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CNP Assurances

PRI reporting framework 2018

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ESG issues in asset allocation

SG 13. ESG issues in strategic asset allocation

New selection options have been added to this indicator. Please review your prefilled responses carefully.

13.1. Indicate if your organisation executes scenario analysis and/or modelling in which the risk profile of future ESG trends at portfolio level is calculated.

Is this scenario analysis based on a 2°C or lower scenario?

SG 13.1a CC. Pleased describe the resilience of your organisation’s strategy, considering different future climate scenarios.

Strategy affected
Changes to strategy
Description of scenario and time-horizon
How analysis has been used
          Listed equities: exposed to regulatory, technological, market and reputational risk, especially for companies 
in the Energy, Transport, Materials and Construction, Agriculture and Food sectors.
        
          reduce carbone
footprint by 47%
        
          from 2014 by 2021, it is more
than twice the France
commitments at Cop21
        
          at end 2017, the target is 77%. CNP
Assurances engage with companies to
encourage them to set emission reduction
targets, and to strengthen their climate
strategy.
        

13.2. Indicate if your organisation considers ESG issues in strategic asset allocation and/or allocation of assets between sectors or geographic markets.

We do the following

13.3. Additional information. [OPTIONAL]

Other strategies of CNP Assurances, considering different future climate scenarios:

  • Real Estate : market and regulatory risk:

Reducing the energy consumption of the entire property portfolio by 20% by 2020 in comparison with 2006. CNP Assurances has already rolled out a €150 million renovation programme.
The CNP Assurances objective is consistent with the national low-carbon strategy, which calls for a 28% reduction in energy consumption between 2010 and 2030.

  • Real estate : physical risk

CNP Assurances started in 2017 a more detailed analysis regarding the physical risk of its real estate
in order to benefit from an exhaustive vision of the climate risk it might be exposed to.
Scenario GIEC RCP4.5 et RCP 8.5 horizon 2050.

  • Forestry : physical risk

Integration of viewpoints on climate change into management plans: analysis of the expected impact of local climate change, the adaptation of existing tree and plant species and production cycles.
CNP Assurances’ strategy of sustainable exploitation of forests matches the national low carbone strategy.
The spread of forest assets also reduces the risk to extreme events such as storms or drought. Plant species diversity is a genuine means of spreading the risks run with each species in respect of climate change.


SG 14. Long term investment risks and opportunity

14.1. Describe the process used to identify short, medium and long-term risks and opportunities that could have a material impact on your organisation and its activities.

The risk management system incorporates risk as a component of all decision-making processes.

The strategic priorities in terms of risk management are decided by the Board of Directors  based on input from the Audit and Risk Committee.

 Risk management was informed by frequent committee meetings, both cross-functional and focused on specific risk categories. Of particular note for assets were the Investment Committee, the Asset Risk Monitoring Committee, the Strategic Asset Allocation Committee and the Asset/Liability Management Committee.

The Board of Directors has accordingly validated the inclusion of ESG criteria in asset management as part of its

annual review of the investment strategy. The efficiency of the implementation of the approach is demonstrated by the SRI commitment of the two main delegated management companies: Natixis AM, with its dedicated subsidiary Mirova, and LBPAM, which together manage the directly held assets, i.e., more than 70% of the portfolio.

This approach, covered 80% of the portfolio at the end of 2017.

14.1 CC. Describe the processes used to determine which climate-related short, medium and long-term risks and opportunities could have a material impact on your organisation and its activities.

We have started to disclose climate related risks and opportunities for our portfolios (see below) and intend to integrate TCFD-aligned disclosure into financial reporting by 2020.

Financial risks associated with the effects of climate change:

CNP Assurances  have identified the following physical and transition risk factors and implemented measures to mitigate them:

14.2. Some investment risks and opportunities arise as a result of long term trends. Indicate which of the following you act on.

14.2a cc. Please describe how you define “short”, “medium” and “long term”, and describe your material climate-related issues over these time horizons.

Definition
Description of material climate-related issues
Short term
          Transition risk
        
          Asset values are potentially exposed to regulatory, technological, market and reputational risk, especially property assets and investments in the energy, transport, materials, construction and agri‑food sectors. The Group’s exposure to these risks is limited because investments in each of these sectors represent less than 6% of our total equity and bond portfolios.
        
Medium term
          Transition risk
        
          Asset values are potentially exposed to regulatory, technological, market and reputational risk, especially property assets and investments in the energy, transport, materials, construction and agri‑food sectors. The Group’s exposure to these risks is limited because investments in each of these sectors represent less than 6% of our total equity and bond portfolios.
        
Long term
          Physical risk
        
          Our property and forestry assets are located mainly in France and their exposure to physical risk is therefore limited. A more detailed review of this exposure was nevertheless launched in 2017, to obtain a holistic view of the Group’s climate risk exposure.
        

14.3. Indicate which of the following activities you have undertaken to respond to climate change risk and opportunity

14.4. Indicate which of the following tools you use to manage emissions risks and opportunities

14.4a CC. Please provide further details on these key metric(s) used to assess climate related risks and opportunities.

Metric Type
Coverage
Purpose
Metric Unit
Metric Methodology
Metric Trend
Limitations / Weaknesses
Carbon footprint (scope 1 and 2)
          DIRECTLY HELD LISTED EQUITIES
        
          to contribute to the energy and environmental transition
        
          tonnes of carbon dioxide equivalent per thousand euros invested
        
          Emissions under Scope 1 (direct GHG emissions) and Scope 2 (energy-related indirect emissions) are taken into account to calculate the carbon footprint. CNP Assurances estimates GHG emissions of portfolio companies without eliminating overlap, based on the portfolio’s gross asset value.
        
          At 31 December 2017, the carbon footprint is estimated at 0.3 tonnes of carbon dioxide equivalent per thousand euros invested, compared with 0.47 t.CO2eq. at 31 December 2014 that is a reduction of 36%. CNP Assurances has set itself the goal of reducing the end-2014 level by 20% by 2020 so it reinforce the goal of reducing by 47% by 2021.
        
          Estimates are volatile, and depend notably on the scope and data collection methods used in the various companies, as well as changes in reference emission factors. As such, while the 2016 results are very encouraging, CNP Assurances remains vigilant and committed.
        
Exposure to carbon-related assets
          exclusions on activities using thermal coal (mining and electricity generation), all corporate asset under management
        
          to reduce stranded asset, Excluding the acquisition of new financial assets: companies mining coal or producing coal-based energy when more than 15% of their revenue is derived from thermal coal +Exclusion from the portfolio of financial assets: companies mining coal or producing coal-based energy when more than 25% of their revenue is derived from thermal coal.
        
          amount of asset invested
        
          Trucost collects and analyses data obtained from companies, securing them by cross-referencing them with data collected by another specialised service provider and with information obtained during discussions with issuers.
        
          since 2016, no amount of asset invested in companies mining coal or producing coal-based energy where more than 25% of their revenue is derived from thermal coal.
        
          When the necessary detailed data are not disclosed, Trucost makes estimates through a sector approach, based on similar and relevant data. As the Trucost data by definition date back at least a year, CNP Assurances reserves the right not to exclude companies announcing a significant change in strategy in the aim of reducing the share of thermal coal in their future revenue. This update optimises support for the energy and environmental transition.
        
Other emissions metrics
          Real estate
        
          renovation to reduce energy consumption
        
          CO2 equivalent emissions avoided by the renovation of buildings
        
          Renovation work serves to avoid CO2 emissions. CNP Assurances has monitored this indicator since 2012.
        
          The
total theoretical emissions avoided through work carried out since 2008 amounts to 4033  t.CO2eq./year.
        
          
        

14.6. Additional information [Optional]

14.7 CC. Describe your risk management processes for identifying, assessing, and managing climate-related risks.

Please describe

The risk management system is part of the comprehensive strategic management process led by the Chief Executive Officer.

Risk management was informed by frequent committee meetings, both cross-functional and focused on specific risk categories. Of particular note for assets were the Investment Committee, the Asset Risk Monitoring Committee, the Strategic Asset Allocation Committee and the Asset/Liability Management Committee.

The aim of identifying and assessing recurring risks is to provide governance structures with the information needed to manage the risks inherent to each business activity and to define a risk management strategy for the Group as a whole.

The Board of Directors has accordingly validated the inclusion of ESG criteria in asset management as part of its annual review of the investment strategy. The efficiency of the implementation of the approach is demonstrated by the SRI commitment of the two main delegated management companies: Natixis AM, with its dedicated subsidiary Mirova, and LBPAM, which together manage the directly held assets, i.e., more than 70% of the portfolio. This approach, which has been rolled out gradually since 2006 and which covered 80% of the portfolio at the end of 2017.

CNP Assurances have identified the physical and transition risk factors and implemented measures to mitigate them.

14.8 CC. Describe your processes for prioritising climate-related risks.

Priority is set according to the materiality of risk, based on risk factors such as physical risk and transition risk , Initiated through the development of a risk and opportunity approach in 2015.

Analysis of climate information on the various points (CDP reporting, Carbon Impact Analytics assessment of the contribution to the energy and environmental transition, Mirova and LBPAM ESG ratings, Mirova and LBPAM analysis of climate challenges) is performed on a company-by-company basis on companies with the highest level of GHG emissions, i.e., 20 stocks covering 90% of the carbon footprint of the equities portfolio.

The goal is to identify companies facing the biggest carbon challenge that have yet to change their strategy, with a view to establishing appropriate dialogue. Cross-referencing companies that currently have a low or negative contribution on climate issues with those without or with an insufficiently ambitious low-carbon future strategy helped bring a number of players to light. The list was backed up by analyses carried out by our management companies.

14.9 CC. Do you conduct engagement activity with investee companies to encourage better disclosure and practices around climate-related risks?

Please describe

In keeping with its commitment as a responsible shareholder, CNP Assurances has set up dialogues and commitments with key stakeholders to ensure that they are aware of the risks and opportunities involved, to support them in their transition to a carbon-free economy. CNP Assurances became in 2017 membership of Climate Action 100+, a platform for collaborative shareholder engagement.

14.10 CC. Describe how you use data from climate-related disclosures.

The data to estimate carbon footprint are the Scope 1 and 2 emission data published by companies, retrieved primarily from CDP. CNP Assurances estimates GHG emissions of portfolio companies without eliminating overlap, based on the portfolio’s gross asset value.

CNP Assurances use also Carbon Impact Analytics approach developed by Carbone 4. This innovative methodology serves to measure the carbon footprint in two stages:

  • Measurement of GHG emissions generated and avoided by companies across their entire value chain (Scopes 1, 2 and 3).
  • Evaluation of the contribution to the environmental and energy transition by qualitative forward-looking indicators, based on the company’s investments in low-carbon challenges and spending on related research and development, the carbon footprint figures across the three scopes, as well as the company’s positioning and strategy, transparency and reporting quality.

Analysis of information is performed on a company-by-company basis on companies with the highest level of GHG emissions. The goal is to identify companies facing the biggest carbon challenge that have yet to change their strategy, with a view to establishing appropriate dialogue. These assessments provide a basis for engagement activities, accompanied if necessary by management positions.

 


SG 15. Allocation of assets to environmental and social themed areas

New selection options have been added to this indicator. Please review your prefilled responses carefully.

15.1. Indicate if your organisation allocates assets to, or manages, funds based on specific environmental and social themed areas.

15.2. Indicate the percentage of your total AUM invested in environmental and social themed areas.

2 %

15.3. Specify which thematic area(s) you invest in, indicate the percentage of your AUM in the particular asset class and provide a brief description.

Area

Asset class invested

0.43 % of AUM

Brief description and measures of investment

An additional €1362 million is invested directly in green bonds funding specific environmental projects.

Infrastructures 0,33% : Investments in renewable energy infrastructure, sustainable mobility and water and waste treatment represented total assets of €1041 million at 31 December 2017. At the end of 2015, with management company Meridiam, CNP Assurances launched the “Meridiam Transition” infrastructure fund to finance innovative development projects related to the energy transition, local services such as heating systems or energy from recovered waste, electricity and gas grids, and innovative renewable energy.

 

Asset class invested

1.6 % of AUM

Brief description and measures of investment

CNP Assurances’ maintenance and renovation programmes for the property assets in its portfolio constantly aim to make the properties more energy efficient. Renovation projects are carried out to the highest environmental standards (31% of property assets under direct management were certified or labelized at the end of 2017, a significant increase compared with 2016).

Asset class invested

0.1 % of AUM

Brief description and measures of investment

  • CNP Assurances is France’s largest private owner of woodland, with 54,077 hectares at 31 December 2016. Société Forestière, a 50%-owned subsidiary, applies sustainable management techniques that help to prevent fires, promote biodiversity and anticipate the effects of climate change. In 2003, in addition to ISO 9001 certification, all of CNP Assurances’ woodland assets were certified by the Pan European Forest Council (PEFC), which guarantees that the timber comes from sustainably managed forests.

Asset class invested

Brief description and measures of investment

Asset class invested

Brief description and measures of investment

0,08%

Be they innovative start-ups or SMEs with an established presence in their market, operating in the high-tech sector or established industrial segments, these companies play a strategic role in strengthening France’s economic fabric, creating jobs and attracting foreign investment. Under the OPEN CNP programme launched in 2016, CNP Assurances plans to devote €100 million over five years to developing partnerships with innovative start-ups in businesses close to its own. Three investments of various kinds were made in 2016. After supporting a crowdlending platform for SMEs, CNP Assurances chose to fund a telemedicine solution to fight against social and geographical inequalities in access to healthcare. Lastly, a few months ago, it gave support to a new online health insurance company dedicated to start-ups and SMEs.

Also in 2016, CNP Assurances partnered with the NovESS fund, whose objective is to support the transition and change of dimension of the Social and Solidarity Economy.

 

CNP Assurances has invested in several socially beneficial funds in a total amount of nearly €140 million at 31 December 2017. Examples include financing small businesses that have trouble raising capital due to social barriers, and supporting SMEs facing financial hardship.


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