ERAFP has adopted an innovative approach by integrating the objectives of the Paris Agreement and the withdrawal from the coal industry into its SRI framework for companies. ERAFP has adapted its best-in-class policy by requiring companies in sectors with high energy transition stakes to adopt strategies consistent with the objectives of the Paris agreement and by withdrawing from those that fail to do so and whose thermal coal-related activities exceed 10% of their turnover.
In addition, ERAFP made a strong commitment to promote SDG's by signing the French public Asset Owners Charter on SDG's.
Finally, we can highlight the educational work led by ERAFP organizing many SRI trainings for several stakeholders (Board members, employees, beneficiaries, students or also other investors).
Finally, we can mention that ERAFP has signed the Net Zero Asset Owner Alliance gathering investors that aim to reach the carbon neutrality by 2050
In 2018, ERAFP publishes the 2°c alignment of its equity and corporate bonds portfolios in its annual report. ERAFP uses the sectoral decarbonization approach (SDA) methodological framework based on the application of the IEA’s 2°C scenario. It accordingly proposes “2°C trajectories” between 2010 and 2050 for 13 business sectors, including targets for absolute carbon intensity levels by 2050 (tCO2/
unit of activity) as well as annual rates of reduction of this carbon intensity.
In addition, aimed at being coherent with the Paris Agreement's objectives, ERAFP has added to its Green bonds portfolio, investments in the Amundi Planet Emerging Green One, the biggest green bonds issued on emerging markets fund in 2018.
In 2018, ERAFP also launched a request for proposal for an emerging market bonds mandate which includes a significant part of ESG criteria. ERAFP requests to its candidates to be able to apply its SRI approach and framework including ESG rating for each issuer, ESG controversies monitoring and initiation of dialogue with portfolio's issuers
Finally, in 2018, ERAFP has launched a mandate whose a substantial part of investment is allocated to intermediate housing. With this mandate, ERAFP increases its positive social impact allowing access to lower rents.
Taking the climate-related risks and opportunities evaluation expansion further, the ERAFP’s public report 2016 presents the contribution to the energy transition and the 2°C alignment for the equity and corporate bond portfolios (green share, intensity of contribution to the climate transition and emissions avoided).
ERAFP have also made a review of its portfolio's climate-related risks and opportunities that it presented and discussed with its board.
Moreover, ERAFP strengthened its targeted investments to promote combating climate change investing € 100 million in listed equity funds focused on this issue. Those investments are realized after one year of performance history followed on the virtual platform, implemented with Cedrus AM and amLeague, enabling fund managers to demonstrate their '"low-carbon" management expertise.
Through its work on decarbonation methodologies, ERAFP has done a comparison of the energy mix attributable to ERAFP's equity portfolio with that of a current typical portfolio, firstly, and secondly with an energy generation breakdown for the International Energy Agency's 2°C scenarios between 2030 and 2050. We also extended the carbon footprint evaluation from the equity portfolio to the public sector and corporate bonds portfolios, covering around 87% of ERAFP's total assets.
Ten years after adoption of the SRI Charter by ERAFP’s board of directors, the Scheme has updated this document.
ERAFP has decided to extend its work on decarbonisation by teaming up with Cedrus AM and amLeague to establish a virtual platform that managers can use to demonstrate their know-how in the reduction of carbon intensity by applying their expertise in the management of a notional portfolio of international equities.
In 2015, ERAFP innovated by implementing two SRI mandates for Pacific Equities. This project has required preparatory works with asset managers to adapt our SRI and voting guidelines.
Following on from the publication of its equity investments’ carbon footprint, ERAFP has been working with the French asset manager Amundi on a methodology aimed at significantly reducing the carbon footprint of a €750 million portfolio managed on ERAFP’s behalf under an indexed management mandate.
This decarbonisation methodology rounds out the best in class approach of selecting only those companies with the best environmental, social and governance profiles. It applies an additional filter based on their carbon-intensity data (CO2e emissions / sales): this excludes from the portfolio the overall 5% most polluting companies and the 20% most polluting companies in each sector.
Tracking error for the decarbonised portfolio must not exceed 0.7%: its performance will be similar to that of the initial index and yet its carbon intensity will be some 40% lower.
1) To our knowledge, we have been the first French institutional investor to have its equity portfolio undergoing and disclosing a carbon footprint analysis.
2) We also think that our SRI approach to real estate is innovative. Called "dynamic best-in-class", this approach allows our asset managers to identify the room for progress in terms of environmental, social and governance performance of a building before making the decision to invest.
3) Finally, our SRI approach to multi-assets management is also innovative to our knowledge since our fund of funds manager is required to look at three aspects:
the ESG capabilities of the underlying funds asset managers,
the way ESG factors are integrated into the management of the underlying funds,
as well as the ESG quality of the issuers to be found in the underlying funds.
In 2012, ERAFP innovated by implementing two SRI mandates for European and global convertible bonds. This project has required significant preparatory works with asset managers and research providers since it was the first time ESG issues had such an important weight in a tender in this asset class.