他的スクリーニング
ポジティブ/業界最高のスクリーニング
基準に基づくスクリーニング

04.2. 組織内でアクティブ運用している債券に適用するスクリーニングのアプローチを記載してください。

Mirova has developed a comprehensive RI approach that combines positive and negative screenings. The purpose is to primarily focus RI Research on the most appropriate environmental, social and structural innovations so that these may form a basis of investment decisions (thematic and green bond screening), but without disregarding the need to control ESG risks.

To this end, Mirova has defined proprietary ESG analysis methodologies suited to each category of issuers, so as to screen the investment universes in a relevant way (for further details, please refer to FI.04.03).

These ESG analysis methodologies are established and applied by Mirova’s in-house RI analysts, who also draw on various external providers and resources (detailed in FI.2).

There is no pre-defined frequency to review the RI criteria. The idea generation process and screening criteria, and generally speaking the entire process of extra-financial research, undergo constant improvement and refinement while offering continuity. 

Should a significant change of RI approach or criteria occur that might affect the investment process, the fund’s prospectus would be updated. In such a case, changes would be notified to the CSSF, the Luxemburg sucurities regulator, and /or to  AMF, the French securities regulator, and investors would be properly informed.

04.3. 補足情報 [任意]

Additional information about Mirova’s screening approaches,
suited to each category of issuers

 

A/ a positive screenings

-       Corporate issuers and SSA (supranational organizations / agencies / local authorities):

a growing exposure to sustainable bonds, issued by corporate issuers,  Supranational organizations or government agencies (a detailed explanation of how Mirova defines the eligible universe is provided in questions FI.8 to FI.10) 

a selection of well-rated issuers in portfolios: For each corporate issuer, the RI research team produces a Sustainability Opinion, which assesses whether the investment is compatible with the UN Sustainable Development Goals. This Sustainability Opinion, which is obtained by merging a “Sustainability Opportunity exposure” with a “Sustainability Risk Review”, is defined on a 5-level scale: “Negative”, “Risk”, “Neutral”, “Positive” and “Committed”. Only issuers rated “Neutral”, “Positive” or “Committed” are eligible for investment at Mirova.

we prioritize Green and Social bonds compared to conventional bonds for an equivalent return

-       Corporate issuers specifically:

An additional focus on sustainability-leaders and Positive Contributors. It consists in selecting primarily corporate issuers that have the ability to perform over the long term through business models that address Sustainable Development Goals. These issues are classified on 8 macro-sectors* enabling the identification of investment opportunities along the entire value chain and across all sectors of activity. The RI Research assesses the  “Sustainability Opportunity exposure” of each corporate issuer, after analysing to what extent their business models fit with one or several of the above-mentioned themes.

Overall, we prioritize green bonds issuers and issuers rated as “committed” or “positive” by the ESG research team.

 

B/ negative screening (including norms-based screening)

-       Corporate issuers and SSA (supranational organizations / agencies / local authorities)**: issuers that are badly rated for an ESG reason are excluded from Mirova's investment universes, and are therefore not allowed in portfolios (i.e. "sustainability opinions" below neutral: risk or negative). In particular, issuers exposed to severe and repeated violations of the UN Global Compact and OECD principles are badly rated and therefore excluded..

-       Non-financial corporate issuers specifically: As a result of its absolute ESG analysis that differentiates between sectors in order to favour those with positive environmental and/or social externalities (and not for dogmatic reasons), Mirova does not invest in coal, in tobacco, in military industry nor in oil E&P. Controversial weapons (antipersonnel mines and cluster bombs) are also systematically excluded.

-       SSA (Sovereign Issuers specifically): based on 31 ESG indicators, the RI Research team assigns to each country a Sustainable Impact Opinion on a 5-level scale: “negative”, “risk”, “neutral”, “positive” and “committed”. Countries that have a negative score on Governance Pillar automatically obtain a negative overall Sustainable Impact Opinion and are therefore excluded from the investment universe. Countries that have an Environmental or Social Pillar assessed as negative obtain a “Risk” overall opinion and are not eligible. Only sovereign issuers with a “neutral”, “positive” and “committed” overall Sustainable Impact Opinion can be held in Mirova’s portfolios.

 

*Energy, mobility, resources, consumption, buildings and cities, health, finance, information and communication technologies.

** Supranational organizations, government agencies and local authorities, are assessed as corporate issuers as long as they have a distinct governance from their country


FI 05. Examples of ESG factors in screening process (Private)


FI 06. Screening - ensuring criteria are met

06.1. 債券投資においてファンドスクリーニングの基準に違反がないことを確認するために組織が使用しているシステムを記載してください。

スクリーニングの種類
ネガティブ/排他的スクリーニング​
ポジティブ/業界最高のスクリーニング
基準に基づくスクリーニング​

06.2. 補足情報 [任意]

Mirova is a Core RI player. As a consequence, ESG criteria are at the heart of its investment processes. The ESG guidelines are formalized and their application is strictly monitored.
To ensure the follow-up of Environmental, Social and Governance criteria in Mirova's RI strategies, two levels of monitoring are in place:
-At the level of the RI Research team: the analysts responsible for assessing issuers monitor news and alarms so as to continually ensure the consistency of their ratings with actual practices (the monitoring of issuers and updates of sustainability opinions are previously explained in questions FI.02 to FI.04) -At the level of the Risks Constraints and Operations teams: they monitor not only the regulatory and financial constraints of portfolios, but also their minimum level of ESG quality. Among their tools, therefore, these teams have access to the ESG ratings of each issuer and ensure that none rated below "neutral" is present in the portfolio continuously.

For the latter level,  Mirova draws on Natixis IM's (its parent-company) strong risk management organisation to ensure that fund screening criteria are not breached, among which ESG constraints. To this end, the process described below is strictly applied.
Considerable attention is paid to monitor compliance with established guidelines. Given the in-depth risk monitoring and the ability to pre-test trades both for consistency with the model portfolio and for guideline compliance, the potential for breaches based on portfolio management activity should be low. Further, any breach that does occur (for example, due to market action) can be quickly discovered and resolved given the systems that actively monitor guideline compliance.
Guardian, dedicated software
Guardian leads both pre-trade and post-trade controls and provides a daily automated audit trail. All portfolio constraints are input into the Guardian dedicated software by the Risk Constraints and Operations Team (RCO) of the Legal, Monitoring (Compliance and Internal Control) and Risk Department of Ostrum AM (a sister company of Mirova and another affiliate of NIM). Guardian (Compliance module of CRD) is linked to the Charles River Development order management system and to the Apollo central record keeping system for portfolio positions, which is updated daily.
The RCO Team develops and maintains pre-trade controls for the use of portfolio managers before submitting trades. These controls are performed in real time, before a broker or counterparty has been contacted by a dealer. These pre-trade controls concern mainly eligibility and investment constraint calculations, and are intended to prevent breaches. Pre-trade compliance strengthens the asset management process by reducing risk of late corrections and end-of-day non-compliance.
In addition the RCO Team uses Guardian to perform post-trade controls. Any breaches are reviewed daily and brought to the portfolio manager for resolution. There is a formal escalation procedure if the breach is not resolved in less than 2 days. Reports on breaches are sent twice each month to the heads of investment departments and the heads of Legal, Monitoring (Compliance and Internal Control) and Risk Department.
Control mechanisms operate at three distinct levels.
- First level: controls at front office level - portfolio managers
Operational business lines are responsible for these front-level controls through self-regulation and the policies stipulated in the written procedures. Risk management is part of the portfolio managers' investment process. They use an in-house developed tool for pre-trade simulations and controls. These ex-ante controls include regulatory, contractual and internal constraints that portfolio managers take into account while constructing and managing a portfolio. The Middle Officers are in charge of the first analysis. Through standardized consistency checks, Middle Officers make sure the breach is valid and raise it, through Guardian, to the portfolio manager listed assets. The Mirova Risks Committee also reviews these procedures.
- Second level: controls at risk management team level
The second level of controls is led by the RCO Team, who monitors constraints linked to portfolios' financial management (intelligence and validation, exhaustiveness, effective control, adjustment procedure, audit trails, reporting). Controls cover either the prospectus specifications when relevant for funds, or contractual constraints for mandates including specific investment guidelines, as well as regulatory requirements. It finally implements ex-ante constraint controls on portfolios. The initial analysis is handled by the middle office. Through standardized consistency checks, this department checks that the breach is valid and raises it, through Guardian, to the portfolio manager for action. If after two alerts, action is not taken, risk managers take over from the middle office until the exception is corrected.
- Third level of control, called regular controls
Specific audits can be conducted by Natixis Investment Managers, and the quality and relevance of Mirova's internal control mechanism is reviewed 3 times a year by the Risk and Compliance Committee
*Internal audits of fund holdings are undertaken regularly, but it is to be noted that such controls are made by Risk Constraints and Operations Team (RCO), and not by the internal control team which is rather in charge of monitoring the application of internal processes.
**The in-house Research team relies on several kinds of sources described in details in FI.02


B) 実施:テーマ

FI 07. Thematic investing - overview

07.1. テーマ投資の割合を示してください。

49.2 %
0 %
4.8 %

07.2. テーマ債券投資に対する組織のアプローチについて説明してください。

Mirova's approach to thematic investing in fixed income is through green, social and sustainability bonds. We believe that by knowing the projects being financed through the green bonds, we have a greater understanding of the underlying impacts of these investments.

07.3. 補足情報 [任意]


FI 08. Thematic investing - themed bond processes

08.1. グリーン債原則に従ったテーマ債券の発行に関連する透明性や開示を奨励しているかどうか示してください。社会貢献債原則またはサステナビリティ債ガイドライン。

          We ensure that the bond framework is coherent with the company’s overall sustainability strategy and adresses the issuer's revelant environmental/social issues
        

08.2. 発行体が提供文書の記載に従って、債券収益を配分していないときに取るべき対応策を説明してください。

As described below in the « additional information » section, Mirova has developed a proprietary methodology to assess the relevance of the projects financed and to perform an ESG risk review (for further details, please refer to FI.9.3 hereafter).

In addition to this prior analysis, a monitoring of the projects is undertaken after the issuance, in order to control the fulfilment of the commitments made by the issuer, to verify the environmental and/or social impacts, and to discuss potential areas for improvement. If an issuer does not disburse bond proceeds as described in the offering documents, the PMs and RI analysts engage in dialogue him, as part of Mirova’s engagement approach. In case of unsuccessful dialogue, the bond would be automatically excluded from the investment universe or the portfolio(s) for the green bond fund. 

08.3. 補足情報 [任意]

Additional information about Mirova’s proprietary methodology
to assess sustainability bonds from an ESG perspective

As a member of the executive committee of Green Bonds Principles (GBP), Mirova  naturally endorses the Principles. Its analysis methodology is therefore based on the GBP, and even includes further requirements.

In addition to a full analysis of the issuer, each green or social bond is analyzed independently. The RI Research team scores each issue on a scale from 0 to 10. The bonds are eligible only if they obtain a minimum score of 5 on this assessment, which is based on a qualitative opinion on the following 4 criteria:

-Use of Proceeds: Mirova requires the legal documentation, at the time of issuance, to specify the use of proceeds, financing or refinancing projects with a positive environmental and/or social impact, in one or more of the following categories: Climate Change, Resources, Pollution, Biodiversity, Health and Development.

-Impact on Sustainable Opportunity: The quality of the sustainability impact of the project is analysed. 4 Evaluation levels have been defined with respect to the positive environmental and/or social impact: High, Significant, Low or No, and Negative. Only issues with a High or Significant positive impacts can qualify. Furthermore, it is under this section wherein an analysis is done of the coherence of the green / social bond framework with the overall sustainability strategy of the company. This is where the credibility and pertinence of the projects being earmarked are analysed and verified.

-ESG Risk review, at both issuer and project levels: The RI Research team conducts an analysis of the general ESG practices of the issuer, of the management of the environmental and social risks during the life cycle of the projects, and of the bond’s governance (second opinion, impacts reporting, traceability of proceeds, third opinion). If any human rights breaches are detected, the issue would automatically be excluded.

-Reporting: The issuer has to provide regular reports on the use of proceeds. A lack of reporting would lead to the exclusion of the issue from Mirova’s investment universe. The regular reporting is also used to monitor and re-assess all other aspects of the analysis as described above.


FI 09. Thematic investing - assessing impact

09.1. 組織のテーマ投資の環境的または社会的影響を評価する方法を示してください。

09.2. 補足情報 [任意]

As regards green and social bonds, the issuers must commit to providing regular reports on the use of proceeds. Such reports (at the very least annual) must provide information on the projects actually financed by the funds and the amounts allocated

They are also very much encouraged to: 

 - Provide qualitative and quantitative performance indicators measuring the actual impact of investments with respect to issues of sustainable development (e.g. tonnes of CO2 equivalent avoided)

 - Be certified by an independent third party.

In the absence of such regular reporting, the bond would not be considered as a green or social bond.

Furthermore, a monitoring of the projects is undertaken after the issuance, in order to control the fulfilment of the commitments made by the issuer, to verify the environmental and/or social impacts, and to discuss potential areas for improvement

For its part, Mirova is committed to disclosing the aggregated environmental impacts of its fixed income funds. For example, some environmental indicators are measured according a proprietary methodology and are included in Mirova Green Bond Global Fund’s monthly report, e.g. a breakdown of the portfolio by level of positive impact (significant, high) and by kind of projects (renewable energy, energy efficiency, water management, waste management, etc.). The portfolio carbon footprint is also measured and disclosed for all its funds, including fixed income portfolios. (further information about the measuring of ESG impacts is provided in FI.18)


C) 実施:ESG問題の統合

FI 10. Integration overview

10.1. ESGを従来の財務分析に統合するアプローチを説明してください。

Mirova’s fixed income management team has 3 core beliefs:

-Today, markets are not fully integrating all ESG related information, which in turn creates inefficiencies that can present attractive long-term opportunities for active investors focusing on these areas (e.g. considerable needs for energy transition that can be met through green bonds). “Positive Contributors” are therefore issuers well positioned on solutions to tackle sustainable development challenges.


-Mirova’s ESG analysis helps better avoid black swan events and prevent some default Risks: Major ESG shortcomings could expose issuers to capital destruction and ultimately default risk. This could be due, for example, to high carbon profiles (vulnerable balance sheets), innovation / disruption challenges, low level business ethics (litigation risk), etc.


-By analyzing each issuer (and Green/social project related to sustainability bonds) from an ESG and financial perspective, thanks to its optimum ESG integration approach, Mirova seeks to deliver both financial performance on a long run and positive ESG impacts

 That being said, Mirova’s fixed income expertise has a dual-purpose:

-Assisting issuers’ transition to become more sustainable;
-Creating value for client by targeting sustainable assets, which will appreciate over the long run.

This ambitious objective cannot be achieved only through screenings: the thematic filter is a valuable input in idea generation, the ESG filter helps in avoiding issuers with poor ESG practices, but ESG Integration is the third essential component of an efficient and performing RI process.

That’s why ESG factors are incorporated at each stage of the issuers selection process. Once the eligible investment universe is defined, after applying Thematic / Sustainability Bonds / ESG filters and financial filters, an in-depth financial analysis is applied to the active universe (please refer to FI.12 and FI 13 for further details)

This incorporation on ESG criteria into fundamental analysis helps in gaining a more comprehensive knowledge of opportunities and risks related to each issuers. ESG criteria are also taken into account at the portfolio construction level: for equal financial profile, the fixed income portfolio managers prioritize green / social bonds and “positive contributor bonds” as regards to sustainability.

10.2. 投資する債券の各種類に対してESG統合アプローチをどのように調整するのか説明してください。

SSA

Our ESG integration approach is described in details in FI.12 and FI.13

Nota bene: for SSA we only invest in Green and Social bonds

社債(金融)

Our ESG integration approach is described in details in FI.12 and FI.13

 

社債(非金融)

Our ESG integration approach is described in details in FI.12 and FI.13

10.3. 補足情報 [任意]


FI 11. Integration - ESG information in investment processes

11.1. ESG情報が、通常、投資プロセスの一部としてどのように使用されるのか記載してください。

当てはまるものをすべて選択してください
SSA
社債(金融)
社債(非金融)
ESG分析をファンダメンタル分析に組み込んでいる
ESG分析が発行体の内部信用評価を調整するために利用される
ESG分析が予想財務業績および将来キャッシュフロー予測を調整するために利用される
ESG分析が発行体の同業グループと比較したランキングに影響する
発行体のESG債スプレッドおよび同セクター企業に対するその相対価値が、すべてのリスクが織り込まれているか否かを把握するために分析される
各種デュレーション/満期の発行体債券へのESG分析の影響が分析される。
感度分析およびシナリオ分析が、ベースケースとESG組み込み証券評価の差を比較する評価モデルに適用される
ESG分析が、ポートフォリオのウェイティング決定に組み込まれている
会社、セクター、国、通貨が、ESGエクスポージャーの変化およびリスク制限の違反についてモニタリングされる
ESGリスクが大きい証券についてポートフォリオのESGプロファイルが検討され、ベンチマークのESGプロファイルと比較して評価される
その他(具体的に記載してください)

11.2. 補足情報 [任意]

Mirova is a pure player in the field of responsible investment. As a consequence, ESG criteria are systematically taken into account and form an integral part of all our fixed income investment processes, and for all kind of issuers, whether they be public / para-public (i.e. SSA), or corporate (both financial and non-financial). The modus operandi to ensure the use of ESG information by the investment teams is the following:
-Interactions between portfolio managers and RI analysts are constant: in addition to day-to-day informal communications, they share views and opinions on securities during regular common internal committees (e.g. monthly committees, ad hoc meetings for each issuance), as part of a collaborative process. This collegial modus operandi fosters cross-teams exchanges, trust and idea sharing. -In addition to the thematic and screenings applied upstream to define the eligible investment universe, the ESG analysis is incorporated throughout the process, including while conducting fundamental analysis and bond valuation: the ESG profile is taken into account in addition to financial criteria (credit profile, liquidity).
- The relevance of issuers' business models to the Sustainable Development Goals, is also taken into consideration as part of idea generation. Such sustainability criteria can impact selection, weighting and portfolio construction decisions: for equal financial profile, the fixed income portfolio managers prioritize "positive contributor bonds" as regards sustainability. When relevant, the latter are overweighed in portfolios. The purpose is to benefit from the strong drivers arising from sustainability issues, while generating the greatest possible positive impacts by overweighting green / social bonds and issuers rated "Committed" and "Positive" (Mirova's highest sustainability ratings).
-- Mirova’s fixed income portfolio managers and credit research analysts systematically incorporate ESG factors into the credit research notes of corporate issuers provided by their two external credit research providers: CreditSights and Spread Research. They focus on business model analysis from an ESG point of view, potential litigations issues and stranded assets. Furthermore, Mirova's fixed income portfolios are composed largely of green or social bonds** which intrinsically combine both financial and extra-financial key features. With regards to Sovereign issuers, Portfolio Managers (PMs)are provided with several key Energy & Climate-related information (details are provided in FI.13) that could be taken into account in fundamental analysis, considering: a) the importance of these issues from a sustainability perspective, b) the materiality of these factors from a financial perspective.
-Given its positioning as a Core RI player, Mirova monitors and controls*** the application of the ESG guidelines of its investment processes, to ensure that all the issuers included in its portfolios are compliant with its high ESG and thematic requirements. Mirova is fully transparent with regard to this ESG quality commitment and discloses publicly the breakdown of its portfolios in terms of "Sustainability Opinion" in monthly factsheets, available on its website: http://www.mirova.com/en-UK/p/our-funds. For fixed income portfolios, this Sustainability Opinion breakdown is also disclosed separately for each category of issuer. For Mirova Green Bond Global Fund, a breakdown of the portfolio by level of positive environmental impact (significant, high) and by kind of projects (renewable energy, energy efficiency, water management, waste management, etc.) is also disclosed.
-PMs and RI research teams co-produce internal research notes and articles for the Mirova Newsletter that combine ESG and financial perspectives ( https://www.mirova.com/en/news/corporate-newsletter-q4-2019 )

Regular publications are also released on market liquidity analysis.
* Mirova's parent company
** Issued by SSA issuers (mostly supranational and government agencies), corporate financial or corporate non-financial
*** Further explanations about the control mechanisms are provided in FI.


FI 12. Integration - E,S and G issues reviewed

12.1. 組織の統合プロセスでESG問題をどのように検討するか示してください。

E(環境)
S(社会)
G(ガバナンス)
SSA

E(環境)

S(社会)

G(ガバナンス)

社債(金融)

E(環境)

S(社会)

G(ガバナンス)

社債(非金融)

E(環境)

S(社会)

G(ガバナンス)

12.2. 組織の統合プロセスでE/S/G要因を検討する方法を詳しく説明してください。

SSA

Supranational organizations and government agencies held in our portfolios are only green or social bonds. As a consequence, ESG factors intrinsically form a part of the financial / credit profile.

Furthermore, whether for green/social or conventional bonds, the ESG analysis is incorporated throughout the process, mainly at two levels:

Upstream while defining the eligible universe, by determining to what extent the underlying project addresses sustainability issues as defined by Mirova. Furthermore, an ESG risk assessment is carried out at both issuer and project levels.
While conducting the bond evaluation, the ESG profile is also taken into account in addition to financial criteria (credit profile, liquidity).

As regards Sovereign issuers specifically, Mirova’s RI Research team has developed its own methodology for assessing countries from a sustainability perspective. This proprietary approach, based on 31 ESG indicators, is used upstream as a screening to define the eligible universe (screening criteria are detailed in FI.06).  But it also includes a specific focus on Climate and Energy matters, for both sustainability and materiality reasons. The RI Research team therefore drew on the expertise of the specialized rating agency “Beyond Ratings” to set up a “Energy & Climate Risk Scoring framework”, which aims to provide an operational tool for the integration of energy and climate risk analysis in sovereign asset management. For each country, the PMs are provided with several key Energy & Climate-related information that could be taken into account in fundamental analysis, as part of the ESG Integration process:

.Performance on each pillar of analysis: climate physical risk index, energy-climate economic risk index, energy macro-economic risk index and GHG emissions
.Ranking on each pillar of analysis
.Assessment of the level of exposure to three possible major risks: food, sea level rise and peace
.List of country strengths and weaknesses

 

社債(金融)

The sustainability bond market has expanded robustly in recent years. While agencies and supranational issuers were the first to come out with green / social bonds and are the main players on the market, more and more banks and corporate issues and even sovereign issuers are helping expand the market.

This robust expansion now provides access to a market that is diversified in terms of issuers, geographical coverage, currencies and ratings. Considering this widening green/social bond market and the robust drivers towards sustainability, Mirova continually grows its exposure to green and social bonds, including in the corporate-issuer category. As explained above (in SSA section), ESG factors intrinsically form a part of the financial / credit profile of sustainability bonds.

Furthermore, whether for green/social or conventional bonds, the ESG analysis is incorporated throughout the process, including while conducting the bond evaluation: the ESG profile is taken into account in addition to financial criteria (credit profile, liquidity).

As regards the materiality of ESG factors, it is worth highlighting that Mirova’s RI research is focused on key sectorial issues. On opportunity side, the purpose is to assess the compatibility of the issuer’s business model with sustainable development themes (that benefit or will benefit from drivers). The level of exposure is assessed in terms of environmental or social benefits presented by an activity in comparison to a business as usual scenario. On the risk side, the analysis aims at identifying the key challenges specific to the issuer’s activities depending on its sector of activity, its country risk and its position in the value chain. This targeted ESG analysis approach enables a focus on important issues that are:

- relevant from a sustainability perspective;
- the most prone to be financially material.
 

 

社債(非金融)

The ESG Integration process is the same as the one applied to financial corporate issuers (please refer to the explanation provided above

12.3. 補足情報 [任意]


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