Risico-aspecten

Samenvatting

Geen duurzame beleggingsdoelstelling

Dit fonds promoot ecologische of sociale kenmerken maar heeft geen duurzame beleggingsdoelstelling.

Ecologische en/of sociale kenmerken van de financiële producten

Het Fonds promoot de ecologische en/of sociale kenmerken door bepaalde emittenten uit te sluiten aan de hand van ESG-overwegingen en criteria op basis van normen.

Beleggingsstrategie

CRMC (de 'Beleggingsadviseur') identificeert emittenten of groepen emittenten die uit de portefeuille worden geweerd om de ecologische en/of sociale kenmerken te verwezenlijken die het Fonds promoot. De Beleggingsadviseur voert beoordelingen uit en past screening toe op basis van ESG-overwegingen en normen om ondernemingen en overheden uit te sluiten als deze betrokken zijn bij sectoren als wapens. Ook ondernemingen die de beginselen van het VN Global Compact schenden, worden uit de portefeuille geweerd (het 'Negatieve-Screeningbeleid').

Het Fonds promoot onder meer ecologische en sociale kenmerken, waarbij als aanvullende voorwaarde geldt dat er uitsluitend in ondernemingen wordt belegd die er deugdelijke governancepraktijken op nahouden. In het kader van het ESG-integratieproces houdt de Beleggingsadviseur de governancepraktijken van emittenten tegen het licht. Bij de beoordeling van praktijken op het gebied van goed bestuur neemt de Beleggingsadviseur minstens zaken in aanmerking die hij als relevant beschouwt voor de vier voorgeschreven pijlers van goed bestuur (nl. goede managementstructuren, betrekkingen met werknemers, beloning van het betrokken personeel en naleving van de belastingwetgeving). Deze praktijken worden beoordeeld op basis van een montoringproces. Waar relevant wordt er ook een fundamentele analyse uitgevoerd van een verzameling governance-parameters die thema's beslaan als auditpraktijken en de samenstelling en beloning van de raad van bestuur.

Het Negatieve-Screeningbeleid van Capital Group wordt toegepast op de volledige portefeuille, met uitzondering van contanten, kasequivalenten en geldmarktfondsen. Indexderivaten waarvan voor afdekkings- en/of beleggingsdoeleinden van wordt gebruikgemaakt, worden niet op doorkijkbasis beoordeeld. In bepaalde omstandigheden kan het Fonds op deze manier indirecte blootstelling verkrijgen aan een emittent die is betrokken bij de uitgesloten categorieën (bijvoorbeeld met derivaten en andere instrumenten die blootstelling bieden aan een index). Derivaten met één onderliggende waarde moeten voldoen aan het Negatieve-Screeningbeleid. De Beleggingsadviseur zal waarborgen dat het ontvangen onderpand aansluit op het beleid.

Aandeel beleggingen

De voorgenomen assetallocatie wordt doorlopend gemonitord en jaarlijks heroverwogen. Ten minste 90% van de beleggingen van het Fonds is afgestemd op E/S-kenmerken. Maximaal 10% van de beleggingen van het Fonds, met inbegrip van beleggingen die niet zijn afgestemd op de gepromote E/S kenmerken en/of derivaten behoort tot de categorie '#2 Overige'. Het Fonds verplicht zich er op dit moment niet toe om enige duurzame beleggingen aan te houden.

Monitoring ecologische of sociale kenmerken

De duurzaamheidsindicatoren die door dit Fonds worden gebruikt om de verwezenlijking van elk van de door het Fonds gepromote ecologische of sociale kenmerken te meten zijn de volgende.

De Beleggingsadviseur past het Negatieve-Screeningbeleid toe op de fondsportefeuille door emittenten uit te sluiten op basis van ESG-overwegingen en normen. Het Fonds houdt de volgende parameters bij:

• het percentage overheidsemittenten dat niet voldoet aan de vereisten uit het relevante beoordelingsproces van de Beleggingsadviseur; en
• in hoeverre effectenuitgevende ondernemingen voldoen aan de criteria uit het Negatieve-Screeningbeleid.

Methodologieën

Het Fonds hanteert één bindend ESG-gerelateerd criterium: emittenten worden uitgesloten op basis van screens op sectorniveau en op basis van normen.

Databronnen en -verwerking

Er wordt voornamelijk bepaald welke emittenten worden uitgesloten aan de hand van een externe gegevensaanbieder, MSCI ESG Business Involvement Screening Research ('MSCI ESG'). Daarnaast wordt er van datapunten als het VN Global Compact en de MSCI Carbon Footprint Metrics gebruikgemaakt.

Methodologische en databeperkingen

De methodologie en bronnen die als grondslag dienen voor de uitsluitingen en de volledige ESG-integratie, hebben hun beperkingen.

Due diligence

Personeelsleden van de afdelingen Compliance, Risicobeheer en Interne audit van Capital Group voeren periodieke beoordelingen uit over de opzet en de operationele effectiviteit van de ESG-activiteiten van het bedrijf en essentiële controlemaatstaven.

Engagementbeleid

Een dialoog aangaan met bedrijven is een integraal onderdeel van de dienst voor beleggingsbeheer die de Beleggingsadviseur aan cliënten aanbiedt. Hierdoor kan Capital Group een dialoog tot stand brengen over enige kwesties die een invloed zouden kunnen hebben op de langetermijnvooruitzichten van de onderneming waarin is belegd, inclusief blootstelling aan duurzaamheidsproblemen.

Aangewezen referentiebenchmark

Het Fonds heeft geen referentiebenchmark aangewezen om te voldoen aan de door het Fonds gepromote ecologische en/of sociale kenmerken. 

The sustainability-related disclosures are meant to be revised as necessary from time to time to capture any changes or reviews. The capitalized terms are used in accordance with the definitions and references outlined in Capital International Fund Prospectus.

Capital International Fund – Capital Group Emerging Markets Debt Fund (LUX)(the “Fund”)
LEI:5493009VJSAE25SFXL78

The below section “Summary” was prepared in English and is being translated to other official languages of the European Economic Area. In case of any inconsistency(ies) or conflict(s) between the different versions of this section “Summary”, the English language version shall prevail.

Summary

No sustainable investment objective

This Fund promotes environmental or social characteristics, but does not have as its objective sustainable investment.

Environmental or social characteristics of the financial products

The Fund promotes the environmental or social characteristics of excluding investments in issuers based on ESG and norms-based criteria.

Investment strategy

CRMC (the “Investment Adviser”) identifies certain issuers or groups of issuers that it excludes from the portfolio to promote the environmental or social characteristics supported by the Fund. The Investment Adviser evaluates and applies ESG and norms-based screening to implement exclusions on corporate and sovereign issuers with respect to certain sectors such as weapons, as well as companies violating the United Nations Global Compact principles(the “Negative Screening Policy”).

The Fund promotes, among other characteristics, environmental and social characteristics, provided that the companies in which investments are made follow good governance practices. Good governance practices are evaluated as part of the Investment Adviser’s ESG integration process. When assessing good governance practices, the Investment Adviser will, as a minimum, have regard to matters it sees relevant to the four prescribed pillars of good governance (i.e., sound management structures, employee relations, remuneration of staff and tax compliance). Such practices are assessed through a monitoring process. Where relevant, fundamental analysis of a range of governance metrics that cover areas such as auditing practices, board composition and executive compensation, among others, is also conducted.

The Capital Group’s Negative Screening Policy will apply to the entire portfolio, with the exception of cash, cash equivalents and money market funds. Index derivatives that are used for hedging and/or investment purposes will not be assessed on a look–through basis. Therefore, there may be circumstances where the Fund may gain indirect exposure to an issuer involved in the excluded categories (through, including but not limited to, derivatives and instrument that gives exposure to an index). Single-name derivatives will need to be compliant with the Negative Screening Policy. The Investment Adviser will ensure that collateral received is aligned with the policy.

Proportion of investments

The planned asset allocation is monitored continuously and evaluated on a yearly basis. At least 90% of the Fund's investments are aligned with E/S characteristics. A maximum of 10% of the Fund’s investments including investments non-aligned with the E/S characteristics promoted and/or derivatives are in category “#2 Other”. The Fund does not commit to make any sustainable investments.

Monitoring of environmental or social characteristics

The sustainability indicators used by this Fund to measure the attainment of each of the environmental or social characteristics it promotes are as follows.

The Investment Adviser applies ESG and norms-based exclusions to implement a Negative Screening Policy to the Fund’s investments. The Fund will monitor:

• percentage of sovereign issuers failing the Investment Adviser’s process for assessing sovereigns; and

• adherence of corporate issuers to the criteria set forth in the Negative Screening Policy.

Methodologies

The Fund implements one binding ESG-related criteria: sector- and norms-based screens in the form of exclusions.

Data sources and processing

Exclusions are primarily identified through a third-party provider, MSCI ESG Business Involvement Screening Research (“MSCI ESG”). Other data points include the MSCI United Nations Global Compact and MSCI Carbon Footprint Metrics.

Limitations to methodologies and data
The methodology and sources relating to the exclusions and the ESG integration approach as a whole have certain limitations.

Due diligence

Members of Capital Group's compliance, risk management and internal audit staff conduct periodic assessments on the design and operating effectiveness of the firm’s ESG activities and key controls.

Engagement policies

Establishing dialogue with companies is an integral part of the Investment Adviser’s investment management service to clients. This enables Capital Group to engage and generate dialogue on any issues that could affect the investee company’s long-term prospects, including exposures to sustainability issues.

Designated reference benchmark

The Fund has not designated a reference benchmark to meet the environmental and/or social characteristics it promotes.

No sustainable investment objective

This Fund promotes environmental or social characteristics but does not have as its objective sustainable investment.The Fund does not make any sustainable investments.

Environmental or social characteristics of the financial product

The Fund promotes environmental and social characteristics, provided that the companies in which investments are made follow good governance practices.

The Investment Adviser evaluates and applies ESG and norms-based exclusions to implement a Negative Screening Policy to the Fund’s investments at the time of purchase.

For sovereign issuers, the Investment Adviser conducts an eligibility assessment leveraging its proprietary sovereign ESG framework, which covers a range of ESG indicators to evaluate how well a country manages its ESG risk. The Investment Adviser uses its proprietary sovereign ESG framework to assess the ESG and Governance score of a sovereign issuer against predetermined thresholds.

For corporate issuers, the Investment Adviser relies on third-party providers who identify an issuer’s participation in or the revenue which they derive from activities that are inconsistent with these screens.

The Investment Adviser selects investments to the extent they are in line with the negative screening policy.

Investment strategy

The Investment Adviser applies the following investment strategy to attain the environmental and/or social characteristics promoted.

Negative Screening Policy: The Investment Adviser evaluates and applies ESG and norms-based exclusions to implement a Negative Screening Policy to the Fund’s investments at the time of purchase.

To support this screening on sovereign issuers, the Investment Adviser conducts an eligibility assessment leveraging its proprietary sovereign ESG framework, which covers a range of ESG indicators to evaluate how well a country manages its ESG risk. To be eligible for investment, sovereigns must score above pre-determined thresholds for their proprietary ESG score on both an absolute and GNI-adjusted basis. The Investment Adviser leverages data from third-party institutions such as the United Nations and the World Bank to calculate ESG scores across the sovereign universe. Sovereign issuers are evaluated on: (1) a gross national income-adjusted basis to better understand how well a country manages ESG risk relative to its wealth and available resources, as well as (2) on an absolute basis. Sovereign issuers that score below pre-defined thresholds in either category are generally not eligible for purchase by the Fund. If the Investment Adviser believes that the third-party data and/or assessment is incomplete or inaccurate, the Investment Adviser reserves the right to identify exclusions for sovereign issuers through its own assessment. The Investment Adviser also periodically reviews sovereign issuers and if a previously eligible sovereign issuer held in the Fund becomes ineligible, the sovereign issuer will not contribute towards the environmental and/or social characteristics of the Fund and the sovereign issuer will generally be sold within six months from the date of such determination, subject to the best interests of investors in the Fund (save that if the Investment Adviser believes that a score is below a pre-defined threshold for a temporary or a transitory reason, the Investment Adviser may, from time to time, exercise its discretion to keep holding or purchase securities issued by the sovereign issuer).

For corporate issuers, the Investment Adviser relies on third party provider(s) who identify an issuer’s participation in or the revenue which they derive from activities that are inconsistent with the ESG and norms-based screens. In this way, third party provider data is used to support the application of ESG and norms-based screening by the Investment Adviser. In the event that exclusions cannot be verified through third-party providers or if the Investment Adviser believes that data and/or assessment is incomplete or inaccurate, the Investment Adviser reserves the right to identify business involvement activities through its own assessment (including by using other third-party data sources). If an eligible corporate issuer held in a Fund subsequently fails a screen, the issuer will not contribute towards the environmental and/or social characteristics of the Fund and will generally be sold within six months from the date of such determination, subject to the best interests of investors in the Fund.

What is the policy to assess good governance practices of the investee companies?

The Investment Adviser ensures that the companies in which investments are made follow good governance practices.

When assessing good governance practices, the Investment Adviser will, as a minimum, have regard to matters it sees relevant to the four prescribed pillars of good governance (i.e., sound management structures, employee relations, remuneration of staff and tax compliance).

As described above, the Investment Adviser applies a Negative Screening Policy to the Fund. As part of this, the Investment Adviser excludes companies that, based on available third-party data, are viewed to be in violation of the principles of the UNGC, which include Principle 10 (anti-corruption) and Principle 3 (employee relations). 

In addition, good governance practices are evaluated as part of the Investment Adviser’s ESG integration process. Such practices are assessed through a monitoring process based on available third-party indicators relating to corporate governance and corporate behavior. Third-party data may be inaccurate, incomplete or outdated. Where the corporate governance and corporate behavior indicators cannot be verified through the third-party provider, the Investment Adviser will aim to make such determination through its own assessment based on information that is reasonably available. Where relevant, fundamental analysis of a range of metrics that cover auditing practices, board composition, and executive compensation, among others, is also conducted. The Investment Adviser also engages in regular dialogue with companies on corporate governance issues and exercises its proxy voting rights for the entities in which the Fund invests.

If a previously eligible company held in a Fund subsequently fails the Investment Adviser’s assessment of good governance practices, the company will generally be sold within six months from the date of such determination, subject to the best interests of investors in the Fund.

Capital Group’s ESG Policy Statement provides additional detail on Capital Group’s ESG philosophy, integration, governance, support and processes, including proxy voting procedures and principles, as well as views on specific ESG issues, including ethical conduct, disclosures and corporate governance. Information on Capital Group’s corporate governance principles can be found in its Proxy Voting Procedures and Principles as well as in the ESG Policy Statement. Information on Capital Group’s corporate governance principles can be also found in its Proxy Voting Procedures and Principles, available on:
https://www.capitalgroup.com/content/dam/cgc/tenants/europe/documents/responsible-investing/global_proxy_voting_guidelines(en).pdf.
The ESG Policy Statement provides additional detail on Capital Group’s views on specific ESG issues, including ethical conduct, disclosures and corporate governance, available on:
http://www.capitalgroup.com/content/dam/cgc/tenants/eacg/esg/files/esg-policy-statement(en).pdf

Proportion of investments

At least 90% of the Fund's investments are in category “#1 Aligned with E/S characteristics” and so are used to attain the environmental or social characteristics promoted by the Fund (being subject to the Investment Adviser’s binding Negative Screening Policy). A maximum of 10% of the Fund’s investments including investments non-aligned with the E/S characteristics promoted and/or derivatives are in category “#2 Other”.
The Fund does not commit to make any sustainable investments.

Cash and/or cash equivalents are excluded from the asset allocation. Cash and cash-equivalents may be held for liquidity purposes to support the Fund’s overall investment objective.

Monitoring of environmental or social characteristics

The sustainability indicators used by this Fund to measure the attainment of each of the environmental or social characteristics it promotes are as follows.
The Investment Adviser applies ESG and norms-based exclusions to implement a Negative Screening Policy to the Fund’s investments. The Fund will monitor:

• percentage of sovereign issuers failing the Investment Adviser’s process for assessing sovereigns; and

• percentage of corporate issuers failing a screen under the Negative Screening Policy.

The Fund applies investment restrictions rules at the time of purchase on a pre-trade basis in portfolio management systems to restrain investment in companies or issuers based on the exclusion criteria. The portfolio also undergoes regular/systematic post-trade compliance checks. The methodology applied to sovereign and corporate issuers respectively in support of this screening is described in detail under the section “Investment Strategy” of this document.

In the event that exclusions cannot be verified through the third-party provider(s) or if the Investment Adviser believes that third party data and/or assessment is incomplete or inaccurate, the Investment Adviser will aim to identify business involvement activities through its own assessment (including third-party data sources). Please refer to Fund’s Negative Screening Policy for further details.

Methodologies

The Fund implements one binding ESG-related criteria: sector- and norms-based screens in the form of exclusions, with the methodology applied to this commitment having already been presented in detail in the previous sections.
The SFDR classification is related to the European Union’s regulation and is not equivalent to approval or recognition as an ESG Fund by regulators in Asia Pacific.

Data sources and processing

Data sources
The Investment Adviser uses a combination of internal research and third-party data providers to gather ESG-related data.
Third-party providers are used to calculate the carbon footprint of the Fund and for identifying corporate issuers' involvement in activities inconsistent with ESG and norms-based screens. In the event that exclusions cannot be verified through third-party data or if the Investment Adviser believes that third-party data and/or assessment is incomplete or inaccurate, the Investment Adviser reserves the right to identify business involvement activities through its own assessment (including by using other third-party data sources).
Exclusions for sovereign issuers are identified through the Investment Adviser’s proprietary research. The Investment Adviser leverages data from third-party institutions such as the United Nations and the World Bank to calculate ESG scores across the sovereign universe. Sovereign issuers are evaluated on: (1) a gross national income-adjusted basis to better understand how well a country manages ESG risk relative to its wealth and available resources, as well as (2) on an absolute basis. If the Investment Advisor believes that the third-party data and/or assessment is incomplete or inaccurate, the Investment Adviser reserves the right to identify exclusions for sovereign issuers through its own assessment.
Data quality and processing
Capital Group periodically reviews the performance quality of provider organizations and conducts ongoing monitoring and due diligence activities commensurate with the significance of the services provided.
Data are regularly updated in Capital Group’s internal platforms and made available to relevant teams. When issues are identified in third-party data, they are reported back to the provider(s). The Investment Adviser also applies systematic data quality checks to catch discrepancies and validate with the provider when issues arise.
Proportion of data that is estimated

Third-party providers may estimate data. While reported data are prioritized, Capital Group uses estimated data when reported data are unavailable. The proportion of estimated data varies depending on the data point due to inconsistencies in reporting by investee companies.

Limitations to methodologies and data

The methodology and sources relating to the exclusions and the ESG integration approach as a whole have certain limitations. In order to identify all publicly traded companies globally which are involved in activities such as the production of controversial products and revenue derived from activities that are inconsistent with the ESG and norms-based screens, the Fund uses data from third-party provider(s). In the event that data cannot be obtained through third-party providers or if the Investment Adviser believes that third-party data and/or assessment is incomplete or inaccurate, the Investment Adviser will aim to identify business involvement activities through its own assessment (including by using other third-party data sources).

Due diligence

Members of Capital Group's compliance, risk management and internal audit staff conduct periodic assessments on the design and operating effectiveness of the firm’s ESG activities and key controls. This includes compliance with internal processes and procedures as well as with the regulatory landscape in the jurisdictions in which the company operates. Capital Group meets regularly with the third-party data providers to review the quality of the services provided.
Pre-trade and post-trade checks are also in place as further explained in section “Monitoring of environmental or social characteristics” above.

Engagement policies

Establishing dialogue with companies is an integral part of the Investment Adviser’s investment management service to clients. Capital Group’s investment teams meet on a regular basis with company management, including executive and non-executive directors, chairs, and finance directors. This enables the company to engage and generate dialogue on any issues that could affect the company’s long-term prospects, including exposures to sustainability issues.
Where Capital Group's investment teams identify an issue material to the long-term value of a company or they are concerned about relative ESG performance, Capital Group's investment professionals and governance teams will engage with management. Management’s response and the steps they take to minimise any associated risks, forms an important part of Capital Group's assessment of management quality, which itself is a key factor in the stock selection decisions.

Designated reference benchmark

The Fund has not designated a reference benchmark to meet the environmental and/or social characteristics it promotes.

Where can more product-specific information be found?

More product-specific information can be found in the pre-contractual template:
https://docs.publifund.com/1_PROSP/LU1577354035/en_LU
More product-specific information can be found in the periodic reports:
https://docs.publifund.com/4_AR/LU1577354035/en_LU