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METROPOLE Gestion

PRI reporting framework 2019

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

(A) Implementation: Screening

LEI 04. Types of screening applied

04.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by

Description

METROPOLE Gestion excludes any companies directly or indirectly linked to the financing of controversial weapons, as provided for by international conventions. Are also excluded mining companies that generate more than 30% of their revenue through coal production, energy-producing companies more than 30% of whose production comes from coal, companies linked to tobacco production and companies linked to pornography.

This exclusion policy applies to all our funds.

Screened by

Description

Our SRI approach is a multi-sector approach, Best-in-Class and Best Effort approach. We encourage companies to improve in the extra-financial areas: environment, social, governance and stakeholders.

04.2. Describe how you notify clients and/or beneficiaries when changes are made to your screening criteria.

Since 2009, METROPOLE Gestion has been keen to establish a methodological basis independent of the major ESG rating agencies by establishing an academic collaboration with the University of Auvergne in order to produce an in-house company rating system.
The framework is the architecture of the screening system and it is laid out across two axes which define four orthogonal pillars (Internal – External / Human Resources – Public assets and capital) which are then broken down into items comprehensively reviewed:

  • Environment: measures the impact of the company's activities on the ecosystem
  • Social: measures the impact of the company's activities on its human resources
  • Governance: measures the quality of relations between Management, shareholders and the Board of Directors
  • Stakeholders: measures the quality of relations with stakeholders

Our ESG approach is a 360° analytical approach to the company, taking into account three aspects: extra-financial analysis, financial analysis, balance sheet analysis.

The screening combines quantitative and qualitative analysis.

As for the quantitative analysis, the screening is based on our extra-financial database which provides stable data over time, combining official corporate data (annual reports, sustainable development reports) and details of any controversies sourced from press agencies. Using this data, we build 150 indicators to measure each element of our standards, favoring outcomes over drivers deployed (75% - 25%).

  • Each pillar is equally weighted.
  • Best in Class rating: each company is rated in relation to its sector to obtain a Best in Class rating.
  • Best Effort rating (1 to 5 stars): this takes into account the change in extra-financial rating over the past four years, with additional weighting given to the last year.
  • Ratings are reviewed annually.

The quantitative analysis is supplemented by a qualitative analysis:

- Taking into account any ongoing controversies:

  • all controversies regarding stocks held in the portfolio are reported and monitored on a weekly basis.
  • in the case of new companies under consideration, in addition to the quantitative rating, controversies are analysed over the last three years.

- Analysis of sector-specific risks.
- Dialogue with companies through interviews with CSR managers and senior management (at least once a year for companies in the portfolio), designed to explore in depth the risks identified, to detect any risks not identified during the rating process to influence company strategy.

Policies and procedures are updated when changes are effective and the documentation is made available to the clients on our website.


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

05.1. Indicate which processes your organisation uses to ensure screening is based on robust analysis.

05.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your ESG screening strategy.

05.5. Additional information. [Optional]

Best-in-class / best effort ratings are reviewed annually but controversies are reviewed weekly.


LEI 06. Processes to ensure fund criteria are not breached

06.1. Indicate which processes your organisation uses to ensure fund criteria are not breached.

06.2. If breaches of fund screening criteria are identified - describe the process followed to correct those breaches.

Rules and criteria are input into the Front Office system, which checks compliance with regulatory and statutory ratios and approves investment decisions in real time. The ratios are monitored at all times both by the investment team and by the control functions (compliance, risk management and internal control officers).

06.3. Additional information.[Optional]


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