The GREaT framework is based on 4 pillars :
- Responsible Governance
- Sustainable management of Resources
- Economy and Energy transition
- Local development
To obtain an ESG rating of companies, we implement this philosophy through a quantitative and a qualitative approach, for which we selected a certain number of criteria. We have selected the ESG ratings providers that cover our ESG criteria in the most relevant way (Vigeo and MSCI ESG Research).
We then adjust weights per pillars according to sectors. This is done in a qualitative manner by the RI Team in a periodic basis. For example, environmental issues for a driller and a media group cannot be equally considered.
All companies are rated between 1 and 10 (1 for the best, 10 for the worst) using Z-scores in order to reduce bias within our universe. Companies are eligible when they have a rating below or equal to 5. Overall, it means that 50% of the rated issuers are eligible within our RI funds.
This matrix has a sector bias:
- it excludes approximately 50% of companies in "neutral" sectors
- it excludes approximately 60% of companies in "SRI high-risk" sectors (for instance Energy)
- it excludes approximately 40% of companies in "SRI high-opportunity" sectors (for instance Healthcare)
Every 3 months, RI analysts can modify/adjust ESG ratings calculated by the AGIR tool, under a formalized process. Changes have to be explained and agreed collectively by the Review committee. After the meeting, the system generates an email that is sent to all portfolio managers and results are integrated in all investment tools (SRI or mainstream). This tool also feeds into front office systems thus expanding the use of ESG ratings across all investment platforms. Quarterly meetings are also organised between the RI team and the other investment platforms to explain the main changes in ratings across the universe.
Changes impacting clients portfolio are documented either in monthly reporting or during investment committees.