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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 » Outputs and outcomes

Outputs and outcomes

SAM 08. Percentage of externally managed assets managed by PRI signatories

08.1. Describe how you ensure that best RI practice is applied to managing your assets

Measures

          In 2016, we updated our SRI Charter to improve our ESG evaluation and SRI strategy. We have worked with our asset managers to update it. In 2017, we have worked together to implement the changes which mainly consist on: 
- a more granular sectorization in which assets are classified 
- new and modified ESG indicators with E, S and G pillars more balanced and a focus on environmental and social impacts of services or products
-  change on weight to better evaluate material issues in each sector
- a better following of companies controversies with asset managers' engagement on targeted companies 
- a development of ESG impact indicators 
 
More globally, ERAFP challenges its asset managers on a permanent basis. On a bi-annual basis, at each committee with an asset manager, ERAFP requests a reporting on portfolio's ESG performance vs. Benchmark's ESG performance, monitoring of most important ESG controversies, engagement activity for the portfolio and ESG impacts. 
The ESG and climate-related evaluations made by ERAFP's own service providers help to monitor and challenge asset managers' RI performances and practices. 
For Private Equity, Infrastructures and Real Estate mandates, ERAFP's asset managers are involved into the climate-related analysis by participating to the data collection and discussing results. Each year, they are encouraged to improve the level of transparency to make credible analysis. 

Finally, ERAFP always encourages its asset managers to participate to the RI practices improvement. For instance, in 2018, signing the ACT (Assessing Low Carbon Transition) Charter, ERAFP has committed to  promote ACT methodologies and evaluation with asset managers.
        
          survey towards asset managers
        

Measures

          In 2019, we have asked some of our asset managers about ERAFP's SRI policy relevance. We asked questions mainly on the relevance of our SRI framework, the materiality of our SRI criteria and the linked between financial performance and our SRI framework. We discussed  those points during meetings with asset managers and concluded that our SRI's framework is globally satisfying for asset managers
Regarding coal disengagement, we also discussed with our asset managers about the good way to implement the coal divestment. They help us to build a relevant policy.
        

08.2. Additional information. [Optional]


SAM 09. Examples of ESG issues in selection, appointment and monitoring processes

09.1. Provide examples of how ESG issues have been addressed in the manager selection, appointment and/or monitoring process for your organisation during the reporting year.

Topic or issue
          Selection
        
Conducted by
Asset class
Scope and process

In 2019, ERAFP has started a request for proposal to select asset managers for global convertibles bonds mandates. During the request for proposal, asset managers are evaluated on their experience and their capacity to implement ERAFP's SRI guidelines on the asset class and geographical area.
The request for proposal is composed of two phases:
- A first one where the asset manager is globally evaluated on its SRI policy, processes and experience
- A second phase where the asset manager is more evaluated on its capacity to implement ERAFP's SRI guidelines (rating on ERAFP's SRI framework, monitoring of controversies, engagement, report on ESG impacts, ...) on the specific asset class and geographical area

Outcomes

We are currently between the two phases of the RfP. The first phase allowed to select a reduced number of candidates which have the capacity to apply ERAFP's SRI policy

Topic or issue
          Monitoring
        
Conducted by
Asset class
Scope and process

On a bi-annual basis, the compliance with ERAFP SRI Charter of the investments made on its behalf is discussed during investment committee meetings with investment managers. In order to prepare these meetings, ERAFP recourses to the services of an ESG research provider who conducts on a bi-annual basis an exhaustive review of the portfolio aiming at monitoring the compliance of ERAFP's investment with its SRI requirements. Before the investment committee, ERAFP send a list of questions to its asset managers which includes requests for their opinion on the lowest rated issuers by our ESG research provider.
External managers have also the duty to report on engagement activities (dialogue, collaborative initiatives and voting results), the following of controversies and available ESG impact KPIs (for instance, their portfolio carbon footprint).
ERAFP also monitors the presence of coal issuers in its portfolio. In the case of issuers which revenue relies for more than 10% on thermal coal, ERAFP discussed with asset managers who own the issuer in their portfolio to decide if the strategy of the issuer is consistent with the Paris Agreement. According to the result, ERAFP could request a divestment from issuers in its asset manager's portfolios.

Outcomes

ERAFP's good understanding of its portfolios' ESG performance and good implementation of ERAFP SRI policy and requirements

09.2. Additional information.


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