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PRI reporting framework 2019

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

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

METROPOLE Gestion specialises in the selection of undervalued stocks (Value Investing) with the potential of reducing the discount in the share price (upside potential) within a reasonable time frame, i.e. 18 to 24 months. This concept is based on a simple principle: by purchasing a stock at a discount, investors are able to minimize the risks and maximize profitability in the medium term. This process is strictly applied by all managers within the framework of collective management and has proven its efficiency over the medium term in all market climates and over a complete market cycle.

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

It is a Best-in-class/Best Effort multi-sector approach that encourages companies to improve in three key extra-financial areas: Environment/Social/Governance.

Our ESG approach is based on engaging with companies:
‒by exercising the voting rights attached to securities held in the portfolio, as part of a voting policy published on our website.
‒by direct dialogue with issuers as a means of detecting ESG risks and influencing the strategy of companies analysed.

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]

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 proprietary to METROPOLE Gestion.

1. The reference framework:

The frame of reference is the architecture of the rating system. It is organised into 4 orthogonal pillars:

  • Environment
  • Social
  • Governance
  • Stakeholders

2. Quantitative analysis: data metrics and aggregation:

  • We use Eikon (Thomson Reuters), one of the largest extra-financial databases (5000 companies worldwide), 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.

3. Qualitative analysis:

The quantitative rating is verified and completed by the qualitative analysis. It is based on the following elements:

Consideration of current controversies

All the controversies relating to stocks held in the portfolio are fed back and monitored weekly.

On new companies studied, controversies are analysed over the last three years in addition to the quantitative score.

Analysis of specific sector risks

We also pay close attention to identifying specific ESG risks. We include these risks in our analysis for all companies in the same sector.

Dialogue with the companies

The dialogue with companies is through interviews with CSR managers and company managers (at least once a year for portfolio companies), which provide the opportunity to look in greater detail at the identified risks, pinpoint unidentified risks during the rating process and develop the company’s strategy.

4. Our Responsible Value Investment policy:

Our SRI approach is in phase with our Value management process: breaking free of short-termism to generate outperformance. This approach covers almost all our AuM.

METROPOLE Gestion Responsible Value Investing is a global, integrated management process.

Selection of securities:

  • discounted against their industrial value,
  • in sound financial health commensurate with their activity and the economic cycle,
  • demonstrating strong extra-financial conviction: companies rated above or equal to BBB- (Investment grade) may be selected with no Best effort condition; companies rated below or equal to BB+ may be selected subject to a minimum +++ Best effort rating; companies rated in the CCC bucket are ruled out.

Adjusted according to:
‒financial catalysts,
‒extra-financial catalysts: new controversies or changes in extra-financial rating.

Exit from the portfolio or lower the weighting in the event of:
‒downgrading of the extra-financial analysis (significant controversies or rating downgrade),
‒disappearance of catalysts,
‒decrease in financial discount.

Exclusion of companies linked directly or indirectly to the financing of controversial weapons, as provided for by international conventions and the French Defence Code (Code de la Défense) and applied across our entire range.

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.

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.

01.6. Additional information [Optional].

I confirm I have read and understood the Accountability tab for SG 01 I confirm I have read and understood the Accountability tab for SG 01

SG 01 CC. Climate risk

01.6 CC. Indicate the climate-related risks and opportunities that have been identified and factored into the investment strategies and products, within the organisation's investment time horizon.

Within our ESG framework (150 indicators), the following indicators include an appraisal of risks and opportunities related to climate change:

- Emission Reduction/ Monitoring (outcome): percentage of company sites or subsidiaries that are certified with any environmental management system.

- Emission Reduction/ Greenhouse Gas Emissions: Total CO2 and CO2 equivalents emission in tonnes divided by net sales or revenue in US dollars.

- Emission Reduction/ Environmental Expenditures: Total amount of environmental expenditures. Does the company report on making proactive environmental investments or expenditures to reduce future risks or increase future opportunities?

- Emission Reduction/ Transportation Impact Reduction: does the company report on initiatives to reduce the environmental impact of transportation used for its staff?

- Emission Reduction/ Improvements: has the company set targets or objectives to be achieved on emission reduction?

- Emission Reduction/ Implementation: does the company have a policy to improve emission reduction?

- Emission Reduction/ Innovative Production: does the company report on its participation in any emissions trading initiative?

- Emission Reduction/ Monitoring (outcome): percentage of company sites or subsidiaries that are certified with any environmental management system.

- Emission Reduction/ Cement CO2 Emissions: Total CO2 and CO2 equivalents emission in tonnes per tonne of cement produced.

- Emission Reduction/ Ozone Depleting Substances: Total amount of ozone depleting (CFC-11 equivalents) substances emitted in tonnes divded by sales or revenue in US dollars.

- Emission Reduction/ Self-Reported Environmental Provisions: Evironmental fines as reported by the company divided by net sales or revenue in US dollars

- Emission Reduction/ Fleet CO2 Emissions: Total fleet's average CO2 and CO2 equivalent emissions in g/km divided by net sales or revenue in US dollars

- Resource Reduction/ Monitoring: Does the company conduct surveys of the environmental performance of its suppliers?

- Resource Reduction/ Implementation: Does the company have an environmental management team? Does the company train its employees on environmental issues?

- Resource Reduction/ Environmental Supply Chain Management: Does the company use environmental criteria (ISO 14000, energy consumption, etc.) in the selection process of its suppliers or sourcing partners?
Does the company report or show to be ready to end a partnership with a sourcing partner, if environmental criteria are not met? Does the company have a policy to include its supply chain in the company's efforts to lessen its overall environmental impact?

- Resource Reduction/ Energy Efficiency Initiatives: does the company make use of renewable energy?

- Emission Reduction/ Environmental Partnerships: does the company report on partnerships or initiatives with specialized NGOs, industry organizations, governmental or supra-governmental organizations, which are focused on improving environmental issues?

- Resource Reduction/ Implementation (outcome): does the company claim to have an ISO 14000 or EMS certification? Percentage of company sites or subsidiaries that are certified with any environmental management system.

- Emission Reduction/ Environmental Management Systems: percentage of company sites or subsidiaries that are certified with any environmental management system.

- Product Innovation/ Environmental R&D Expenditures: Total amount of environmental R&D costs (without clean up and remediation costs) divided by net sales.

01.7 CC. Indicate whether the organisation has assessed the likelihood and impact of these climate risks?

01.8 CC. Indicate the associated timescales linked to these risks and opportunities.

Risks and opportunities' timescales are systematically assessed through the dialogue with companies.

01.9 CC. Indicate whether the organisation publicly supports the TCFD?

Explain the rationale

Support to the TCFD is currently under consideration (in 2019).

01.10 CC. Indicate whether there is an organisation-wide strategy in place to identify and manage material climate-related risks and opportunities.

01.11 CC. Describe how and over what time frame the organisation will implement an organisation-wide strategy that manages climate-related risks and opportunities.

In 2019, one of our engagement themes relates to the climate change. The following topics will systematically be adressed (including the time frame).

1.12 CC. Indicate the documents and/or communications the organisation uses to publish TCFD disclosures.

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. 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.

Possible conflicts of interest directly concerning the financial management business:
This type of conflict of interest has been identified and is managed by means of the system for processing stock market orders (for investment or divestment purposes) placed with financial intermediaries, requiring:
• The systematic pre-allocation of orders in the management application/transmission of orders (sent to brokers),
• The drafting of an incident report when a trading error is recognised,
• The prohibition of transactions arbitraging positions (buy-sell) between funds and between funds and mandates, when their sole purpose is to ensure sufficient liquidity for one of the counterparties.
To this end, the company has an operational procedure for allocating and monitoring orders and a procedure for transactions between managed portfolios.
As part of its third-party asset management business, METROPOLE Gestion must always serve the best interests of its principals or of the shareholders [or unit holders] of the funds under management, ensuring that principals and shareholders are treated equally.

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

In the event that any anomalies or incidents are detected, the following procedure is applied:

1-Information of the operational manager and prior analysis

The person who caused or detected an incident covered by the scope of the procedure immediately informs his/her operational manager. Together, they decide whether or not an incident report form should be opened for the problem.

2-Incident report form

The incident report form is created. It is identified by a number that chronologically lists incidents. The standardised report form particularly contains the identity and function of the person (the "author") who detected the incident, the date the problem was detected, the type of incident, the details thereof, the date(s) of reminder(s) and the corrective measure(s) taken. This report form is signed by the author and his/her operational manager.

3-Categorisation and retention of incident report forms

In an incident life cycle, a report form may have the following statuses:

- in progress: the incident is being investigated with a view to its resolution;

- solved: a solution has been found and normal service is restored. As soon as the incident has been solved, the author must close it by indicating the resolution date on the report form together with any further information about the corrective measures taken. Once signed, report forms are saved on the network in a dedicated directory with any relevant document (email, order ticket, etc.).

4-Communication of the incident

The author must inform Management and the permanent control team by email quoting the incident reference number as soon an incident report form is created ("in progress" status) and again once it is solved ("solved" status).


Resolution lead-times are determined based on the priority of incidents. 6-Incident follow-up If within 5 working days of opening an incident report form, the problem is still unsolved, the report form author informs his/her operational manager and the permanent control team by email. Within 10 working days of opening the incident report form, if the problem is still pending, the CCO notifies Management by drafting a memo explaining why the problem is still not solved. The CCO reads the incident report forms and reports to Management on a monthly basis on incidents that occurred during the month. Incidents are recorded in the incident database monitored by the permanent control team and are analysed to improve internal processes.