Description of Key Indicators
Entropics monthly reports disclose key indicators for responsible investments. Every bond offered to Entropics is screened based on the principles defined in the policy for responsible investments. The screening consists of an ESG analysis and an assessment of the insurance purpose. In the investment process, the insurance purpose has the highest weight.
ESG data for key entities
- The sponsor (the company or other entity seeking insurance protection that initiates the emission of the bond)
- The domicile of the SPV
- The currency of the bond
- The country or organization that emits the instruments that the collateral is invested in
Data for key indicators for corporations are provided by Bloomberg. For countries, key indicators from the World Bank Worldwide Governance Indicators, the Social Progress Index and the Environmental Performance Index are used. Based on available key indicators, complemented by screening of individual entities (in particular where key indicators are missing), the ESG risk of each entity is assessed.
In the monthly report, the results of this assessment is disclosed under the headline “Problematic Entities”, as the share of exposure that is exposed to problematic entities.
Entropics assesses the general purpose of each bond (for example general property insurance or mutual insurance). The distribution on general purposes is disclosed in the monthly report. The assessment does not affect investment decisions, but is provided as general information about the exposure.
As the insurance purpose is evaluated, Entropics assesses if the purpose is problematic or ineligible. The fund refrains from investments in bonds assessed as ineligible. Complying with Entropics’ policy for responsible investments, no more than 10% of the fund’s exposure can be to problematic purposes. The policy describes which purposes are problematic.