With a culture of innovation and the ability to design liquid and transparent investment vehicles, LYXOR is well positioned to help its clients meet the challenge ofsustainable investment. Indeed, LYXOR puts SRI at the heart of its investment strategy by creating concrete solutions that take into account environmental, social and governance factors. This consideration is based on the belief that non-financial analysis contributes to value creation, expands the selection process and contributes to the robustness of the management process. Our active and passive management solutions, as well as our expertise in fund selection, enable us to meet the growing demand forsocially responsible investments and the challenges of climate change.
1- DESIGNING INNOVATIVE SOLUTIONS INCORPORATING ESG CRITERIA
A- Exclusion strategies
Cf additional information hereafter
This strategy is based on financing sustainable projects or companies. Thematic investment encompasses a variety of themes, allowing investors to choose specific investment fields. This strategy requires the development of dedicated and tailor-made thematic impact solutions to generate social and environmental added value. Because they provide concrete solutions to sustainable development, these activities should benefit from attractive growth opportunities. Thus, LYXOR has developed dedicated 4 thematic funds aimed at delivering sustainable impact and financing some of the United Nations Sustainable Development Goals (SDGs), namely gender equality (SDG 5), clean water and sanitaion (SDG 6), affordable and clean energy (SDG 7) and climate action (SDG 13).
C- ESG Selection
This strategy involves the selection or overweight of the best performing companies identified by the ESG analysis, in a defined investment universe. This approach avoids the extra-financial risks that could compromise the company’s long-term financial performance. LYXOR applies this ESG strategy in both its active and passive solutions.
D- Impact Investing
Impact investing aims to combine financial returns with a positive and measurable environmental and social outcome. The aggregation of those two objectives provides investors with concrete solutions to meet the Sustainable Development Goals.
In 2019, LYXOR collaborated with SEB (Swedish investor) on a Multi-manager strategy to provide an innovative ESG selection in order to create investment universes with a positive and measurable economic and/or environmental impact (otherwise referred to as “Impact Investing”).
2- ACT AS A COMMITTED AND RESPONSIBLE SHAREHOLDER
In order to promote best environmental, social and governance practices, LYXOR has defined a shareholder engagement policy that is based on two complementary areas (voting and engagement). By exercising its voting rights, LYXOR can contribute to improving the economic and financial performance of the companies in which it invests on behalf of its clients, to encourage the adoption of best practices and to mitigate the risk of business failure.
A- Engagement Policy
Convinced that the performance of a company is not solely based on its financial performances, LYXOR today expects companies in which it invests to take into account, and be transparent, on extra financial issues. Taking into account these environmental, social, societal and governance issues, is beneficial to the long-term performance of companies and therefore in the long-term interest of investors.
In order to promote best practices in this area, LYXOR has defined an engagement policy that is structured around three axes:
❑ A specific engagement to general meetings
As the representative of the shareholders UCIs that it manages, LYXOR undertakes to exercise the voting rights attached to the shares held by these UCIs in order to promote best practices in corporate governance. To do so, LYXOR will use its influence before general meetings, to initiate a constructive dialogue with companies and thus enrich the analysis work carried out internally by LYXOR.
❑ A thematic engagement on environmental,social and/or governance matters
Taking into account environmental, social and governance matters is essential to LYXOR’s strategy as a responsible investor. Engaging with companies to understand how they manage extra-financial risks and how they capture the associated opportunities is paramount. The goal of these engagement campaigns is to influence companies to improve or adopt the Corporate Social Responsibility best practices.
❑ A dedicated engagement on climate
International politics really took hold of the subject at COP 21 by adopting the Paris Agreement (2015), which made it possible to frame the climate change ambitions at the international level: to maintain the increase in global temperature well below 2°C, and further efforts to limit this increase to 1.5°C. Once the framework is defined, it is necessary that each one at his level seizes the subject and makes evolve the practices Thus, LYXOR has decided to focus on the issue of climate change, representing resolutely one of the major challenges of the 21st century and has joined Climate Action 100+, an international initiative led by investors to engage systemically important greenhouse gas emitters and other companies across the global economy that have significant opportunities to drive the clean energy transition and help achieve the Paris Agreement targets. The choice of climate change as the first thematic engagement campaign is in line with LYXOR’s socially responsible investment policy
3 - INTEGRATING ESG AT THE HEART OF OUR MODEL
In addition to taking into account non-financial criteria that play a key role in the development of our activities, LYXOR has implemented a proprietary methodology to achieve an ESG & Climate rating (including carbon footprint) of its investment vehicles.
This ESG & Climate assessment makes it possible to identify the risks and opportunities of the various issuers (companies and governments) in the portfolio. All asset classes (stocks and bonds, including companies, countries, government organizations) are covered. The investor can thus analyse his exposure to these risks and benefit from an ESG and Climate assessment of his investment vehicles.