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Trecento

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
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

Trecento AM has implemented an exclusion policy that applies before the investment selection and that restricts the potential investment universe of our funds.

- Norms-based exclusion: elimination from our SRI investment universe of listed issuers that do not comply with international norms, including the 10 Principles of the the United Nations Global Compact.

- Negative (or Sectoral) exclusion: elimination from our SRI investment universe of listed issuers when their core activity is, according to Trecento AM, incompatible with the principles of socially responsible investment.

On its website (http://www.trecento-am.com), Trecento AM releases the list of sectors and issuers included in this negative (or sectoral) and normative exclusion policy, as well as information and details on the choice of organisations we have deemed relevant as a source for this exclusion policy.

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

A typical example of an issuer that is excluded for environmental and social negative reasons is a manufacturer of nuclear weapons. Nuclear weapons are violating fundamental humanitarian principles and are considered as an inhumane weapon.

Moreover, the potential global impacts of nuclear blasts on the environment would be desastrous as even a small-scale war would quickly devastate the world's climate and ecosystems, causing damage that would last for more than a decade.

Type of fixed income

ESG factors

Screening

Description of how ESG factors are used as the screening criteria

Another example of an issuer that is excluded for environmental and social negative reasons is a coal producer. Thermal coal represents the largest source of CO2 which is a greenhouse gas responsible for the ongoing global warming. As coal is widely available, at a low cost, it has been used for decades by countries looking for a cheap energy source. It is therefore a significant climate risk, not to mention an environmental risk (pollution and impact on biodiversity of coal mining activities).

Coal producers are excluded for social negative reasons as well since working conditions in coal mines are harmful for employees (health, safety). The violation of international labor norms also implies that these companies can be excluded for social norms-based criteria.

It has been demonstrated that some coal producers, to overcome local resistance to new mines or coal-based plants due to environmental and social concerns, used corruption of local authorities ou PPE to launch or maintain operations. It then triggers governance norms-based exclusion for some specific issuers.

Type of fixed income

ESG factors

Screening

Description of how ESG factors are used as the screening criteria

We exclude issuers that have been convicted of corruption. We have for example excluded this French company which was bribing officials to gain capital goods contracts in some countries, usually emerging markets.

05.2. Additional information.

Our negative and norms-based exclusion policy is fully described on our website.


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]


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