Integrating ESG factors into investment choices The Pension Fund, in the definition of the "Universe ESG", is supported by an Advisor specifically qualified in this assessment and the targeted selection is made according to the following criteria:10 Principles of the UN Global Compact;well-defined sector policies;avoiding involvement in activities in controversial sectors (such as pornography, weapons, gambling, alcohol and tobacco);“Best in Class Sector” ratings.
A quality assessments is made by the Advisor define a list of securities as follows:
From Dec 1 to 3: Positive - From Dec 4 to 7: Neutral - From Dec 8 to 10: Negative
The Pension Fund monthly receives an excel sheet with a detailed analysis for these index:
MSCI North America - MSCI Europe - MSCI Pacific - Bloomberg Barclays Global Aggregate.
All the holdings are reported with an ESG score and with the weight contribution within the above indeces.
Once checked on the in/out securities (split, mergers etc.), the Pension Fund sends to the Man.Co. the investing universe for each index, stopping at the first 7 deciles, reducing the investment choice to those companies that, according to criteria defined by the Board, are eligible to invest in because of their Socially Responsible Principles.
The delegated managers will have toMan.Co. could comply with the limits imposed by the investing universe and achieve monthly performance aligned with those of the benchmark assigned (45% MSCI EUROPE - 35% MSCI N.America -25% MSCI PACIFICO) by maximizing the rating (scoring ) ESG portfolio, with annual tracking error volatility levels below 1.0%.
At the moment, the target average ESG score is about 55, with the possibility of increasing the ESG target according to the SRI assessment that the Board will impose.
The Pension Fund, the Man.Co. and the ESG Advisor perform a steady active control during the month; if there were any variations to securities (due to mergers / split etc ..) it should be immediately discussed, provided that the responsibility of the decision remains on the Fund.
Monthly the Pension Fund receives updated sector research from the ESG Review Team.