Spotlight – March 2021

by | Apr 12, 2021 | Spotlight

SFDR and ESG as part of our strategy

Our environmental, social and governance (ESG) journey continues to evolve and the application with the Central Bank of Ireland (CBI) to align the fund with Sustainable Finance Disclosure Regulation (SFDR) Article 8 marks a new milestone. The positioning of the fund under Article 8 follows the integration of ESG into our research and investment process, supplemented with sustainability exclusion criteria. These two pillars are aligned with our approach – investing on a long-term buy and hold basis, based on bottom-up credit convictions. With the full integration of ESG, we maintain our long-term, forward-looking view on the robustness of the issuers we invest in. On the other hand, our sustainability exclusion criteria follow the sector exclusions outlined in our ESG policy for ethical reasons (weapons, tobacco, alcohol, gambling) and adding sectors most vulnerable to climate change (coal, oil sands) and companies with the most serious ESG breaches.

ESG Integration:

The integration of ESG factors in our investment process is based on a full integration approach where ESG factors are incorporated in the team’s credit research process in a manner consistent with our long-established, bottom-up research policy.ESG is fully integrated into the research process. Credit analysts within Atlanticomnium consider ESG factors as part of the research process. ESG is one of the key building blocks of the credit analysis framework and directly influences analysts’ recommendations and subsequent investment decisions.Each research note has a dedicated section around ESG risks which then feeds into the overall assessment of the credit profile of the issuer. External ESG data provider MSCI is leveraged to help identify key ESG trends and topical issues material to the analysis of issuers. This is the starting point of the ESG analysis, where ESG ratings help to provide an indication of risk of issuers from a credit perspective. Analysts then conduct internal research on key areas of focus for specific issuers. For issuers with poor ESG ratings, rating downgrades, controversies and other risks, there will be an increased layer of analysis to assess the implications for the credit profile. Our ESG approach is based on in-depth analysis aimed at better understanding risks of issuers rather than excluding issuers based on their ESG profile.As these in-depth notes are thoroughly discussed by the investment team during investment committee meetings, any potential risks from ESG will be carefully assessed to ensure that the issuer meets the criteria for inclusion in the portfolio. Furthermore, ESG developments are also thoroughly discussed as part of investment committee meetings to ensure that any change in ESG risk that impacts the credit profiles of issuers are taken into account. Therefore, ESG is integrated in our research / investment process throughout the lifecycle of our investments.ESG profiles of issuers are closely monitored as part of the research investment process. This includes a periodic monitoring of changes in MSCI ESG ratings, monitoring of controversies and ESG discussions as part of management interactions.A rounded approach to ESG integration continues post-investment. For this reason, engagement with issuers is also a key priority of our ESG agenda. Interaction with the senior management of our issuers has long been a central part of our investment process and has resulted in deep access and strong relationships. Extending this engagement to cover ESG topics is a natural development.The investment team conducts more than 240 company interactions annually. As part of these regular interactions with management, key ESG issues are discussed and analysts will document the discussions as part of a feedback report to the investment team. On specific ESG issues (engagement) Atlanticomnium will follow up on the progress made by the management.

Overview of ESG in our investment process

Sustainability exclusion criteria

  • Any involvement in controversial weapons as outlined in the GAM-wide exclusion policy on banned weapons.
  • Derive over 10% of their annual revenue from the manufacturing of weapons or weapon components. 
  • Derive over 5% of their annual revenue from the manufacture, retail or distribution of tobacco or tobacco-related products.
  • Derive over 25% of their annual revenue from the mining of thermal coal or from generating electricity from thermal coal, unless the issuer has made a credible net-zero decarbonisation commitment. 
  • Derive over 25% of their annual revenue from the extraction of oil sands. 
  • Are assessed as having serious breaches of the UN Global Compact, the ten principles of which cover human rights, labour rights, the environment and anti-corruption.

Beyond the sectors excluded, including weapons, tobacco, thermal coal and oil sands – issuers with serious breaches of the UN Global Compact are also excluded. The UN Global Compact regroups ten principles, including human rights, labour rights, the environment and corruption. We believe that issuers in serious breach of these principles carry higher credit risk (litigation, franchise erosion, etc), making risk-return unattractive for bondholders.

  • The Valuation date: October 3, 2024
    serieAsOFDateFKFund NameISINMTDYTDSIMTDYTDSI
    120,241,001GAM Sustainable Climate Bond fundIE000BSJBO140.00290.0523-0.02170.295.23-2.17
    220,241,001GAM Star Crdt Ops EUR InvIE00B50JD3540.00140.10510.64670.1410.5164.67
    320,241,001GAM Star Crdt Ops GBP InvIE00B510J1730.00090.09060.92430.099.0692.43
    420,241,001GAM Star Crdt Ops USD InvIE00B57693100.00090.09870.85250.099.8785.25
    520,241,001GAM Interest Trend IncIE00BYM4P9130.00070.09740.38310.079.7438.31

  • Please read this important legal information before proceeding.

    Information contained herein are solely for the use of the person who has accessed this information and may not be reproduced or distributed, even partially, to any other person or entity.

    The material contained herein is confidential and intended solely for the use of the persons or entities with nationality of or respectively with their residence, domicile, registered office or effective administration in a State or Country in which distribution, publication, making available or use of the information is not contrary to applicable laws or any other regulation.

    The material contained herein is aimed at sophisticated, professional, eligible, institutional and/or qualified investors/intermediaries who have the knowledge and financial sophistication to understand and bear the risks associated with the investments described.

    The information is solely product-related and does not take into account any personal circumstances and does not qualify as general or personal investment recommendation or advice. In particular, the information is given by way of information only and does not constitute a specific legal offer for the purchase or sale of financial instruments. Moreover, nothing contained herein is constitutive of any tax advice.

    Every effort has been made to ensure the accuracy of the financial information herein but the information contained herein has not been independently reviewed or verified. Therefore, Atlanticomnium SA gives no assurance, express or implied, as to whether such information is accurate, true or complete and no responsibility is accepted by Atlanticomnium SA for any errors or omissions. Third-party content is the property of its respective provider or its licensor and is protected by applicable copyright law.

    Past performance is not indicative of future performance. The price of shares/units and the income from the funds/trusts can go down as well as up and may be affected by changes in rates of exchange or financial markets fluctuation, out of the scope of Atlanticomnium SA.

    To the fullest extent permitted by law, in no event shall Atlanticomnium SA or our affiliates, or any of our directors, employees, contractors, service providers or agents have any liability whatsoever to any person for any direct or indirect loss, liability, cost, claim, expense or damage of any kind, whether in contract or in tort, including negligence, or otherwise, arising out of or related to the use of the information provided.

    • AgreeCancel
    PERFORMANCE