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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

Implementation processes

LEI 01. Percentage of each incorporation strategy

01.1. Indicate (1) which ESG incorporation strategy and/or combination of strategies you apply to your actively managed listed equities and (2) the breakdown of your actively managed listed equities by strategy or combination of strategies (+/- 5%)

ESG incorporation strategy (select all that apply)

Percentage of active listed equity to which the strategy is applied
95.4 %
Percentage of active listed equity to which the strategy is applied
4.6 %
Total actively managed listed equities 100%

01.2. Describe your organisation’s approach to incorporation and the reasons for choosing the particular ESG incorporation strategy/strategies.

This ESG incorporation strategy matches the steps of our Responsible Value Investment process.

We adopt a 360° analytical approach to the company, taking into account three aspects: extra-financial analysis, financial analysis, balance sheet analysis. We follow a Best in Class/Best Effort multi-sector approach that encourages companies to improve in the following key extra-financial areas: Environment/Social/Governance/Stakeholders.

METROPOLE Gestion has engaged with ESG since 2008 and launched the METROPOLE Value SRI strategy in July 2008, which incorporated ESG criteria and an SRI approach into the management.

As ESG considerations gained momentum over time, we decided to extend the use of our ESG reference framework to the other funds / strategies, so as to cover all the investable universe in European equities.
 

01.3. If assets are managed using a combination of ESG incorporation strategies, briefly describe how these combinations are used. [Optional]


 


LEI 02. Type of ESG information used in investment decision

02.1. Indicate what ESG information you use in your ESG incorporation strategies and who provides this information.

Type of ESG information

Indicate who provides this information  

Indicate who provides this information 

Indicate who provides this information 

Indicate who provides this information 

Indicate who provides this information 

02.2. Indicate if you incentivise brokers to provide ESG research.

02.4. Additional information.[Optional]


LEI 03. Information from engagement and/or voting used in investment decision-making

03.1. Indicate if your organisation has a process through which information derived from ESG engagement and/or (proxy) voting activities is made available for use in investment decision-making.

03.2. Additional information. [Optional]


(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]


(C) Implementation: Integration of ESG factors

LEI 08. Review ESG issues while researching companies/sectors

08.1. Indicate the ESG factors you systematically research as part of your investment analysis and the proportion of actively managed listed equity portfolios that is impacted by this analysis.

ESG issues

Proportion impacted by analysis
Environmental

Environmental

Social

Social

Corporate Governance

Corporate Governance

08.2. Additional information. [Optional]


LEI 09. Processes to ensure integration is based on robust analysis

09.1. Indicate which processes your organisation uses to ensure ESG integration is based on a robust analysis.

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

09.4. Indicate how frequently you review internal research that builds your ESG integration strategy.

09.5. Describe how ESG information is held and used by your portfolio managers.

09.6. Additional information.[Optional]


LEI 10. Aspects of analysis ESG information is integrated into

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

10.1. Indicate which aspects of investment analysis you integrate material ESG information into.

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

          We follow a 360° analytical approach to the company. Fundamental analysis is completed with ESG quantitative and qualitative analyses.
        

Proportion of actively managed listed equity exposed to investment analysis

10.3. Describe how you integrate ESG information into portfolio weighting.

In our SRI fund, we maintain an average ESG rating for the portfolio above that of Eurozone listed companies with a market capitalisation in excess of €5 billion (some 280 companies), after deduction of 20% of the lowest ratings, which is key for determining portfolio weighting.

When ratings are updated, weightings may be reviewed at the same time.

In addition to that, when reviewing controversies, portfolio weightings may be adjusted.
 

10.6. Additional information. [OPTIONAL]


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