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Pendal

PRI reporting framework 2020

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

(A) Implementation: Screening

FI 04. Types of screening applied

04.1. Indicate the type of screening you conduct.

Select all that apply
SSA
Corporate (financial)
Corporate (non-financial)
Negative/exclusionary screening
Positive/best-in-class screening
Norms-based screening

04.2. Describe your approach to screening for internally managed active fixed income

  • Our Ethical/Exclusionary screening approach screens issuers based on material business involvement in activities, the most common being tobacco, alcohol, gaming, weapons, pornography, thermal coal and oil sands. Materiality is typically 10% of revenue.
  • All things being equal, we apply an active positive tilt on issuers who rank high on sustainability scores, Issuers with low scores will be excluded.
  • In addition, "Use of Proceeds" holdings go through a two-step process where we assess the sustainability of the issuer and the security - both steps need to be cleared for a security to be deemed investable. The security is deemed investable if it is certified Green, Climate, Social or Sustainable based on an approved industry standard (e.g. Climate Bond Initiative or International Capital Markets Association Green Bond Principles).
  • Screening criteria is applied every month and portfolio changes are communicated in the monthly performance reports.

04.3. Additional information. [Optional]


FI 05. Examples of ESG factors in screening process

05.1. Provide examples of how ESG factors are included in your screening criteria.

Type of fixed income

ESG factors

Screening

Description of how ESG factors are used as the screening criteria

Select fixed income funds will not invest in issuers with material business involvement in the extraction of thermal coal and oil sands production. We generally consider that an issuer has a material business involvement in an activity if 10% or more of its total revenue is derived from that activity.

Type of fixed income

ESG factors

Screening

Description of how ESG factors are used as the screening criteria

Select fixed income funds will not invest in issuers with material business involvement in manufacture or provision of gaming facilities, due to social harms from gambling. We generally consider that an issuer has a material business involvement in an activity if 10% or more of its total revenue is derived from that activity.

Type of fixed income

ESG factors

Screening

Description of how ESG factors are used as the screening criteria

Select fixed income funds will not invest in issuers with unethical business conduct and poor governance, as determined through our proprietary sustainability assessment.

Type of fixed income

ESG factors

Screening

Description of how ESG factors are used as the screening criteria

Select fixed income funds positively screen for issuance relating to products or services which contribute to positive environmental outcomes. For example, we actively seek opportunities to invest in Green Bonds and other sustainability bonds, which support climate change, water security and other environmental benefits.

Type of fixed income

ESG factors

Screening

Description of how ESG factors are used as the screening criteria

Select fixed income funds positively screen for issuance relating to products or services which contribute to positive social outcomes. For example, we actively seek opportunities to invest in Social Bonds and corporate debt which supports education, affordable housing and other benefits to the community.

05.2. Additional information.


FI 06. Screening - ensuring criteria are met

06.1. Indicate which systems your organisation has to ensure that fund screening criteria are not breached in fixed income investments.

Type of screening
Checks
Negative/exclusionary screening
Positive/best-in-class screening

06.2. Additional information. [Optional]

The audit of fund holdings for screening purposes are addressed through Pendal’s annual internal controls report (GS007) The controls are tested on a sample basis and include the controls covering the establishment of investment guidelines system and monitoring and escalation of breaches.


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