European High Yield remains less advanced and transparent than other larger asset classes regarding ESG information. Comprehensive ESG ratings are yet to be fully implemented but we can see a positive momentum that should translate into more companies following these principles. At CORUM Butler, we firmly believe that ESG-related issues will be a major concern for investors in the years to come.
Indeed, we believe that our SRI approach is only of interest if it is shared with all those associated with it: the investment teams, investors in our funds, but also the issuers in which we are investing. Raising awareness, informing and mobilizing all stakeholders is essential.
Overview of our ESG Process
ESG considerations are already fully integrated into the investment process through the use of third-party ESG ratings and analysis from Sustainalytics or other equivalent service providers and through the application of our ESG filters. Since the 1st December 2022, all our funds are Article 8 as per SFDR.
Hence, they all go through our 3-step ESG screening process described below (excluding our SRI fund which has a specific process) :
1. Normative Exclusions – investee companies that do not respect the principles of the United Nations Global Compact on human rights, working conditions, the environment and the fight against corruption are excluded from the Investable Universe. Similarly, Investee companies which derive more than 0% of their revenue from anti-personal mines, cluster weapons, controversial weapons and biological and chemical weapons or do not comply with the Ottawa Treaty and the Oslo Convention on cluster mines are excluded from the Investable Universe.
2. Sectoral Exclusions – investee companies which derive more than 0% of their revenue from tobacco products, adult entertainment, arctic oil & gas exploration, recreational cannabis, oil sands, palm oil, predatory lending and whale meat. Thermal coal is limited to a maximum of 30% of revenue.
3. Severe ESG Risk Exclusions – we systematically exclude issuers having a “Severe ESG Risk” score by Sustainalytics.