SFDR requires that information provided in a pre-contractual disclosure in respect of a portfolio which promotes environmental and/or social characteristics be published on a website.
This disclosure is made for these purposes by the CIM division of Citibank Europe plc, in relation to clients of its Luxembourg branch.
This disclosure relates to the following portfolios:
- Citi Global Fixed Income ESG Focus Portfolio
- Tailored Discretionary Portfolios utilizing the investment process from the Citi Global Fixed Income ESG Focus Portfolio
The portfolio promotes environmental or social characteristics but does not have a sustainable investment objective. It uses a reference benchmark appropriate to the market and segment of investments selected by the portfolio manager, but the benchmark is not designated for the purpose of attaining the environmental or social characteristics promoted by the portfolio.
What are the environmental and/or social characteristics promoted by the portfolio?
- It invests in bonds that exhibit favourable Environmental, Social and Governance (ESG) ratings as defined by CIM’s third party ESG data providers.
How are those characteristics met?
- The investment process uses a combination of positive screening, negative screening and exclusion criteria (‘ESG integration’) to define an investment universe for the portfolio.
- The ESG integration has four binding elements which determine investment selection:
2) From this investable universe, companies which are ‘non-compliant’ with UN Global Compact Principles or UN Global Compact Violators are excluded. Non-compliance is assessed by the third party data provider who determines the extent to which a company causes or contributes or is linked to violations of international norms and standards as defined by the UN Global Compact Principles.
3) The investment process also excludes companies that have greater than 10% revenue in a company’s prior fiscal year from either production or distribution of the following product types (as assessed by the third party data provider):
4) Companies with a direct or indirect association with manufacturing or distributing Controversial Weapons and Civilian Firearms are excluded. A company is deemed to be indirectly associated through ownership of a subsidiary that is directly associated with controversial weapons and civilian firearms development or distribution. The direct and indirect association is identified using third party data provider information.
The portfolios’ investment strategies are implemented through an investment process that annually refreshes the ESG scores and, on a monthly basis, updates the exclusion data upon which CIM makes its investment decisions.
What policy does CIM use to assess the good governance practices of investee companies?
- The good governance practices of the investee companies are considered in the investment due diligence process. CIM’s determination of whether an investee company follows good governance practices is based upon a rating produced by a third party ESG data provider.
- The data provider considers a range of criteria to assess whether the investee companies follow good governance practices, including with respect to sound management structures, employee relations, remuneration of staff and tax compliance.