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CIBC Asset Management Inc.

PRI reporting framework 2020

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You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes » (A) Implementation: Screening

(A) Implementation: Screening

LEI 04. Types of screening applied

04.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by

Description

For SRI mandates, CIBC AM excludes securities of companies whose primary activity or a major part thereof contributes to:
a) significant negative impact on the environment;  
b) impairing the quality of life of individuals through its involvement in the tobacco, alcohol, gambling or adult entertainment industries;
c) promoting conflict between individuals through its involvement in the military and weaponry sector;
d) significant issues with the governance of the company;
e) Not respecting human rights.

Screened by

Description

In addition to our normal-course analysis, we incorporate "internal" ESG ratings that rank companies from "best-in-class" to "below average". All equity and fixed income analysts work together to determine an internal ESG rating. The ESG ratings are sector specific, given the range of the relevance of ESG factors between sectors, based on our proprietary model.

An analysis of ESG factors is fundamental to the accurate valuation of a company and assessment of the risks and the range/magnitude of potential outcomes associated with company valuations. By combining both financial and ESG risk analysis, we reach a deeper understanding of the companies where we invest.

 

04.2. Describe how you notify clients and/or beneficiaries when changes are made to your screening criteria.

Please refer to LEI 01.2 for our proprietary approach to ESG integration

We also consider ESG factors for internally-managed Socially Responsible Investment (SRI) mandates (a.k.a as Ethical investment), under which we apply a 'negative' screening approach to companies incompatible with clients' beliefs. The screening for these mandates is based on products, certain activities, environmental and social practices and performance and corporate governance as detailed below. No broad sector or country/region is explicitly and systematically screened out, yet we may "positively screen" specific activities or industries (for instance renewable energy within the energy sector).

These strategies shall not contain any securities of companies whose primary activity or a major part thereof contributes to: a) significant negative impact on the environment; b) impairing the quality of life of individuals through its involvement in the tobacco, alcohol, gambling or adult entertainment industries; c) promoting conflict between individuals through its involvement in the military and weaponry sector; d) significant issues with the governance of the company; e) Not respecting human rights.

In the case of a), d) and e), the decisions are mostly made according to our ESG assessments. For b) and c) we currently use a limit of 10% of the revenues of a company to come from involvement in these activities for the issuer to be acceptable. Based on those criteria, an internally-generated preliminary Social Responsible Investing (SRI) Approved list of securities considered acceptable is updated twice a year. The list update is followed by a discussion to analyze the new additions to and exclusions from the list within a list-review internal committee before becoming final. To communicate the evolving information, this final list is then provided by CIBC AM to the clients as of March 31st and September 30th.

 


LEI 05. Processes to ensure screening is based on robust analysis

05.1. Indicate which processes your organisation uses to ensure ESG screening is based on robust analysis.

05.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your ESG screening strategy.

05.4. Indicate how frequently you review internal research that builds your ESG screens.

05.5. Additional information. [Optional]

Each member of our in-house research team performs ESG analysis of the companies under coverage, and gives a ESG rating from -2 to +2, as described elsewhere in this report.

Our firm also manages Social Responsible Investing (SRI) funds which screen out for activities and products identified by our clients.  Our firm’s approach is to review the allowable investment list two times per year, and to review firms where we become aware of changes to their business mix.  Our cut off for revenue for negative screening is currently set at 10%, and was reduced from 20% previously.   We tabulate the allowable investments in equities, sort by industry, and share the list with our clients.  Our clients are allowed to make additions to the list if they desire. 

In addition, we use a third party provider to help determine companies that are not allowed.


LEI 06. Processes to ensure fund criteria are not breached (Private)


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