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DNCA Finance

PRI reporting framework 2019

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LEA 09. Number of companies engaged with, intensity of engagement and effort

報告年度中に貴社がエンゲージメントを行った、上場株式ポートフォリオ内の企業の割合を示してください。 We did not complete any engagements in the reporting year.



09.2. 報告年度内に行ったエンゲージメントの内訳を対話(貴社の代理で行われた対話を含む)の回数ごとに示してください。

対話回数 1回
対話回数 2 ~ 3回
対話回数 4回以上

09.5. 補足情報 [任意]

Note that the figures for 2018 need to be assessed in light of the organisational changes at DNCA, with the creation of a dedicated ESG team in June 2018. Prior to June 2018, only company meetings held prior to AGM to discuss governance issues are counted. From June 2018 onward, all company meetings dedicated to ESG issues are counted. The figures include both company dialogue and company engagement.

LEA 10. Engagement methods

10.1. 貴社のエンゲージメントが以下のどの項目を含むか明示してください。

10.2. 補足情報 [任意]

We distinguish in our approach between company dialogue and company engagement. 

  1. Company dialogue: holding very regular meetings with the companies we invest with or are part of our investment universe is at the very basis of DNCA's investment philosophy. It is the case for all investment teams, including the RI team. As an active shareholder and long-term investor in many French and European companies, we are a privileged stop for many top managements in their European/French roadshows, especially during the result seasons. The RI team participates in these meetings with top management on a regular basis, and systematically if there are some material ESG issues. We also conduct regular site visits, which in our view add a lot of value to our fundamental analysis (we conducted a dozen of site visits in 2018).
  2. Company engagement: In addition, we have developed an engagement approach that identifies and selects engagement targets, based on our ability to influence practices (shareholding, relationship with the company), the weight that a company has in our overall investments, and the materiality that some ESG issues can have on the reputation and investment case of companies. The list of engagement targets is updated on a semi-annual basis.

Engagement targets are identified in different ways depending on whether the engagement is reactive or proactive.

  • Reactive engagement

We monitor daily the news flow of the companies that we cover and analyse in detail the controversies that they face. This enables us to identify companies with which we would like to conduct reactive engagement. Therefore, we systematically ask for a meeting with companies facing controversies considered “serious”, meaning those identifed as level 3 in our internal analysis tool.

  • Proactive engagement

Target companies for proactive engagement are identified based on several factors:
- The proportion of the company's equity that we own, which determines in part our power to influence
- The proportion of our total investments that the company represents for DNCA Finance, which determines the level of our risk exposure
- The presence of the company in our SRI funds, which justifies greater attention to ESG risks
- The company’s “Responsibility” rating, which can alert us to inadequate management of ESG risks
Each year, we select a list of at least 10 companies with which we would like to begin or continue engagement. In selecting the companies, priority is given to the following situations:
- We own more than 5% of the company’s equity
- Our investment in the company represents more than 1% of our total investments
- The company is included in our SRI funds and has a “Responsibility” rating of less than 5/10 and/or a rating in one of the four aspects of the “Responsibility” analysis (shareholder, environmental, social, societal) of less than 3/10 (if this aspect is considered material).

In both reactive and proactive engagement, we tend to favour direct contact with either top management or the person in charge of managing the issues identified (Sustainability Manager, Head of Business Unit, Head of Human Resources).

LEA 11. Examples of ESG engagements

11.1. 報告年度に貴社または貴社のサービスプロバイダーが実行したエンゲージメントの事例を挙げてください。

Labour practices and supply chain management

Through our ESG assessment process, we had identified the nursing home industry as facing particularly high social risks. In our view, the level of disclosure and performance was insufficient across the sector to provide reassurance that these companies were putting in place adequate efforts to attract, retain and manage staff responsibly.

We thus decided to conduct a sector-wide engagement with companies in the industry, with a dual objective:

- improve disclosure on social indicators in the whole sector

- differentiate between companies in the way they were addressing this challenge in order to inform our investment decisions

Both these objectives were reached but we will continue to engage as we believe social risks persist and have a material impact on the investment case.


We started our engagement effort by discussing these issues with the CEOs of the 3 French nursing home companies we invest in. 

- In one case, the CEO offered to hold a meeting with the Head of Human Resources. The meeting we had with the Head of Resources reassured us that despite the challenges, the company had identified the right priorities and was putting in place adequate efforts to enhance its practices.

- In another case, we flagged the lack of disclosure on social indicators to the CEO who committed to enhance disclosure in the next reporting season. We have decided not to hold this company in our most advanced SRI fund, as long as we do not have reassurance on the company's ability to improve its social practices.

- In another case, the CEO was very transparent in recognising the social challenges it faced and highlighted some of the efforts put in place to address these. The company's positioning and geographical exposure acted as further reassurance.

We decided to divest from another nursing home companies as our meeting with the IR person was unsatisfactory, and after the company had faced another issue.

Anti-bribery and corruption|Other governance

Our ESG assessment of a company in the Capital Goods sector identified that the company did not have an internal audit function.

This issue is a clear red flag for the overall risk management system as the third line of defence is missing.

We contacted the company to gain:

- clarification on whether it had put in place an internal audit function

- reassurance on the company's risk management procedures


We contacted the IR person in order to clarify whether the company had an internal audit function and how the overall risk management system functioned.

The first response provided by the IR person was unsatisfactory and we have asked him to clarify the company's overall risk management structure. As of end of February 2019, we were still awaiting his response.

We have decided not to hold the company in our SRI funds until we get reassurance on the overall risk management system.

Human rights

Based on our ESG assessment, we have identified significant human rights risks linked to a construction company's activities in Qatar.

We have therefore decided to start an engagement process with the company with a dual objective:

- gain reassurance on the company's ability to manage its Qatari operations responsibly (including within its supply chain)

- urge the company to improve disclosure on how it manages the risk of human rights' abuse in tis supply chain (recognising that the company had already done a lot within its own workforce)


After a first meeting with the company's IR, we requested another meeting to discuss more specifically human rights issues in Qatar.

The company first provided us with substantial information on its commitment and practices on the ground and the improvements made in the past 3 years, efforts that have been commended by a well-recognised Human Rights NGO.

We commended the company for its efforts, but asked for further information regarding the management of its supply chain and to what extent the actions implemented in its own workforce had been rolled out to its (sub)contractors.

We have agreed with the company to organise a call to discuss these issues when the next annual/sustainability report is published.

Executive Remuneration|Company leadership issues|Aggressive tax planning|Other governance

As a long-term shareholder in the company G., which is also in our SRI funds, the company G. requested a meeting to discuss in advance the governance issues we may have, before finalising the list of resolutions that they would present to the next AGM.

This meeting was for us the opportunity to convey some of our concerns on the governance of company G., including:

- the composition of the Board, which in our view could be improved both in terms of independence and diversity of profiles.

- the combination of the functions of Chairman and CEO, and the succession process for the current Chairman-CEO

- the remuneration policy, with a share of qualitative criteria that was in our view too large and lacking precision. We also urge the company to have a more precise and result-oriented CSR component.


The meeting with the IR and Board Secretary was for us the opportunity to raise some concerns on the governance of the company. The company confirmed that as an important and long-term shareholder, our opinion was very much taken into account in finalising the resolution for the next AGM.

More specifically on our engagement objectives, company G confirmed that:

- a "rejuvenation" of the Board had started and would be conducted in the next 2 years, which should help improve both the independence level and the diversity of profiles of the Board members.

- the functions of Chairman and CEO would be dissociated at the end of the mandate of the current Chairman CEO in 2020

- regarding the remuneration policy, our comments were "heard" and we are now waiting for the finalisation of the resolutions to assess whether the remuneration structure has improved. We will have another meeting with the company prior to the AGM which will be another opportunity to voice our concerns if the strcuture and transparency of the remuneration policy has not been improved.


11.2. 補足情報[任意]