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PRI reporting framework 2018

You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage

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

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.3a CC. Describe how your products or investment strategy might be affected by the transition to a lower-carbon economy.

Our products are impacted positively or negatively by the transition to a lower-carbon economy. It depends on the companies which are in our portfolios.

Positive impacts: companies develop products and services that are carbon/energy efficient and/or are frugal in energy in their manufacturing processes. These companies will be less impacted by energy price increases and/or carbon-related regulations.

Negative impacts: companies involved in carbon intensive activities and where pricing power is low will suffer from this transition.

01.3b CC. Describe how climate-related risks and opportunities are factored into your investment strategies or products.

Having a long-term investment horizon and caring about the impact of companies’ activities on our planet, Comgest is committed to monitoring and managing climate risks carefully within its investment processes. Comgest is a signatory to the Global Investor Statement on Climate Change, to the Climate Action 100+ initiative, and supports the recommendations of the TCFD.

Comgest’s portfolios have generally low or no exposure to carbon intensive industries, as a result of our investment selection process.

Otherwise, climate-related risk and opportunities for each company in our portfolios (when relevant) are taken into account in our fundamental analysis and may have an impact in our valuation.

At portfolio level, the carbon footprint analysis, although relying on estimates sometimes, gives us an aggreagted picture that can be compared with the benchmark. Results of this footprinting exercise realised by Trucost on our 3 flagship funds show that our portfolios have carbon footprints well below the carbon footprints of their respective benchmarks.

01.4. Describe your organisation’s investment principles and overall investment strategy, and how they consider ESG factors and real economy impact.

As asset managers, we must invest on behalf of others with a clear sense of fiduciary duty. We consider that Responsible Investment is part of this fiduciary duty. As stewards of capital, we look to preserve the long-term interests of our clients by investing in companies where we believe the financial returns are sustainable over the long term. This includes monitoring the social and environmental impact of our investee companies to evaluate whether they support conditions for sustainable growth.  This is important for the health of the financial returns, but also because our clients are affected by our investee companies in other ways - as consumers, employees, citizens and inhabitants of the earth.

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

Responsible Investment can be differentiated from traditional approaches to investment in four ways:

1) We believe that time horizons are critical; the ultimate objective is the creation of sustainable, long-term investment returns not just short-term returns. The long term has been the cornerstone of our investment philosophy since the beginning.

2) Responsible Investment requires that we monitor changes happening at the level of social ecosystems so as to link extra-financial analysis to financial outcomes and investment decisions. We believe in the ability of companies to transform social problems into economic opportunities. The long-term success of a company depends on the health of economic and environmental systems as well as evolving societal values and expectations.

3) Being an active investor is not only about selecting a few companies as measured by an active share, it also means facilitating positive impacts for civil society and the environment through our support to companies whose activities lead to positive outcomes (e.g. job creation, energy efficiency), including when the ESG profile of a company is in recovery.

4) We recognise that being a shareholder of a company implies that we share with it what we think is a good way of conducting its business and what is not. To become a responsible investor in a company is to accept this association, sharing in its good fortunes but also indirectly bearing some of its responsibilities and reputational risks.

To be responsible, an investor needs to think like an owner. Just like an owner, he or she needs to care about the strategic intent of the company as well as the impact of the company on its customers and employees. A responsible investor should try to answer some basic questions: What solutions does this company want to provide to what type of problems? What are the costs (direct and indirect) that will result from such actions? How should the benefits and costs be aggregated to assess the net social utility of the company? Do I want to invest in this business and with these people? And finally how should the value created be monetised and made as sustainable as possible?

SG 02. Publicly available RI policy or guidance documents

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

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

02.3. Indicate if your organisation’s investment principles, and overall investment strategy is publicly available

02.4. Additional information [Optional].

SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

Comgest has implemented rules, policies and procedures in order to mitigate the risk of conflict of interest:

Personal transactions

The Compliance Officer prior approval is needed.
The request won’t be approved if an order has been executed on the relevant security on behalf of a portfolio managed within the last two days or if an order is currently been executed or planed for execution for the two following days.

The cash of the company is managed independently from portfolio managers and is not invested in listed shares.

Orders are pre-allocated and the system used does not allow ex-post changes.
Group orders must be allocated on a prorata basis in case of partial execution.
Any different allocation must be justified in the system and must be in the interest of the relevant investors.

Best execution and best selection policies have been implemented.
As an independent company, Comgest has no ownership or capital link with any broker or counterparty. Therefore, brokers and counterparties are exclusively chosen in the best interest of investors.

Despite these rules, policies and procedures, if a conflict of interest occurs, Comgest will manage it in the interest of the investors and will inform the relevant investors.

03.3. Additional information. [Optional]

SG 04. Identifying incidents occurring within portfolios

04.1. Indicate if your organisation has a process for identifying and managing incidents that occur within portfolio companies.

04.2. Describe your process on managing incidents

          We monitor ESG (and non-ESG)-related incidents and controversies that occur within portfolio companies, using all means such as the media, companies' statements, ESG data providers (RepRisk, Sustainalytics, MSCI ESG Research, Bloomberg), brokers, etc.