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Coronation Fund Managers

PRI reporting framework 2020

You are in Direct - Fixed Income » ESG incorporation in actively managed fixed income » Implementation processes

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.
SSA
0 Screening alone
0 Thematic alone
100 Integration alone
0 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
0 No incorporation strategies applied
100%
Corporate (financial)
0 Screening alone
0 Thematic alone
100 Integration alone
0 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
100 Integration alone
0 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.

In line with our investment philosophy of investing on longterm fundamentals, we will forecast the long-term earnings potential and cash flow generation of a business in order to assess its ability to meet its debt obligations. ESG forms an intrinsic part of the investment assessment. We are valuation driven, security selectors and seek to be adequately compensated for the risk assumed.We do not construct portfolios based on themes. Themes may emerge as a result of where we find value from the bottom up. Each business faces its own unique set of environmental and social circumstances which may have an impact on future cash flows. Coronation will not explicitly screen out any shares due to ESG factors, instead we may require a greater riskadjusted upside or a higher yield before investing in relation to companies with a higher ESG risk profile. The only exception would be where we are concerned about a significant lack of corporate governance in a potential investee company and where, in Coronation’s view, it is unlikely that we would be able to influence management of the potential investee company to improve their corporate governance to the extent required.

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:

specify description

          While issuers do not review our research, we engage with them about disclosure and practices.
        

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

03.3. Additional information. [Optional]

There is a spectrum of opinion concerning materiality of ESG issues. These differences can be magnified with cultural or regional differences. Frameworks such as the materiality maps provided by the Sustainability Accounting Standards Board (SASB) are helpful in providing some guidance. We have developed our own view on what is most material.  For environmental and social issues, our focus centers around areas related to climate change, resource scarcity, waste management, general environmental impact; social controversies, health and safety standards, matters relating to labour policies and practices; approach to data security and privacy and in countries like South Africa, the company’s approach to and status of Black economic Empowerment. The responsibility to identify and evaluate the impact on the valuation resides with the analyst. We believe our investment strategy benefits from a culture that encourages individuals to challenge one another and a wide range of biases and assumptions, every day. In addition, we subscribe to MSCI for access to their independent ESG reports on companies as additional reference material for consideration by our analysts in interrogating their ESG assumptions and assessments. 


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