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La Fran├žaise Group

PRI reporting framework 2019

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Innovation

SG 18. Innovative features of approach to RI

18.1. Indicate whether any specific features of your approach to responsible investment are particularly innovative.

18.2. Describe any specific features of your approach to responsible investment that you believe are particularly innovative.

We believe that our approach built with our fully integrated ESG research team at IPLF (Inflection Point  by La Francaise) is unique and sets us apart specifically through the Investment Model, based on the 5 Factor Model, and the Integration that takes place at each stage of our investment process.

It is important to note that the integration of the different factors and perspectives occurs simultaneously in the investment process, not sequentially, as is often the case with other managers. We believe that the factors must be considered together, at the same time, rather than having the financial and "non-financial" analysis conducted sequentially, eliminating some companies on a single-factor basis.

Investment model

Our core advantage is our ability to assess a company's quality based on an analysis of factors that collectively provide a proxy for the quality of management.

Our 5-Factor model considers ESG : Environmental Sustainability, Human Capital, Organizational Capital as well as Strategic issues : Adaptability and Responsiveness and Innovation Capacity.

Integration

We have been able to create a disciplined, fully integrated investment process, and to bring together different expertise that combine financial expertise and non-financial expertise.

A strength of our investment process is that candidates for investment need to be well-rated on all three dimensions; finance, strategic and ESG. Assessment is applied simultaneously, not sequentially, which we believe results in more robust outcomes than single factor cut-offs, which can lead to companies being rejected for non-material reasons, ultimately impacting on ability to deliver returns. We have put in place very stringent conditions for investment whereby ESG and financial analysts must agree and be equally convinced of the business case.

What also distinguishes our approach is the interconnection we are making between the different streams of analysis: made possible by continuous and extended informal collaboration and discussions between the analysts and the portfolio manager, it results in the ESG or strategic scores impacting the financial score. The interconnection and communication has been made possible through a shared interactive, real time platform based on Factset RMS.

We are reporting on the ESG factors and more globally, strategic aspects, of our funds and are doing our best to include reporting on impact as well.


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