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Mirova

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You are in Direct - Fixed Income » ESG incorporation in actively managed fixed income » (C) Implementation: Integration

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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