Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate change
• Governance
• Social issues (including labor management and population demographics)

Environmental Achievements

• Maintained over 95% coverage of holdings across corporates and sovereigns in terms of issuer ESG evaluation framework.
• Performed market research on data and tools available to support climate and carbon risk analysis and reporting, securing a dedicated third-party provider.

Social Achievements

• Continued to provide ongoing ESG training and support to investment professionals.
• Continued to play an active role at the industry level to advance ESG thinking and practice in fixed income investing through collaborations, partnerships and initiatives.
• Updated Proxy Voting Policy and ESG Investment Policy.

Governance Achievements

• Reviewed the effectiveness of the ESG IWG, including refreshing the work programme and membership.
• Formally adopted ESG investment-related objectives for CEO, Board, Management Committee, CIO/Head of Strategy, Investment function, and Client-facing roles.
• Developed and integrated ESG within individuals’ performance objectives.

Climate Goals & Targets

Environmental Challenges

• Limited access to engagement mechanisms compared to equity owners (e.g., proxy voting is immaterial for fixed income investors).
• Structural challenges in engaging with sovereign issuers versus corporates, different asset classes (high-yield vs. investment grade), emerging markets vs. developed markets, and structured credit investments.
• Difficulty attributing engagement activities to direct outcomes due to multiple investors engaging with the same issuer, issuers not attributing outcomes to specific engagements, and long timeframes between engagement and outcomes.

Mitigation Strategies

• Developed a firm-wide ESG investment management approach across all managed assets.
• Employs an in-house ESG investment specialist and team to lead and implement ESG investment efforts.
• Utilizes a risk-based approach to prioritize ESG engagement, focusing on material ESG risks, ESG scores, and investment size.
• Engages in collaborative efforts with other investors to increase the effectiveness of engagement.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: PRI

Certifications: LuxFLAG ESG label (for BlueBay Global High Yield ESG Bond Fund)

Awards & Recognition

• PRI shortlist for ‘ESG initiative incorporation of the year’ award (2020)
• LuxFLAG ESG label (for BlueBay Global High Yield ESG Bond Fund)

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Climate Goals & Targets

Environmental Challenges

• Poorly managed ESG risks can lead to inefficiencies, operational disruption, litigation and reputational damage, which may ultimately impact an issuer’s ability to meet their financial responsibilities.

Mitigation Strategies

• Incorporating ESG analysis (in particularly ESG risks) into traditional financial analysis by reviewing ESG related management practices and performance

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Climate change

Transition Risks

• Global regulation to lower carbon emissions

Reporting Standards

Frameworks Used: SFDR

Environmental Metrics

ESG Focus Areas

• Climate Change
• Governance
• Social Capital
• Human Capital

Environmental Achievements

• Novozymes partnered with foundations to scale up sustainable protein production from captured CO2, reducing the carbon footprint of meat and dairy.
• Assa Abloy released Planet drop-down seals, improving building energy efficiency and accessibility.
• Kingspan took a majority stake in Steico, expanding distribution of carbon-capturing wood fiber insulation.

Social Achievements

• Novo Nordisk's semaglutide drug showed a 20% reduction in major adverse cardiovascular events.
• Keywords Studios invested in global academies, supporting employee development and relocation during a cost-of-living crisis.
• Teleperformance addressed employee concerns in its content moderation department, implementing support systems and premium pay.

Governance Achievements

• Hexagon improved disclosures and proactive investor education following a short-selling report.
• European banks demonstrated resilience due to stricter post-GFC regulations.

Climate Goals & Targets

Environmental Challenges

• Increased decarbonization project costs due to higher interest rates.
• Potential impact of higher interest rates on the energy transition.
• Disinformation risks from generative AI.
• Potential job displacement from AI automation.
• High energy consumption of machine learning models.

Mitigation Strategies

• Government support for decarbonization projects (Inflation Reduction Act, Net Zero Industry Act).
• Focus on financial and balance sheet resilience for companies.
• Development of diagnostic metrics to reduce AI biases.
• Industry development of more energy-efficient hardware and data centers.
• AI applications for energy efficiency improvements across industries.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: MSCI ESG

Sustainable Products & Innovation

• Novozymes' sustainable proteins
• Assa Abloy's Planet seals
• Kingspan's wood fiber insulation

Environmental Metrics

ESG Focus Areas

• Governance
• Climate Change and Nature
• Human Rights

Climate Goals & Targets

Environmental Challenges

• Climate change and nature-related risks
• Human rights risks in supply chains and operations

Mitigation Strategies

• ESG integration into investment decisions
• Active stewardship through proxy voting and engagement
• Measuring, monitoring, and reporting on carbon emissions and net-zero alignment
• Climate scenario analysis
• Working with clients to support their climate objectives
• Producing an annual climate report guided by TCFD recommendations
• Engaging with issuers on material ESG factors
• Implementing firm-wide investment exclusions for certain weapons and sanctions

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events, flooding

Transition Risks

• Regulatory changes, market shifts

Reporting Standards

Frameworks Used: TCFD, TNFD, UN Principles for Responsible Investment (PRI)