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Edmond de Rothschild Asset Management (France) (EDRAM)

PRI reporting framework 2018

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You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes » (A) Implementation: Screening

A) 実施:スクリーニング

LEI 04. Types of screening applied

04.1. 組織内でアクティブ運用している上場株式に適用するスクリーニングの種類を記載し、説明してください。

スクリーニングの種類

スクリーニング実行者

説明

Exclusion of any investments related to Anti-personnel mines (APM) and Cluster Bombs

Screening and Exclusion of a list of banned countries

 

Exclusion of any investments related to Anti-personnel mines (APM) and Cluster Bombs

All of our equity assets under management apply a negative screening approach (used systematically across all the asset management company's funds) based on an  exclusion of companies whose business is in any way related to cluster bombs and anti-personnel mines, in accordance with the Oslo Treaty and the Ottawa Convention signed by the French Government.

 

Screening and Exclusion of a list of banned countries

Edmond de Rothschild Asset Management (France) has drawn up a list of banned countries for which it is necessary to obtain prior approval from Internal Control and Compliance Department before making any investments. Nearly 30 countries appearing on this list are subject to an embargo put in place by the United States and Europe or have been subject to financial sanctions or to asset freezes. In order to enforce this screening, pre-trade blocking limits have been set up in the Dimension front office tool 

スクリーニング実行者

説明

For our equity funds, it concerns one open-ended SRI funds and two institutional mandates.

For the SRI open-ended fund -Edmond de Rothschild Euro Sustainable Growth, the RI specialist team grants the stocks an internal SRI rating. These ratings are based on a seven-point scale ranging from CCC to AAA and are determined by aggregating the company's global results on different ESG (Environment-Social-Governance) criteria, as per the rating matrix designed by the RI specialist team. Extra-financial criteria are allocated different weightings according to the company's sector or industry: however, the overall rating is determined on an absolute basis and is not relative to the sector performanceTo enter  the portfolio, a stock must have a minimum rating of A

04.2. スクリーニング基準の設定方法、基準の見直し頻度、基準の変更を顧客や受益者に通知する方法について説明してください。

POSITIVE SCREENING

Edmond de Rothschild Asset Management (France)'s rating methodology and the matrix for extra-financial analysis were drawn up by our RI fund management/research team following a survey of existing data frameworks (UN Global Compact, OECD or ILO-led conventions and official texts). A particular attention is paid on Global Compact participation and related controversies: this norms-based  compliance watch is not applied according to a systematic exclusion but as one of the components  of our ESG analysis.

Our SRI rating model was built with weightings that differ from the sector-based ESG criteria which take the specificities of each sector or industry into account.

Beyond the exclusion of companies whose business is in any way related to cluster bombs and anti-personnel mines, there is neither a sector or thematic-driven exclusion/inclusion bias, nor a geographic (within the euro zone) or market cap bias in Edmond de Rothschild Asset Management (France)'s SRI funds.

The ESG ratings of companies covered by our in-house extra financial analysis are updated every 18 to 24 months.

Our 3 main research pillars (Environment, Social and Governance - ESG) are not set to change. However, please note that :

  • the former 4th pillar of analysis “Stakeholders”has been merged in the 3 ESG pillars in 2017.
  • within these pillars, the extra-financial criteria or weightings can be modified according to their relevance or enhanced following the identification of new sustainable development issues.
  • These changes are communicated to the clients in the SRI Transparency code and the monthly factsheet.

 

NEGATIVE / EXCLUSIONARY SCREENING

 

  • Exclusion of any investments related to Anti-personnel mines (APM) and Cluster Bombs

All of our equity assets under management apply a negative screening approach (used systematically across all the asset management company's funds) based on an  exclusion of companies whose business is in any way related to cluster bombs and anti-personnel mines, in accordance with the Oslo Treaty and the Ottawa Convention signed by the French Government.

 

  • Screening and Exclusion of a list of banned countries

Edmond de Rothschild Asset Management (France) has drawn up a list of banned countries for which it is necessary to obtain prior approval from Internal Control and Compliance Department before making any investments. Nearly 30 countries appearing on this list are subject to an embargo put in place by the United States and Europe or have been subject to financial sanctions or to asset freezes. In order to enforce this screening, pre-trade blocking limits have been set up in the Dimension front office tool 

COMMUNICATION REGARDING CHANGES ON OUR ESG RESEARCH DATABASE

In terms of external communications regarding changes made to Edmond de Rothschild Asset Management (France)'s ESG research database, all relevant publications are updated regularly on our website in the "Responsible Investment" section (http://www.edmond-de-rothschild.com/site/France/en/asset-management/our-expertise/socially-responsible-investment), accessible to all stakeholders and clients. In addition, Edmond de Rothschild Asset Management (France) launched in 2013 a new publication dedicated to SRI, "The SRI Chronicles". This public newsletter can also include information on any changes made to the ESG/SRI investment process.

Finally, in the context of Edmond de Rothschild Asset Management (France)'s management of SRI mandates, the Investment and Extra-Financial Investment Committees organised for institutional investors provide an appropriate venue for disclosing any information or discussing any changes made to Edmond de Rothschild Asset Management (France)'s SRI research or investment process..


LEI 05. Processes to ensure screening is based on robust analysis

05.1. スクリーニングが徹底した分析に基づいていることを確実にするために、組織が使用しているプロセスを選択してください。

          Annual revision and enhancement of the subcriteria of our own ESG analysis framework; the internal & external controls made on our processes
        

05.2. ESGスクリーニング戦略の一環で包括的なESG調査の対象となるアクティブ上場株式ポートフォリオの割合を示してください。

05.3. 第三者のESG評価がスクリーニング目的で更新される頻度を示してください。

05.4. 組織のESGスクリーニングを構築するための組織内リサーチを精査する頻度を示してください。

05.5. 補足情報 [任意]

Positive screening process for our SRI funds and mandates

In addition to the controls that are carried out in-house, the strength of Edmond de Rothschild Asset Management (France)'s ESG research process is further evidenced by our management of SRI institutional mandates which require:

  • Strict controls on portfolio management related to the deployment of SRI research according to ESG specifications requested by the client.
  • External portfolios reviews carried out by extra-financial rating agencies:  
  •     1) ​Vigeo-Eiris reviewed one of the portfolios managed by Edmond de Rothschild Asset Management (France) on behalf of two institutional clients. This process resulted in Vigeo-Eiris granting Edmond de Rothschild Asset Management (France) one of the highest ratings relative to the client's other portfolio managers.
  •     2) On behalf of an institutional mandate, Trucost measures the carbon footprint of the SRI portfolio managed by Edmond de Rothschild Asset Management (France).
  • The production of specific reports several times in the year with a focus on ESG analysis / portfolio management: these also includes information on how we exercised our voting rights during Shareholders' meetings.

Besides, the ESG ratings of companies covered by our in-house extra financial analysis are updated every 18 to 24 months. The ESG rating can also be updated following to the current news and events, the controversies or still company meetings:

The ESG ratings for our SRI funds managed under an ESG positive screening strategy are determined on a dynamic basis: controversies can cause ESG ratings to be downgraded, depending on the severity and frequency of the issue.In the event of a severe controversy, the company’s ESG 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 in a period not exceeding 90 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 ESG rating, or even trigger an exit from the portfolio due to a low rating.

As far as information on SRI portfolios movements is concerned, new SRI portfolios holdings and exits are recorded in the SRI funds’s monthly financial and extra-financial reporting, where the funds managers may mention any ESG-related issues in the comment section, where relevant.

NEGATIVE / EXCLUSIONARY SCREENING PROCESS FOR ALL OUR EQUITY FUNDS

Edmond de Rothschild Asset Management (France) has implemented a policy excluding stocks involved in the production of cluster bombs and anti-personnel mines from all of the UCITS/AIF and mandates that it manages.

The list of stocks involved in the production of cluster bombs and anti-personnel mines is drawn up at least once a year by the RI team, in cooperation with the Chief Investment Officer. This list is based  publicly-available lists (e.g. PGGM, Norwegian Pension Fund, Australian Pension Fund, etc.) and internal research.

At the Voting and Engagement Committee, which meets at least twice a year, this list is submitted by the RI investment team and, reviewed and validated as appropriate by the Committee. The Committee's minutes include the validation of the list and its composition. It is circulated to Risk Department so that   the front office tool limits are updated accordingly..

This blocking limit applies to all of the portfolios managed by Edmond de Rothschild Asset Management (France).

Besides, Edmond de Rothschild Asset Management (France) has drawn up a list of banned countries for which it is necessary to obtain prior approval from Internal Control and Compliance Department of the Edmond de Rothschild Asset Management (France) before making any investments. As a result, this list of banned countries has an impact in the authorisation of our investment for the equities, corporate and sovereign debt.

Nearly 30 countries appearing on this list are subject to an embargo put in place by the United States and Europe or have been subject to financial sanctions or to asset freezes.


LEI 06. Processes to ensure fund criteria are not breached

06.1. ファンドの基準に違反がないことを確認するために組織が使用しているプロセスを記載してください。

06.2. ファンドのスクリーニング基準に対する違反が判明した場合、これらの違反を是正するために従うプロセスを説明してください。

Edmond de Rothschild Asset Management (France)’s Risk Control Group has set up specific risk controls via “Dimension”, our front/middle/risk management tool, applicable to the Edmond de Rothschild Euro Sustainable Growth fund:

  • the tool is set to check that every stock within the portfolio has a SRI rating
  • the tool operates on a pre-trade and  post-trade basis to prevent the potential inclusion of a poorly-SRI rated stock in the portfolio (i.e. rating < or = to BBB). 
  • every day, the Risk Control Group checks on a post trade basis that all portfolio holdings still have SRI ratings of "A" or above and therefore, that any stock with an inferior rating due to a downgrading is going to be sold within one month, as soon as practicable in the best interest of the unitholders.

Furthermore, Edmond de Rothschild Asset Management (France)’s Internal Control carries out an annual review of the investment process, including the ESG research methodology applicable to these SRI funds (as well as for the SRI mandates process) . This control of the process involves checking the factsheets and the in-house SRI ratings for a sample of stocks  in the SRI open ended funds and mandates portfolios: every stocks within these SRI portfolios must have an ESG rating. 

Finally, the transparency and thoroughness of our ESG research methodology is audited by third parties such as EY France (within the new SRI labelling process launched  and supported by the French Finance Ministry and awarded for the equity SRI fund Edmond de Rothschild Euro Sustainable Growth), or still by institutional investors in the course of reviewing the SRI mandates that we manage on their behalf.  

CONTROL PROCEDURES DESIGNED TO ENSURE THE COMPLIANCE OF THE SCREENING AND EXCLUSIONARY PROCESS FOR ALL OF OUR EQUITY FUNDS

  • Exclusion related to Anti-personnel mines and Cluster Bombs

The stocks within the forbidden list for antipersonnel landmines and cluster bombs cannot be included in the portfolio as “Dimension” – our front office tool - operates on a pre-trade basis and will block the transaction.

  • Negative / Exclusionary screening

Edmond de Rothschild Asset Management (France) has drawn up a list of banned countries for which it is necessary to obtain prior approval from Internal Control and Compliance Department of the Edmond de Rothschild Asset Management (France) before making any investments. As a result, this list of banned countries has an impact in the authorization of our investment for the equities, corporate and sovereign debt.

Nearly 30 countries appearing on this list are subject to an embargo put in place by the United States and Europe or have been subject to financial sanctions or to asset freezes.

Some countries are formally prohibited (5 countries under embargo, i.e. Cuba, Iran, Syria, North Korea and Sudan), while others are placed under a close monitoring: this triggers an analysis on a case by case basis by the internal control and compliance department which authorizes or prohibits the investment within the day.

In order to enforce this screening, systematic pre-trade blocking limits have been set up in the Dimension front office tool: this pre-trade block limit is set in all cases for the equities.

06.3. 補足情報 [任意]


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