Fund Size: £48.22m

Total screened & themed / SRI assets: £44400.46

Total Responsible Ownership assets: £51607.60

Total assets under management: £125342.06

As at: 31/05/24

Contact: benjamin.rumary@candriam.com

Overview

Filters

Fund information

Policy

The companies comprising our investable universe must have relevant exposure or reach to one or more of the following sub-themes:

• Essentials: companies that contribute to children’s basic needs (water, nutrition, sanitation, healthcare, housing, family support)
• Development: companies contributing to children’s development needs (Education, infrastructure, safety, sports & leisure)

As it’s an Article 9 fund, the strategy excludes companies that:

• do not meet the criteria of a normative exclusion filter that takes account of compliance with international standards concerning social, human and environmental rights and the fight against corruption, such as set out in the United Nations Global Compact and the ‘OECD's Guidelines for Multinational Enterprises’. This filter aims at excluding companies that are repeatedly and materially in breach of any of these principles. Furthermore, companies that present both material and severe structural risks in terms of environmental, social and governance factors are excluded from the Sub-Fund; and/or,

• are significantly exposed to controversial activities (such as tobacco, armaments, thermal coal and certain other fossil fuels, etc) and to controversial child-related activities. The strategy does not allow investment in companies that manufacture, use or hold antipersonnel mines, cluster bombs, or chemical, biological, white phosphorus and depleted uranium and nuclear weapons; and/or

• are exposed to countries considered to have a highly oppressive regime

Process

ESG considerations are taken into account within the individual investment processes. Our ESG integration approach leverages on the frameworks and analysis conducted by the ESG Team. The analysis and views resulting from the ESG analysis are embedded in our financial frameworks. The consideration of ESG aspects in the financial framework will impact the final issuer score/color and valuation for our equity strategies. To this end, integrating ESG considerations will ultimately impact the construction of the final portfolio.

We have a bottom-up investment process:

• Thematic screening: Positive screening for companies contributing to children’s essentials of development. For this purpose, we use Bloomberg and Alphasense (AI research tool) to research for companies, as well as proprietary research.

• ESG screening: The ESG team monitors children-related controversies thoroughly across all sectors and activities. Sensitive sector include: Breast milk substitutes, Unhealthy products, Aggressive Marketing Practices (since children are more susceptible than adults to being influenced by marketing directed at them)

• Company Analysis: we assess Quality of Management, Business Growth, Competitive advantage, Value creation and Financial leverage. Each of these pillars receives a colour/score that determines the final assessment of a company.

• Portfolio Construction: within the eligible universe, the process is mainly colour-based, bottom-up stock selection; weightings in the portfolio are function of the global colours of the companies. The sector weight deviations from the benchmark are not a strategic objective; they result from our convictions on individual stocks, with top down sanity checks and other deviation boundaries. The weight is significantly impacted by the colour grade (including the ESG score), and the upside potential derived through our valuation analysis (that takes the ESG score into account as well). We favour companies that are 'green' in all aspects. An ‘orange’ company will have a lower weight and 'red' companies are in principle excluded, or extremely reduced, depending on the process.

Resources, Affiliations & Corporate Strategies

After first implementing a formal sustainability governance for the firm in 2020, we have further refined it to reflect changes within the firm but also to increase transparency vis-à-vis the investor:

• The Board of Directors is responsible for strategy and general policy. It ensures that Candriam has defined and implements a strategy in relation to ESG and corporate sustainability. In this context the Board is responsible for validating the relevant critical policies. 
• The Candriam Board of Managementis Candriam’s key decision-making body on strategic issues including ESG and corporate sustainability. It examines and approves relevant sustainability policies, including those covering sustainability risks, climate and human rights.
• The Group Strategic Committee (GSC)sets out the strategic orientations for the firm’s ESG investing (both from a product and a commercial standpoint) and Corporate Sustainability, with sustainability focus-sessions supported by Candriam’s ESG and CSR experts. The GSC oversees the due diligence approach for Climate and Human Rights risks across the value chain, including the elaboration and review of appropriate policies.

ESG

• The Sustainability Risk Committee (SRC)oversees and steers the management of extra-financial risk in the context of Candriam’s investment activities. The SRC is responsible for approving the ESG processes and framework for funds and mandates. It assesses and monitors sustainability risks and negative sustainability impacts, including climate and human rights risks, and defines companywide ESG investment-restrictions for all Candriam investment activities. The SRC oversees monitoring of respect and breaches as well as Engagement actions plans.
• The Proxy Voting Committeeprovides strategic guidance on proxy voting best practices and monitors Candriam’s voting policy.
• The Client Solutions Committee (CSC)and Product Range Committee (PRC) are the main bodies of Candriam’s regular product governance. They steer & manage the product approval and review process, including the ESG/Sustainability characteristics of products & services.  
• The ESG Steeringfollows-up on the implementation of the strategic ESG roadmap, and consists of investment, operational, IT and regulatory team workstreams.

CSR

• The CSR Ethics Committeeassesses & monitors human rights risks related to Candriam’s operations, incl Human Resources and Suppliers. It monitors the human rights due diligence process embedded within Candriam’s operations and follows up on issues alerted by operational, procurement or risk teams or via the Compliance whistleblowing procedure.
• The Candriam Institute for Sustainable Developmentoversees Candriam’s philanthropy and community impact program, through the support of initiatives in ESG research, education & entrepreneurship, social inclusion & solidarity, environment, and the fight against cancer.
• The CSR Steeringcoordinates the implementation of the CSR roadmap (incl. environmental & social aspects) and CSR reporting in the context of Candriam’s own operations, across staff, clients, operational value chain, governance and the community.

ESG + CSR

• The Sustainability Regulations Committeeoversees the follow-up of ESG/CSR regulations and coordinates the implementation of the Sustainability regulatory roadmap.

As an investment manager, we strive to integrate ESG across all processes, offering the best services and products in ESG Investing. As a company, we commit to upholding the highest sustainability standards in every dimension of our business and we believe that our new ESG Governance Framework will allow us to so in a more efficient manner.  

Dialshifter

This fund is helping to ‘shift the dial from brown to green’ by...

 ...integrating ESG factors at every step of the investment process, from applying norms-based and controversial activities exclusions, to integrating ESG criteria in the fundamental stock analysis that will be reflected (and have an impact) on the valuation of the company. Apart from its ESG and financial objectives, the fund has 2 ESG KPIs:

• achieving an overall ESG score higher than that of its benchmark index (ACWI) and
• contributing to SDGs number 3 (health care and well-being), 4 (education) and 6 (water/sanitation).

Our organisation is helping to support the Paris Climate Agreement and the Race to Net Zero by...

• Moving beyond integrating scope 1 & 2 carbon footprinting, and extending the measurement of carbon performance to scope 3 emissions where relevant;
• The integration of climate goals in ESG research and investment objectives;
• Articulating our Climate Strategy around the core functions and activities of the organization:
  • investment management products and services,
  • corporate stewardship & active ownership,
  •  the company’s own operations.

We publish a certain number of metrics both at company level and fund level.

Literature

• Fund overview & literature (including factsheet)

Last amended: 25/01/24 11:11