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Mercy Investment Services, Inc.

PRI reporting framework 2020

You are in Indirect – Manager Selection, Appointment and Monitoring » Appointment

Appointment

SAM 04. Appointment processes (listed equity/fixed income)

04.1. Indicate if in the majority of cases and where the structure of the product allows, your organisation does any of the following as part of the manager appointment and/or commitment process

04.2. Provide an example per asset class of your benchmarks, objectives, incentives/controls and reporting requirements that would typically be included in your managers’ appointment.

Asset class

Benchmark

ESG Objectives

          The objective of the portfolio is to outperform the benchmark over the long-term, net of fees and expenses, while giving special consideration to certain environmental, social and governance criteria.
        
          Mercy Investment Services will seek investment in companies whose products, services or activities are consistent with the values, mission and Direction Statement of the Sisters of Mercy and the social teachings of the Catholic Church. Investments in securities will be avoided in companies that engage in the following: (listing included).
        
          The manager will compile impact data for the portfolio annually and provide to Mercy Investment Services.
        
          Although not specifically included in Invesmtent Managment Agreements, Mercy Investment Services receives verbal commitments from active investment managers to engage companies.
        

Incentives and controls

Reporting requirements

Benchmark

          The manager is expected to generate returns that exceed the Bloomberg Barclays U.S. Aggregate Index, net of management fees, on an annualized basis over a market cycle (3-5 years).
        

ESG Objectives

          The objective of the portfolio is to maximize total return through income and capital appreciation in the broad U.S. dollar denominated fixed income market, while giving special consideration to certain environmental, social and governance criteria and maintaining exposure to impact securities.
        
          Mercy Investment Services will seek investment in companies whose products, services or activities are consistent with the values, mission and Direction Statement of the Sisters of Mercy and the social teachings of the Catholic Church. Investments in securities will be avoided in companies that engage in the following: (listing included).
        
          The manager will compile impact data for the portfolio annually and provide to Mercy Investment Services.
        

Incentives and controls

Reporting requirements

Benchmark

          Targeted returns of 1.8x and 15% IRR, gross; 1.6x and 12% IRR, net
        

ESG Objectives

          The fund aims to make credit-oriented investments that focus on (1) companies, assets and special situations that generate current income and capital appreciation, (2) the investments pass environmental, social and governance (“ESG”) criteria, and (3) the investments can demonstrate measurable societal or environmental impact.
        
          The fund intends to focus on companies within six sub-sectors or verticals: agriculture & water; waste-to-value & recycling; smart cities, transportation & land use; distributed renewables; energy efficiency, storage & microgrids; and enterprise and infrastructure resiliency.
        
          The fund plans to issue an annual report, produced by Tideline, with a qualitative description of each company’s impact thesis, their alignment to the UN SDGs, and one-to-three pre-identified key KPIs (based off IRIS+ metrics) that the fund will actively measure.
        

Incentives and controls

Reporting requirements

04.3. Indicate which of these actions your organisation might take if any of the requirements are not met

04.4. Provide additional information relevant to your organisation`s appointment processes of external managers. [OPTIONAL]

          Mercy Investment Services generally allocates to managers who invest in a combination of SSA, financial and nonfinancial corporate, and securitized fixed income securities. Although the amounts have been segregated as requested in the Organizational Overview, the process of addressing ESG issues for externally managed fixed income portfolios is identical within all fixed income asset classes.
        

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