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

PRI reporting framework 2020

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Asset class implementation not reported in other modules

SG 16. ESG issues for internally managed assets not reported in framework (Not Applicable)


SG 17. ESG issues for externally managed assets not reported in framework

17.1. Describe how you address ESG issues for externally managed assets for which a specific PRI asset class module has yet to be developed or for which you are not required to report because your assets are below the minimum threshold.

Asset Class

Describe what processes are in place and the outputs or outcomes achieved

Private equity

For Private equity, ERAFP has declined it's SRI charter in a specific ESG framework and SRI guidelines.

Since the maturity of SRI research for this asset does not allow application of a quantitative best in class filter, the emphasis is placed on the dynamic aspect: if analysis and comparison of assets must be performed within consistent universes, the asset selection will favour issuers or assets that show an improvement in their ESG practices or profiles over time.

Since ERAFP invests mostly in private equity funds of funds, we have decided that the SRI eligibility of funds opened to selection by the asset manager would be determined based on two aspects:

- An analysis of the management process implemented by the target funds. It has to integrate a minimum of ERAFP's ESG criteria for investments' selection and ensure that none of the investments are accused of international norms violations.

- ESG monitoring at companies level based on the ERAFP's SRI framework. The asset manager must be able to engage a dialog with the fund manager if ESG issues are raised at companies' level.

The average ESG rate of asset managers for the ERAFP's PE mandate is 7.1/10

 

Property

ERAFP has developed a demanding and innovative SRI process for real estate assets, adapting the five values of its SRI Charter to the asset class. It does not only focus on the real estate assets' environmental impact, but also integrates the challenges of social progress, respect for human rights, democratic labour relations and good governance into their management. In this respect, taking account of these challenges throughout the entire management chain is of primordial importance.

This approach also aims to adapt the best in class principle to the specific nature of the real estate asset class by incorporating a dynamic approach consistent with the life span of the assets. In practical terms, this is reflected in a dual SRI performance dimension for the real estate concerned: a relative performance and a dynamic performance that aims to raise each asset to best in class.

As for each asset class, SRI is an important aspect of ERAFP RfP

In 2019, the consolidated ESG rate of the ERAFP's Real Estate portfolio is 67,6/100 and its potential rate is 74,1/100

A monitoring of the climate-related issues is also done since 2017, based on Carbone 4 analysis.

Infrastructure

For Infrastructure, ERAFP has declined it's SRI charter in a specific ESG framework and SRI guidelines.

Since the maturity of SRI research for this asset does not allow application of a quantitative best in class filter, the emphasis is placed on the dynamic aspect: if analysis and comparison of assets must be performed within consistent universes, the asset selection will favour issuers or assets that show an improvement in their ESG practices or profiles over time.

Since ERAFP invests mostly in infrastructure funds of funds, we have decided that the SRI eligibility of funds opened to selection by the asset manager would be determined based on two aspects:

- An analysis of the management process implemented by the target funds: it has to integrate a minimum of ERAFP's ESG criteria for investments' selection and ensure that none of the investments are accused of international norms violations. In addition, the funds must not finance project of coal extraction or combustion  

- ESG monitoring at companies level based on the ERAFP's SRI framework. The asset manager has to be able to engage a dialog with the fund manager if there is ESG issues raised at companies' level.

Other (1) [as defined in Organisational Overview module]

Convertible bonds:

The same as corporate fixed income.

Multi assets fund of funds:

The following aspects were considered for the selection, appointment and monitoring process of our multi-assets manager:

1) Capacity of the multi-asset manager to evaluate the SRI capabilities and experience of the underlying funds manager

2) Capacity of the multi-asset manager to evaluate the ESG selection process (preferably best-in-class) or the thematic approach of the underlying funds manager

3) Capacity of the multi-asset manager to evaluate the quality of the ESG ratings of the underlying fund constituents.

17.2. Additional information.

A monitoring and management of the climate-related issues is also done on unlisted portfolio since 2017, based on Carbone 4 analysis.


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