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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 » (B) Implementation: Thematic

(B) Implementation: Thematic

FI 07. Thematic investing - overview

07.1. Indicate what proportion of your thematic investments are (totalling up to 100%):

49.2 %
0 %
4.8 %

07.2. Describe your organisation’s approach to thematic fixed income investing

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. Additional information [OPTIONAL]


FI 08. Thematic investing - themed bond processes

08.1. Indicate whether you encourage transparency and disclosure relating to the issuance of themed bonds as per the Green Bonds Principles, Social Bond Principles, or Sustainability Bond Guidelines..

          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. Describe the actions you take when issuers do not disburse bond proceeds as described in the offering documents.

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. Additional information. [Optional]

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. Indicate how you assess the environmental or social impact of your thematic investments.

09.2. Additional information. [Optional]

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)


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