Actively Sustainable

Sustainable Investing is all about combining financial, social and environmental returns.

Today, sustainable Investing remains a concept which is not uniquely defined. This leaves investors with a wide selection of approaches to choose from.

Our philosophy

Responsible investing is not related to an asset class, is not an investment style or temporary fad, …it improves insights and enhances performance when integrated with traditional investment analysis

It sets a new risk and opportunity framework

Responsible investment entails the analysis of the sustainable positioning and development of companies to better capture their growth profile, enables to measure the quality of their business model and to better identify and assess specific risks.

It enhances performance as risks and opportunities associated with ESG externalities are not appropriately priced by markets

Investors often take short term views and fail to appreciate the way companies face these challenges.

It requires investors to be active owners of companies in which they invest

As owners, we actively exercise our votes for the shares in the portfolio and collaborate with other investors to engage more forcefully with company management. We are connected to the companies we hold as we consider “engagement” as both an output of, and an input into, the investment process

  • As an input : to fine-tune company analysis
  • As an output : to promote better corporate behavior

 

Our approach

Targeted exclusions

We decided to negatively-screen companies as part our risk management and value-based approach. The term exclusions refers to the elimination of companies which we do not wish to prioritize as investments. We apply targeted exclusions:

  • Norm-based exclusions where companies that fail to comply with the UN Global Compact 10 Principles are excluded. These 10 Principles are grouped in 4 themes : Human Rights, Labor Rights, Environment and fight against corruption.
  • Exclusions based on specific sectors, products or controversial activities. Companies active in Controversial weapons, Tobacco, Gambling, Adult entertainment and GMOs are excluded.

Best-in-class

We integrate ESG considerations at minimum via a Best in class (ESG) approach. It can be defined as a positive screening and pragmatic approach which consists in actively selecting in every sector those companies that meet a defined ranking hurdle (top 50 percent) established by Environmental, Social and Governance criteria. Companies are scored on a variety of criteria. The score received will depend on how the criteria are weighted (= materiality of ESG factors) and that varies sector by sector. ESG analysts rely on internal sustainability measures and data available from the largest mainstream providers, including MSCI and Sustainalytics. These independent providers are leaders in this field with more than 140 analysts covering up to 4000 companies worldwide.

Eligible companies, i.e. companies that meet the ESG screen, are then assessed by fundamental analysts. The final portfolio is made up of a list of names that survives the ESG and the financial screens.

ESG integration

At the global portfolio level, we tend to increase the ESG-related risks and opportunities analysis and thus ESG integration by favoring diversified multi-thematic sustainable managers (in equity and corporate Bonds). These managers select companies which provide solutions or have positive impacts as regards to these challenges.

Selecting sustainable countries

ESG analysis is gradually used to assess companies. However, we believe that governments have an important role to play in the modelling of a more efficient regulatory framework. Social wellbeing and corporate governance are off course key when talking about sustainability and investments.

We base a country sustainability analysis on its’ commitment to ensure the freedom of its citizens, its’ investment in their personal development and wellbeing (education, healthcare, welfare), its environmental consciousness as well as its’ reliability as regards to its international commitments. A series of criteria have been set to determine the “sustainability profile of a country which can be assigned to 5 pillars : “Transparency and democratic values”, “Environment”, “Education”, “Population, Healthcare and Wealth distribution” and “Economy”.