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Keva

PRI reporting framework 2020

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ESG incorporation in actively managed fixed income

Implementation processes

FI 01. Incorporation strategies applied

Indicate (1) Which ESG incorporation strategy and/or combination of strategies you apply to your actively managed fixed income investments; and (2) The proportion (+/- 5%) of your total actively managed fixed income investments each strategy applies to.
Corporate (financial)
0 Screening alone
0 Thematic alone
0 Integration alone
100 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
0 No incorporation strategies applied
100%
Corporate (non-financial)
0 Screening alone
0 Thematic alone
0 Integration alone
100 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
0 No incorporation strategies applied
100%

01.2. Describe your reasons for choosing a particular ESG incorporation strategy and how combinations of strategies are used.

According to our investment philosophy we invest in quality issuers of financial and non-financial corporates. ESG factors are integrated in general, economic, industry, issuer and financial analysis to evaluate the quality of the issuers we invest in. ESG integration is an integral part of our investment decisions.  In addition, our porftolio is screened twice a year by an external service provider for ESG violations or controversies. 

01.3. Additional information [Optional].


FI 02. ESG issues and issuer research (Private)


FI 03. Processes to ensure analysis is robust

03.1. Indicate how you ensure that your ESG research process is robust:

03.2. Describe how your ESG information or analysis is shared among your investment team.

03.3. Additional information. [Optional]

We have access to the reseach portal and weekly alerts issued by our external ESG research and service providers. In addition, twice a year the external service provider screens our portfolio and reports us the ESG violations, the engagement activities and discussions with these issuers as well as any progress. All this information is passed to the portfolio manager and is made available on our intranet immediately.


(A) Implementation: Screening

FI 04. Types of screening applied

04.1. Indicate the type of screening you conduct.

Select all that apply
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

The portfolio is screened twice a year, the screening is norms-based and it it screened by compliance with international conventions (e.g. UN Global Compact, International Labour Organization Conventions and OECD Guidelines for Multinational Enterprises), the screening is conducted by an external service provider which has a defined classification and recommendation framework. Controversial weapons are excluded from our investments.

04.3. Additional information. [Optional]


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


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
Norms-based screening

06.2. Additional information. [Optional]

We have internal processes in place to make sure that the excluded companies are not invested in. 


(C) Implementation: Integration

FI 10. Integration overview

10.1. Describe your approach to integrating ESG into traditional financial analysis.

Analysis of ESG factors are integrated in all internally, actively managed financial and non-financial corporate debt investments. Financial and ESG analysis are combined in evaluating investments.

10.2. Describe how your ESG integration approach is adapted to each of the different types of fixed income you invest in.

Corporate (financial)

ESG factors are evalued how they affect economic growth, macro themes, consumer preferences, regulation changes etc (economic and industry analysis conducted for investment decisions), financial analysis is combined with ESG information (company/issuer analysis) and integrated in valuation (issuer risk). For different industries and for financial or non-financial corporates the materiality and importancy of E, S and G factors varies.

Corporate (non-financial)

ESG factors are evalued how they affect economic growth, macro themes, consumer preferences, regulation changes etc. (economic and industry analysis conducted for investment decisions), financial analysis is combined with ESG information (company/issuer analysis) and integrated in valuation (issuer risk). For different industries and for financial or non-financial corporates the materiality and importancy of E, S and G factors varies.

10.3. Additional information [OPTIONAL]


FI 11. Integration - ESG information in investment processes

11.1. Indicate how ESG information is typically used as part of your investment process.

Select all that apply
Corporate (financial)
Corporate (non-financial)
ESG analysis is integrated into fundamental analysis
ESG analysis is used to adjust the internal credit assessments of issuers.
ESG analysis is used to adjust forecasted financials and future cash flow estimates.
ESG analysis impacts the ranking of an issuer relative to a chosen peer group.
An issuer`s ESG bond spreads and its relative value versus its sector peers are analysed to find out if all risks are priced in.
The impact of ESG analysis on bonds of an issuer with different durations/maturities are analysed.
Sensitivity analysis and scenario analysis are applied to valuation models to compare the difference between base-case and ESG-integrated security valuation.
ESG analysis is integrated into portfolio weighting decisions.
Companies, sectors, countries and currency and monitored for changes in ESG exposure and for breaches of risk limits.
The ESG profile of portfolios is examined for securities with high ESG risks and assessed relative to the ESG profile of a benchmark.
Other, specify in Additional Information

11.2. Additional information [OPTIONAL]

We examine each company from the qualitative ESG point of view. The decision is either yes or no. So, we do not include ESG in the quantitative analysis of the companies. Also, we do not base the size of any of our investment decisions on index weightings. 


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

12.1. Indicate the extent to which ESG issues are reviewed in your integration process.

Environment
Social
Governance
Corporate (financial)

Environmental

Social

Governance

Corporate (non-financial)

Environmental

Social

Governance

12.2. Please provide more detail on how you review E, S and/or G factors in your integration process.

Corporate (financial)

As an integral part of our investment process and decisions we analyze and evaluate systemically the E, S and G factors, in risk and return perspective. According to our investment philosophy we invest in securities of quality issuers, and the management of these issues, specific for industries and corporates are among our quality criteria. The same process is applied on the securities of both financial and non-financial corporates. 

Any ongoing legal issues, environmental damage cases, potential breaches of competition law, etc, are carefully analysed to understand the quality of corporate governance and the strength and integrity of the management. 

 

Corporate (non-financial)

As an integral part of our investment process and decisions we analyze and evaluate systemically the E, S and G factors, in risk and return perspective. According to our investment philosophy we invest in securities of quality issuers, and the management of these issues, specific for industries and corporates are among our quality criteria. The same process is applied on the securities of both financial and non-financial corporates. 

Any ongoing legal issues, environmental damage cases, potential breaches of competition law, etc, are carefully analysed to understand the quality of corporate governance and the strength and integrity of the management. 

12.3. Additional information.[OPTIONAL]


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