Considering that as a significant debt holder of some local governments ERAFP could have an influence on these issuers' ESG practices it has initiated an engagement process with those in which it was most likely to invest :
Between 2008 and 2011, ERAFP wrote to 26 rated local authorities to explain its SRI investment policy and requirements. It then focused its efforts on authorities in its portfolio with lower ESG ratings, informing them that it would not be able to invest further in their securities unless they improved their ratings. The impact of these discussions was particularly positive with one authority, which achieved a significant improvement in its average SRI rating.
In 2013, we had a meeting with the ARF (association of French regions) to present them our SRI policy and ESG selection rules, to discuss about the quality of ESG reporting of regions, and to encourage them issuing sustainable (green and/or social) bonds.
Since then ERAFP has not subscribed to bonds newly issued by local governments. It continues to dialogue with some of its current local government issuers. For instance, ERAFP has gone to visit some infrastructures developed by the lle de France region.
Moreover, ERAFP' ESG provider, Vigeo, dialogues with local authorities when it updates their ESG evaluation. Vigeo send a questionnaire to complete and discuss with issuers to better understand their answers and tries to improve the transparency.