All thematic funds follow a three-step process:
1) Controversies screening
All companies are thoroughly analysed to ensure they have not been involved in controversies due to poor practices. Companies that pass this first screen are compliant with the UN Global Compact, OECD MNEs Guidelines and BNPP AM sector policies.
2) ESG scoring
All companies are evaluated according to an ESG scoring process to assess their performance in terms of their Environmental, Social and Governance practices. In line with our ESG Integration Guidelines, portfolios avoid investing in companies belonging to the bottom ESG decile (10% of the total universe) without actively engaging (or planning to actively engage in the near future) particularly on the key issues identified, and such holdings need to be justified by additional qualitative analysis integrating ESG factors, working closely with the sustainability centre.
3) Contribute towards identified solutions
The environmental and social themes targeted vary depending on the fund, and will be clearly articulated in the fund’s investment philosophy and process documents. This will relate to the activities and business models that are investible for each sustainable strategy, and specify the detail about the activities included. For example, in the context of energy efficiency we may focus on sub-themes, such as: building energy efficiency, industrial and power. For each, we can further specify a list of technologies that are included and the conditions they need to meet. Companies must have coherent activities and a minimum exposure to the identified themes (e.g 20%). The documentation may also cover the potential controversies that may arise in any given sector, and how these may be managed/mitigated.