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ERAFP - Etablissement de Retraite Additionnelle de la Fonction Publique Pension Scheme

PRI reporting framework 2020

You are in Indirect – Manager Selection, Appointment and Monitoring » Appointment

Appointment

SAM 04. Appointment processes (listed equity/fixed income)

04.1. Indicate if in the majority of cases and where the structure of the product allows, your organisation does any of the following as part of the manager appointment and/or commitment process

specify

Requires to rate each issuer according to its SRI framework

04.2. Provide an example per asset class of your benchmarks, objectives, incentives/controls and reporting requirements that would typically be included in your managers’ appointment.

Asset class

Benchmark

          ERAFP in partnership with EDHEC developed an equity index SRI Best In Class ("Scientific Beta eurozone Max Sharpe Ratio ERAFP SRI Carbon Efficient Index"). The originality of this index is to select components based on their risk / return and not by market capitalization, the idea being to give more weight to securities contributing positively to the Sharpe ratio index.
With a specific SRI index based on Vigeo's data, we have control over the implementation of our ESG criteria because the investment universe has been screened for compliance with our SRI framework. A customised index reflects our own individual SRI approach, which may differ from that of other investors, and which is why we have not chosen a sustainable index from the market.
ERAFP also applies a decarbonization method to its equity's passive funds managed by Amundi. In addition to its best in class filter, ERFAP has decided to add a filter based on companies' carbon intensity(teqCO2/€million of revenue) data: 5% of the most polluting companies globally and 20% of the most polluting companies in each sector are excluded from the portfolio.
The decarbonised portfolio's performance is similar to that of the initial index but its carbon intensity is much lower.
        

ESG Objectives

          ERAFP requests from all its listed equity external managers to implement its SRI framework with a best in class strategy in mind. ERAFP's approach is to select the best in class issuers but also to ensure they continue to progress.
        
          For our passively managed funds, ERAFP aims to exclude the most emissive companies: 5% of the most polluting companies globally and 20% of the most polluting companies in each sector are excluded from the portfolio

Since 2019, ERAFP requests exclusion of issuers which revenue relies to thermal coal for more than 10% and that do not plan to reduce their exposure in order to be aligned with the Paris Agreement objectives. In addition, as a consequence of the criteria "social value of products" in the ERAFP's SRI framework, ERAFP requests the exclusion of tobacco producers.
        
          For all the actively managed funds, asset managers have to apply the ERAFP best in class approach, based on ERAFP's ESG framework, to their investment process. For instance, for large listed companies, the best in class is applied by implementing two successive ESG filters on the universe. This requires ESG ratings for all issuers of the universe based on the ERAFP SRI framework
        
          The SRI Charter, reviewed on 2016, asks asset managers to apply a shareholder engagement approach especially with issuers in case of breaches of certain international standards or non-compliance with environmental or socially responsible.
        
          ERAFP has defined a voting policy since 2012, annually updated. It asks to each of its equity portfolios' external managers to implement it on their portfolios. It ensures the good implementation of its voting policy by reviewing voting recommendations of its equity portfolio's asset managers before the annual general meeting for a sample of companies representing around 50% of its listed equity portfolio.
        

Incentives and controls

Reporting requirements

Benchmark

          For Euro corporate fixed income, our asset managers could use the Barclays euro. However, they also could select issuers outside the benchmark. ERAFP asks to compare portfolio's SRI performance with a comparable benchmark.
        

ESG Objectives

          ERAFP requests from all is fixed income external managers to implement its SRI framework with a best in class strategy in mind. ERAFP's approach is to select the best in class issuers but also to ensure they continue to progress.
        
          Since 2019, ERAFP requests exclusion of issuers which revenue relies to thermal coal for more than 10% and that do not plan to reduce their exposure in order to be aligned with the Paris Agreement objectives. In addition, as a consequence of the criteria "social value of products" in the ERAFP's SRI framework, ERAFP requests the exclusion of tobacco producers.
        
          The asset managers have to respect the ERAFP best in class methodology on its SRI framework and explain how do they plan to do it
        
          The SRI Charter, reviewed on 2016, asks asset managers, including fixed income mandates, to apply an engagement approach especially with issuers in case of breaches of certain international standards or non-compliance with environmental or socially responsible principles.
        

Incentives and controls

Reporting requirements

Benchmark

          For Euro corporate fixed income, our asset managers could use the Barclays euro. However, they also could select issuers outside the benchmark. ERAFP asks to compare portfolio's SRI performance with a comparable benchmark.
        

ESG Objectives

          ERAFP requests from all is fixed income external managers to implement its SRI framework with a best in class strategy in mind. ERAFP's approach is to select the best in class issuers but also to ensure they continue to progress.
        
          Since 2019, ERAFP requests exclusion of issuers which revenue relies to thermal coal for more than 10% and that do not plan to reduce their exposure in order to be aligned with the Paris Agreement objectives. In addition, as a consequence of the criteria "social value of products" in the ERAFP's SRI framework, ERAFP requests the exclusion of tobacco producers.
        
          The asset managers have to respect the ERAFP best in class methodology on its SRI framework and explain how do they plan to do it
        
          The SRI Charter, reviewed on 2016, asks asset managers to apply a shareholder engagement approach especially with issuers in case of breaches of certain international standards or non-compliance with environmental or socially responsible
principles.
        

Incentives and controls

Reporting requirements

04.3. Indicate which of these actions your organisation might take if any of the requirements are not met

04.4. Provide additional information relevant to your organisation`s appointment processes of external managers. [OPTIONAL]

          We also ask for a monthly ESG reporting that provides  ESG ratings for each issuer of the portfolio on each of the 5 ERAFP's ESG pillars and the global ESG rate
        

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