To provide long-term capital appreciation with a diversified and actively managed portfolio of European sustainable equities, without any specific restriction on tracking error. The sub-fund will use a selection of securities complying with Environmental, Social and Governance (ESG) responsibility criteria. The portfolio will be composed of issuers that are either leading in ESG best-practice or attractive due to their progression in ESG.
Investment policy
The sub-fund promotes environmental and social characteristics and qualifies as an investment product in accordance with article 8(1) of Regulation (EU) 2019/2088 on sustainability related disclosures in the financial services sector.
The sub-fund is actively managed through a bottom-up/stock picking approach, designed to invest through positive screenings in companies which make positive contribution to society and environment through sustainable and socially responsible practices (also called ESG). The fund seeks to avoid investment in certain areas such as companies which have a material involvment (more than 10% of their profits) in alcohol, nuclear power generation, tobacco and weapon production, gambling and publication of violent or explicit materials. Moreover, in compliance with UN PRI principles the sub-fund excludes direct investments in securities issued by companies involved in severe breach with the UN Global Compact principles. The outcome portfolio is typically invested in large- and mid-cap companies, with a maximum of 60 holdings (this number could vary depending on market conditions).
The sub-fund invests predominantly in transferable equity securities such as equities, other equity shares such as cooperative shares and participation certificates issued by, or warrants on transferable equity securities of, companies which are domiciled in or exercise the predominant part of their economic activity in Europe. Selection of investments will rely on a combination of financial criteria, as well as Environmental, Social & Governance criteria. The minimum asset allocation in such securities on a consolidated basis (direct and indirect investments) will be of 60% of the sub-fund's net assets. The minimum sub-fund’s investment in equity securities will be of 75% of the sub-fund's net assets. Moreover, until the 30th September 2021, the minimum ownership of equities in companies established in countries of the European Economic Area having concluded a tax agreement with France including a clause on administrative cooperation for combating fraud and tax evasion will be at least 75% of the sub-fund’s net assets.
The sub-fund ESG approaches consisted of Research, then leads on to Screening, Engagement and Governance.
The sub-fund seeks to invest in companies whose products, services, or practices help provide solutions to climate change and renew the earth, as well as companies that help advance for all equality with social mobility, respect for human rights,and wellbeing.
The sub-fund applies a default ‘Ethics/Values’ screen in which companies in the business areas listed below are excluded where turnover or profit (whichever is higher) exceed 10%. Investment ideas are also screened against six areas of ESG risk (also referred to as ‘Responsibility/ESG). In addition, the sub-fund excludes companies on the ABN-Amro banned list. The RI team analyses companies according to the own proprietary model of the External Investment Manager. Their recommendation is final: if a stock fails the in-house screening process, we will not invest.
The sub-fund integrates ESG risk factors across its investment process in order to deliver superior returns. This ESG integration covers four key areas: Research, screenings, engagement and Governance.
The screening allow to identify companies are responsible corporate citizens. The ESG screens in addition to the internal and collaborative engagement practices ensurethat the companies invested are good corporate citizens. Additionally, the sub-fund seek to invest in companies that exhibit best practice in the area of corporate governance.
To be considered suitable for inclusion, an investment idea must meet the criteria laid out by the screening model. There are three parts to this: ethics/ values, responsibility/ ESG and sustainability/ thematic. Investment ideas are also screened against six areas of ESG risk (also referred to as ‘Responsibility/ESG). Companies that derive more than 10% of their profits or turnover from these activities are excluded from our universe of investible stocks.
In additional to the norms based and activity exclusions in place, the sub-fund monitores a robust screening process which looks at a range of issues including sustainable features. In that respect,the sub-fund do not have exposure to sectors such as car manufacturers, airlines, cement producers, steel manufacturers or oil and gas E&P where there is no serious plan and commitment to address the impact on climate change, and these are typically not requested to be screened given the External Investment Manager understands this well.
The ESG analysis covered 100% of the portfolio. After reviewing the investment universe, 20% of companies are excluded based on SRI Criteria (ethical screens). All companies in the portfolio go through our in-house RI screening process prior to investment and all stocks are monitored once held in the portfolio.
As part of the Management Company’s Sustainable Investement Policy, the sub-fund complies with the exclusion rules of article 8 investment product.
ESG coverage depends of reported informations from companies and constrained by companies disclosures. An unavailable informations would impact the ability to do proper ESG research.
The sub-fund may also hold on an ancillary basis cash and cash equivalents including certificates of deposit and shortterm deposits.
The sub-fund may invest for maximum 10% of its net assets in funds that have been selected in accordance with a number of qualitative and quantitative criteria. The qualitative analysis assesses the stability and strength of the investment manager, as well as its investment process and philosophy. The quantitative selection process aims to select only funds with proven risk-adjusted performance.
Investments in debt securities will not exceed 15% of its net assets.
The instruments described below are not covered by the ESG analysis.
The sub-fund may invest in derivative instruments and other financial instruments as described in Appendix 2 of the full prospectus for efficient portfolio management only.
This sub-fund is actively managed and is compared to the risk benchmark as described in Appendix 2 for performance and risk level indicator purposes. However, the reference to this index does not constitute any objective or limitation in the management and composition of the portfolio and the sub-fund does not restrain its universe to the index components.
The index does not evaluate or include its constituents on the basis of environmental and/or social characteristics and is therefore not aligned with the ESG characteristics promoted by the sub-fund.
Therefore, returns may deviate materially from the performance of the reference index.
