EDMOND DE ROTHSCHILD ASSET MANAGEMENT (FRANCE) 47, rue du Faubourg Saint-Honoré 75401 Paris Cedex 08 − France T. +33 1 40 17 25 25 − F. +33 1 40 17 24 42 www.edram.fr S.A. à Directoire et Conseil de Surveillance au capital de 11.033.769 euros Numéro d’agrément AMF GP 04000015 – 332 652 536 R.C.S. Paris SRI AFG-FIR / EUROSIF TRANSPARENCY CODE EDMOND DE ROTHSCHILD EURO SUSTAINABLE GROWTH 1 Updated on September 25 th 2015 1- The fund’s name was Edmond de Rothschild Euro SRI until September 1st 2015
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EDMOND DE ROTHSCHILD ASSET MANAGEMENT (FRANCE) 47, rue du Faubourg Saint-Honoré 75401 Paris Cedex 08 − France T. +33 1 40 17 25 25 − F. +33 1 40 17 24 42
www.edram.fr
S.A. à Directoire et Conseil de Surveillance au capital de 11.033.769 euros Numéro d’agrément AMF GP 04000015 – 332 652 536 R.C.S. Paris
SRI AFG-FIR / EUROSIF
TRANSPARENCY CODE
EDMOND DE ROTHSCHILD EURO SUSTAINABLE
GROWTH1 Updated on September 25th 2015
1- The fund’s name was Edmond de Rothschild Euro SRI until September 1st 2015
EDMOND DE ROTHSCHILD ASSET MANAGEMENT (FRANCE) 2/20
CONTENTS
1. General information .................................................................................................................................................................................. 4 2. ESGS analysis: methodology used to assess issuers ............................................................................................................................ 10 3. Investment process ................................................................................................................................................................................. 13 4. Controls and ESG reporting .................................................................................................................................................................... 16 GLOSSARY ................................................................................................................................................................................................ 18
EDMOND DE ROTHSCHILD ASSET MANAGEMENT (FRANCE) 3/20
Declaration of commitment
Socially Responsible Investing is a fundamental feature of the Edmond de Rothschild Euro
Sustainable Growth fund’s strategic positioning and investment strategy. We have been active in
the field of SRI since 2009 and are proud to implement the Transparency Code. This 5th year of
adherence to the Code covers the period from September 1st 2015 to July 30th 2016. Our full
answers to the SRI Transparency Code are disclosed below and will be available in the upcoming
annual reports produced for each of our open-ended SRI funds, as well as on our website.
Compliance with Transparency Code
The investment firm, Edmond de Rothschild Asset Management (France), commits to providing
transparent communication. We consider that we are as transparent as possible in light of the
regulatory and competitive landscape of the country in which we operate.
September 1st 2015
EDMOND DE ROTHSCHILD ASSET MANAGEMENT (FRANCE) 4/20
1. GENERAL INFORMATION
Edmond de Rothschild Asset Management (France)
1a) Name of the investment firm managing the fund concerned with this Code
This present code applies to the FCP Edmond de Rothschild Euro Sustainable Growth (formerly
known as Edmond de Rothschild Euro SRI) managed by Edmond de Rothschild Asset Management
(France).
With close to €22.5 billion in assets under management as of 31/12/2014, Edmond de Rothschild Asset
Management (France) is the asset management subsidiary of the Edmond de Rothschild Group in France.
With global AUM close to 49 billion euros, the Edmond de Rothschild Group is a key partner for institutional
investors, banks, insurance companies and fund distribution platforms. The group’s product and service offer
covers a wide range of investment strategies designed to create strong added value: equity, corporate debt,
asset allocation and sovereign debt, alternative funds, multi-management, Socially Responsible Investment
(SRI), and overlay.
EDMOND DE ROTHSCHILD ASSET MANAGEMENT (France)
47, rue du Faubourg Saint-Honoré
75401 Paris Cedex 08
Public limited company with Executive and Supervisory Boards and a capital of €11,033,769 euros
Authorised by the AMF under reference GP 04000015
332.652.536 R.C.S. Paris
Website: http://www.edram.fr
1b) Please describe Edmond de Rothschild Asset Management (France)’s broad approach to integrating environmental, social and governance criteria (ESG).
EDMOND DE ROTHSCHILD ASSET MANAGEMENT’S APPROCH BUILDS ON THE EXISTING
SUSTAINABLE DEVELOPMENT STRATEGY OF THE EDMOND DE ROTHSCHILD GROUP
Edmond de Rothschild Asset Management (France)’s SRI approach feeds into the Edmond de Rothschild
Group’s sustainable development approach with the view to offering clients exhaustive and dedicated
solutions able to combine their values with their performance objectives, whether financial or extra-financial.
EDMOND DE ROTHSCHILD ASSET MANAGEMENT (FRANCE) 5/20
This commitment is driven at the highest level by the Group and builds on the Sustainable Development
Strategy whose “5 pillars for action” include sustainable and responsible investment. The Edmond de
Rothschild Group’s sustainable development strategy is described in the Sustainable Development Report
EDMOND DE ROTHSCHILD ASSET MANAGEMENT (FRANCE)’S VOTING POLICY
A new voting policy was drawn up at the end of 2009 that can be applied in France and globally, for all funds
managed by Edmond de Rothschild Asset Management (France). This voting policy – effective from the 2010
Shareholder Meetings season – is applied in consistent manner to all stocks held in portfolios managed by
1 Environment-Social-Governance
2 The full answers provided by Edmond de Rothschild Asset Management (France) in the most recent edition of the UN-PRI questionnaire are available by
cliecking on the following link: http://www.edmond-de-rothschild.com/SiteCollectionDocuments/asset-management/isr/EDRAM-EN-Public-Transparency-Report.pdf.
EDMOND DE ROTHSCHILD ASSET MANAGEMENT (FRANCE) 6/20
Edmond de Rothschild Asset Management (France), as long as the information provided by the issuer is
sufficient and that the custodian banks are able to register the vote. Every year, we may review or amend our
voting policy as we come across specific cases or situations that were not covered.
Furthermore, the principles of this voting policy are in keeping with the SRI approach deployed by Edmond
de Rothschild Asset Management (France): they set forth Edmond de Rothschild Asset Management
(France)’s position on Environmental or Social resolutions submitted at shareholder meetings, in addition to
fundamental governance issues.
For more details on our policy, please refer to the Voting Policy document available on our website:
1c) Please provide a list of your SRI funds and describe the resources that are specific to
SRI strategies.
In response to evidence that environmental and social issues have become a major challenge for the years to
come, and in light of existing commitments and initiatives conducted by the Edmond de Rothschild Group,
Edmond de Rothschild Asset Management (France) launched its SRI fund offer:
With the launch on 26th June 2009 of Edmond de Rothschild Euro SRI, which became
Edmond de Rothschild Euro Sustainable Growth on September 1st 2015, the Edmond de
Rothschild Group’s first ESG-S selection SRI fund. Edmond de Rothschild Euro Sustainable
Growth is a Eurozone equity fund focusing on stocks offering a positive sustainable development
policy and attractive growth prospects. Since 2009, the fund has been granted the SRI Label from
Novethic3, which recognizes Socially Responsible Investment (SRI) funds that demonstrate a
systematic integration of Environment, Social and Governance (ESG) considerations in fund
management. The Label certifies the importance of ESG analysis on the portfolio structure.
In 2009, with changes made to one of the group’s flagship funds, Edmond de Rothschild
Tricolore Rendement. These changes involved upgrading the fund’s investment process
to include a SRI Dialogue/Engagement process on ESG-S issues. In September 2011 and
3 To find out more on Novethic’s SRI Label (http://www.novethic.fr/isr-et-rse/le-label-isr.html )
EDMOND DE ROTHSCHILD ASSET MANAGEMENT (FRANCE) 7/20
20124, Novethic awarded the SRI Label to Edmond de Rothschild Tricolore Rendement, with a special
mention for Engagement, thereby shining light on a pertinent form of SRI which remains relatively
underdeveloped on the French market.
Edmond de Rothschild Asset Management (France) also manages SRI mandates on behalf of institutional
clients who are pioneering the integration of ESG factors across their investments.
Edmond de Rothschild
Asset Management
(France)’s SRI funds
SRI Strategy AUM in million euros (€m)
as of 30/06/2015
Edmond de Rothschild
Tricolore Rendement
Engagement
on ESG issues
€1,574 m
Edmond de Rothschild
Euro Sustainable Growth
ESGS-based positive selection
(Best in universe)
€38 m
SRI mandates
ESGS-based Selection
(Best-in-class)
€1,700 m
Edmond de Rothschild Asset Management (France) is recognised as key player in the field of European
Responsible Finance, with a total €3.3 billion under management as of June 30th 2015.
TEAM OF FUND MANAGERS AND ANALYSTS RESPONSIBLE FOR EDMOND DE ROTHSCHILD EURO
SRI
Edmond de Rothschild Asset Management (France) deliberately chose to include specific SRI expertise
within the investment teams in order to promote a collaborative approach and facilitate the integration of
extra-financial issues throughout financial analysis.
In order to support the deployment of Edmond de Rothschild Asset Management (France)’s 2013-2016
Responsible Investing Strategy, the company has entered a new stage in its development with the re-
organisation of the SRI investment and analysis team, whose members have been partly redistributed within
the different investment units. The rationale behind this new organisation is to promote the acculturation of
extra-financial issues through experienced ESG correspondents – the ultimate aim being to gradually embed
extra-financial risk considerations across Edmond de Rothschild Asset Management (France)’s portfolios.
4 2012 was the final year for the Engagement Label
EDMOND DE ROTHSCHILD ASSET MANAGEMENT (FRANCE) 8/20
As of June 30th 2015, the SRI analysis and investment team includes 2 people, plus 5 SRI correspondents
deployed across the European Equity, Global Equity, Corporate Debt, Asset Allocation and Sovereign Debt
teams.
1d) Describe the contents, frequency and media used by Edmond de Rothschild Asset
Management (France) to inform investors on the incorporation of ESG factors.
Information pertaining to the Edmond de Rothschild Euro Sustainable Growth fund (monthly financial and
extra-financial reporting, fund presentation material, semi-annual inventory of stocks held in the portfolio
the Key Investor Information Document and the Prospectus) is available on Edmond de Rothschild Asset
Management (France)’s website in the SRI expertise section: “Our range of SRI funds”.
Edmond de Rothschild Asset Management (France) organises regular roundtable conferences with investors
in order to promote our SRI investment and analysis capabilities and to provide interactive and personal
answers to any questions clients may have. The investment team responsible for Edmond de Rothschild Euro
Sustainable Growth also carries out in situ client meetings.
For any additional information, investors are welcome to contact the SRI investment / analysis team by
email, or to set up an appointment using the Contacts page on Edmond de Rothschild Asset Management
(France)’s website.
EDMOND DE ROTHSCHILD ASSET MANAGEMENT (FRANCE) 9/20
THE SRI FUND “EDMOND DE ROTHSCHILD EURO SUSTAINABLE GROWTH”
1e) Please name the fund(s) concerned by this Code and provide an overview of their characteristics.
Fund name
Edmond de Rothschild Euro Sustainable Growth
(A share class)
Inception
Fund launched on: 05/07/1984. Fund investment strategy launched
on 26/06/2009 (Edmond de Rothschild Euro SRI)
Investment strategy changed on 01/09/2015 (Edmond de
Rothschild Euro Sustainable Growth)
Net assets €38 m (30.06.2015)
Curreny Euro
SRI Strategy FCP SRI with ESP-S selection and
Best-in-univers bias
Fund category Eurozone Equities
All Caps
Fund of funds No
Benchmark MSCI EMU, only for indicative
purposes
Label
Novethic SRI Label
2009, 2010, 2011, 2012, 2013, 2014 and 2015
Management Fees 2% Max (VAT incl.)
1f) Objectives behind ESG factor integration in the management of Edmond de Rothschild Euro Sustainable Growth.
Edmond de Rothschild Asset Management (France) strives to optimise its SRI capabilities on a permanent
basis in order to offer clients new analytical and investment tools that will enhance the resources already
developed by the investment firm. Our objective is to provide an efficient investment solution that
EDMOND DE ROTHSCHILD ASSET MANAGEMENT (FRANCE) 10/20
leverages on the economic growth of companies committed to addressing sustainable
development challenges.
2. ESGS ANALYSIS: METHODOLOGY USED TO ASSESS ISSUERS
2a) Fundamental principles on which the ESG methodology relies
Edmond de Rothschild Asset Management (France) considers that the ideal responsible and sustainable company is one that:
- Strives to create long-term value;
- Is aware that to achieve this goal, it has to address economic and financial challenges but also ensure:
o Quality governance, o A healthy and stimulating work environment, o The ability to control and reduce its environmental impact, o Positive relations with its stakeholders (clients, suppliers, civil society…).
- Is proactive in managing risks and seizing opportunities for sustainable development.
REFERENCES AND STANDARDS UPON WHICH OUR ESG ANALYSIS IS FOUNDED
The rating methodology and extra-financial analysis matrix were defined by our SRI investment /analysis
team and based on existing standards and references (e.g. United Nations Global Compact, OECD and WTO
conventions and official publications…).
2b) Internal and external resources for conducting this analysis
Company ratings are calculated in-house as Edmond de Rothschild Asset Management (France) firmly
believes that this process is complementary to financial analysis and offers important insights on whether the
company’s strategy is sustainable (or not).
Drawing upon the information obtained from corporate publications, extra-financial rating agencies and
various external sources, the SRI fund manager-analysts assess the European stocks held in the
portfolio from an Environment, Social, Governance and Stakeholders point of view (ESG-S).
Each of these four pillars includes a set of extra-financial criteria. The team uses this information to rate the
company. Fund managers can confirm their opinion on a given company by meeting the management; they
can also push the analysis further by addressing issues that may not have been mentioned or that require
challenging. It is also during these meetings that the SRI team engages a constructive dialogue with the
companies, especially small and midcaps, to raise awareness on any ESG-P issues specific to their sector of
activity.
EDMOND DE ROTHSCHILD ASSET MANAGEMENT (FRANCE) 11/20
2c) Key ESG analysis criteria
EXTRA-FINANCIAL CRITERIA USED FOR Edmond de Rothschild Euro Sustainable Growth
The key criteria used to assess the four E, S, G and S (Environment, Social, Governance, Stakeholder
relations) pillars are the following:
Environment (E) Social (S) Governance (G) Stakeholders (S)
Environmental risk management
Environmental programmes
∙ Eco-designed products ∙ Compliance with current
and future regulation ∙ Efforts in areas of
transportation and building management…
Human Resource Management
∙ Employee loyalty ∙ Career management
and training
Corporate governance
∙ Independent Board and Committees (audit, compensation…)
∙ Respect of minority shareholder (no anti-takeover measures)
Relations with civil society
∙ Corporate engagement in initiatives such as the Global Compact
∙ Commitment to observe: Human rights Workers’ rights Sound business
practices
Environmental footprint
∙ Greenhouse gas emissions ∙ Energy consumption ∙ Water consumption ∙ Waste treatment ∙ Pollution (heavy metals…)
Social dialogue
∙ Worker representation
∙ Management support with corporate restructuring
Transparency
∙ Disclosure of extra-financial quantitative data
∙ Audited data ∙ Easy access to
information
Client /supplier relations
∙ Responsible buying policy
∙ Tests and quantified data on client satisfaction as a basis for improvement
Impact of product or service
∙ Green innovation ∙ Lifecycle analysis
Working environment
∙ Health and safety ∙ Diversity
management
Contribution to economic and social development
∙ Dynamics in vicinity of company sites
∙ Patronage/sponsorship
Analysis is systematically documented through stock monitoring factsheets and SRI rating matrices
based on the 4 ESG-S pillars.
2d) Methodology used for ESG-based analysis and assessment (construction, assessment scale,…)
Our SRI rating model is constructed in order to allocate different weightings to criteria in order to take the
specificities of each sector or industry in account.
EDMOND DE ROTHSCHILD ASSET MANAGEMENT (FRANCE) 12/20
In practical terms, this means that different extra-financial criteria are given varying degrees of importance
depending on the company’s sector or industry; each of the four pillars is therefore allocated a different
weighting. For instance, a chemicals company will be more concerned by environmental issues, while a
services company will be allocated a higher weighting for social factors.
EXCLUSION OF COMPANIES INVOLVED IN CLUSTER BOMBS OR ANTI-PERSONNEL MINES
Beyond the exclusion of companies whose business is any way related to cluster bombs and anti-personnel
mines - in compliance with an internal policy applicable to all Edmond de Rothschild Asset Management
(France)’s funds (managed in house or sub-advised) - there is no sector, geographic, market cap or thematic-
driven exclusion/inclusion bias within Edmond de Rothschild Euro Sustainable Growth.
A “BEST IN UNIVERSE” INVESTMENT PROCESS
In order to determine whether the companies held in the portfolio meet the criteria of a “responsible and
sustainable company” as per Edmond de Rothschild Asset Management (France)’s SRI standards, the
investment team responsible for Edmond de Rothschild Euro Sustainable Growth grant the stocks an
internal SRI rating. These ratings are based on a seven-point scale ranging from CCC5 to AAA and are
determined by aggregating the company’s global results on different ESG-S criteria, as per the
rating matrix designed by the SRI specialist team. Extra-financial criteria are allocated different weightings
according the company’s sector or industry; however, the overall rating is determined on an absolute basis
and is not relative to the sector performance. To enter the portfolio, a stock must have a minimum
rating of A.
The “Best in universe” approach favours companies with the strongest ESGS ratings – i.e. those with
ratings that are as close as possible to AAA regardless of their sector or industry. As some sectors may not
include highly rated AAA, AA or A companies, they may not feature in the portfolio of Edmond de Rothschild
Euro Sustainable Growth.
5 AAA = ESGS rating above 15/20, AA = rating between 13 and 15, A = rating between 11 and 13, BBB = rating between 9 and 11, BB = rating between 7 and 9, B = rating between 5
eand7, CCC = rating under 5.
EDMOND DE ROTHSCHILD ASSET MANAGEMENT (FRANCE) 13/20
2e) ESG assessment revision frequency
The ESGS ratings of companies covered by our in-house extra financial analysis are updated every 18 to 24
months.
As far as the ESGS methodology is concerned, our 4 main research pillars (Environment, Social, Governance
and Stakeholders – ESGS) are not set to change. However, within these pillars, the extra-financial criteria or
weightings can be modified or enhanced if and when we identify new sustainable development issues.
3. INVESTMENT PROCESS
3a) How are ESG criteria taken into account when defining the universe of eligible stocks for the portfolio?
The universe of eligible stocks for Edmond de Rothschild Euro Sustainable Growth only includes stocks
with extra-financial ratings of A or above.
SELECTION RATIO
From the investment universe (universe of rated stocks) to a universe of SRI eligible
stocks (i.e. ESGS ratings of A and above)
+/- 40 %
3b) How are ESG criteria taken into account at the portfolio construction stage?
The investable universe is defined through the selection of stocks with minimum ratings of A, combined with a selection of growth stocks that operate principally on market segments that are typically exposed to sustainability issues: energy transition, healthcare and population, digitalisation, education & research…
From this investable universe, we conduct financial and stock market analysis and construct a portfolio of around 50 positions.
The structure of the investment process is summarised below:
EDMOND DE ROTHSCHILD ASSET MANAGEMENT (FRANCE) 14/20
The investment process shown above describes the different internal investment constraints that have been
set by fund managers. This is the process as it stands today and it may change over time.
The analysts/fund managers also monitor impact indicators on a regular basis. These indicators help the
team to develop a better understanding on the extra-financial impact of the portfolio. The fund currently
focuses on 4 indicators: CO2 gas emissions (in t/million sales), changes in the accident rate, the number of
women on the executive committee, the signature of the United Nations Global Compact. These indicators
enable the fund managers to keep a close watch on the fund’s extra-financial performance relative to its
benchmark but do not constitute investment criteria.
DISINVESTMENTS TRIGGERED BY ESGS ISSUES
The ESGS ratings for Edmond de Rothschild Euro Sustainable Growth are determined on a dynamic basis.
Controversies can cause ESGS ratings to be downgraded, depending on the severity and frequency of the
issue. In the event of a severe controversy, the company’s ESGS rating is downgraded; the fund manager-
analysts will then put the stock on watch in order to review details and assess the company’s response to
correct the situation. If a company’s rating falls below A, the stock is removed from the portfolio within 15
days.
Generally speaking, disinvestments can be driven by a change in the fund managers’ financial or extra-
financial convictions. Meeting the company’s management can alter our view of the company, cause the
up/downgrade of its ESGS rating, or even trigger an exit from the portfolio due to a low rating.
As far as information on portfolio movements is concerned, new portfolio holdings and exits are recorded in
the fund’s monthly financial and extra-financial reporting, where the fund manager may mention any ESGS-
related issues in the comment section, where relevant.
EDMOND DE ROTHSCHILD ASSET MANAGEMENT (FRANCE) 15/20
3c) Have you developed a specific ESGS Engagement process for Edmond de Rothschild Euro Sustainable Growth?
The investment process for Edmond de Rothschild Euro Sustainable Growth does not include a formal
engagement policy. However the SRI fund manager-analysts do engage with the companies they meet in
order to assess the efforts deployed to manage extra-financial issues and the results obtained in relation to
their stated objectives. These factors are used to update the ESGS ratings. In this respect, during 2014, the
SRI investment and research team carried out 42 ESGS-focused company visits. Most of these visits are in
situ and are traceable via meeting minutes and ESGS ratings revisions, where relevant.
3d) Is there a specific Voting Policy for Edmond de Rothschild Euro Sustainable Growth?
Edmond de Rothschild Euro Sustainable Growth does not have its own Voting Policy. Edmond de Rothschild
Asset Management (France)’s voting policy applies consistently to all equity funds managed by Edmond de