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Mirova

PRI reporting framework 2020

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Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

          Formalised guidelines on sustainable advocacy
        

01.3. Indicate if the investment policy covers any of the following

Other description (1) analysis of ESG opportunities and contribution to the SDGs in our investment policy and processes
Other description (2) reporting of climate scenario associated with our funds

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

We believe that investment choices help form the world of tomorrow, in a context of major demographic, technological, environmental, and governance changes. The development of responsible investment markets has made it possible to avoid investing in companies with poor ESG practices. We believe that acting as a responsible investor requires going beyond these approaches. The creation of Mirova in 2012, a company dedicated to responsible investing, is a response to this observation.The challenges of a sustainable economy are central to Mirova’s strategy. Mirova offers solutions that benefit not only investors, but to all stakeholders over the long term.

We provide a wide panel of investment solutions to our clients, be they individuals or institutional investors, for equities, fixed-income, renewable energy infrastructure, social impact investing and natural capital. All strategies developed by Mirova share the same approach: reconcile creation of economic, environmental, and social value. Applying these principles requires an approach tailored to each asset class.

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

In the field of responsible investment, Mirova is a pure player, fully dedicated to invest in sustainability. Given this positioning, ESG matters are deeply embedded in all its strategies and processes.  Its RI policy therefore:

- relies on the most advanced standards in the industry,
- has been defined according to the main ESG-related international norms mentioned in SG.01.4.
- includes all the RI components mentioned in SG.01.1
- covers all its assets under management. 

Mirova’s investment philosophy is described on its website and is summarized in a public document entitled “Acting as a responsible investor” (the URL is provided in SG.02). This document describes not only Mirova’s convictions and overall approach, but also how this is implemented concretely in the various asset classes.

Mirova was created on the basis of strong conviction. Acting as a “responsible investor” requires interpreting the economic world within its social and environmental context. This analysis cannot be limited to a study of the short/medium-term profitability for each asset individually, but rather requires an understanding of interactions between the various public and private players, small/medium/large-sized companies, and developed and developing economies in order to ensure that growth of each player is compatible with the balance of the rest of the system. It is a long-term approach that guarantees that today’s choices will not have negative consequences for future generations.

Understanding these complex relationships requires:

- a clear interpretation of the major transitions our societies are undergoing such as demographics, technology, environment, and governance

-  an attempt to anticipate the consequences of these transitions as part of our investment strategies.

As with all changes, these transitions are sources of both risks and opportunities. To this end, in September 2015 all world nations adopted a new sustainable development program proposed by the United Nations. It sets 17 Sustainable Development Goals (SDGs) for 2030, broken down into 169 specific objectives designed to confront the major social and environmental problems the world is facing. The SDGs can be read as a road map for responding to these major transitions.

In this context, innovation and sustainability are becoming the main levers for economic, environmental and social value creation. The companies that will be able to provide sustainable and or innovative solutions, while appropriately managing their ESG, will benefit from a real competitive advantage. Our investment approach is primarily based on that conviction and combines the sustainability and financial dimensions of investing with the objective to allocate financial capital with a net positive impact on society and benefit from returns of companies that should deliver better than average performance.

General approach

All Mirova investments, be they stocks or bonds, listed or unlisted, companies or projects, share the same approach: reconcile creation of economic, environmental, and social value. Applying these principles requires an approach tailored to each asset class.

All Mirova’s investment processes rely on the expertise of its in-house RI analysts, who perform state-of-the-art RI research to:

- deepen understanding of ESG-related long-term issues: fighting climate change, pollution control, preservation of resources, protecting biodiversity, fundamental freedoms, right to health, right to development and responsible governance, business ethics etc
- transpose them into sustainable investment for each macro-sector: energy, mobility, resources, consumption,  buildings and cities,  health, finance, information and communication technologies, etc. 

These ESG and sector-specific guidelines take the form of synthetic factsheets for each sector, that analyses the stakes on the UN SDGs that should be taken into account (URLs are provided in SG.02).

On this basis, the RI Research team is  in charge of assessing issuers and projects through an opportunities / risks analysis, that ends up in a rating that defines the composition of Mirova’s investment universe (ESG practices and business models of corporate issuers, ESG assessment of green bonds following a proprietary methodology, ESG profile of sovereign issuers, etc.).

Specific approaches: 

Mirova is however capable of developing specific approaches for its clients. It develops bespoke strategies for specific sustainability objectives: for example, several of its funds are labelised by the French public green label to finance the energy transition ( the Greenfin label, formerly named "TEEC" label), it has developed a dedicated strategy for employment in France, and low-carbon benchmarks and investment strategies for some of its clients. Mirova has also developed specific climate approaches for some of its clients with low-carbon or 2°C aligned products. 

Exclusions:

Mirova does not exclude any industry on principle. Within certain industries, however, case-by-case analysis may result in a “Risk” or “Negative” rating for all  the companies of that sector when practices do not provide an adequate level of assurance that the risks associated with the product are properly managed. “Risk” and “Negative” ratings mean that the issuer cannot be included in Mirova’s portfolios. The rating can nevertheless evolve following the evolution of the company. Current exclusions therefore include: tobacco, the military industry, coal or oil exploration and production, gambling, adult entertainment, sugar sweetened beverages, companies registered incorporated or head-quartered in a tax haven, companies demonstrating serious breach of UN Global Compact’s principles and/or OECD guidelines for international companies. 

Mirova has also developed an advanced proxy voting and engagement approach, with a view to encouraging them to improve their practices. 

The URLs of all documents mentioned above are provided in SG.02.

01.6. Additional information [Optional].

          
        

SG 01 CC. Climate risk

01.6 CC. Indicate whether your organisation has identified transition and physical climate-related risks and opportunities and factored this into the investment strategies and products, within the organisation’s investment time horizon.

Describe the identified transition and physical climate-related risks and opportunities and how they have been factored into the investment strategies/products.

Transition risks have been identified on the basis of the analysis of issuers business models' sustainability opportunities and risks. This analysis defines Mirova's investment universe. This results for instance in a rating that does not include coal and oil companies because their business model is not adapted, does not contribute to and could even hinder the energy transition needed by our economies to combat climate change. This type of analysis is applied to all our investment sectors, including for instance the financial sector that is screened on the basis of its integration of climate-related risks and opportunities and level of financing of fossil fuels. 

A screening of issuers' exposure and degree of preparedness to physical climate risks has also been performed by the ESG analysts for the issuers that are in our portfolio. Given that the ESG analysis performed by the research team is key to define Mirova's investment universe, this consequently integrates this analysis of climate physical risks in the general framework that shapes our investment strategies and products. 

01.7 CC. Indicate whether the organisation has assessed the likelihood and impact of these climate risks?

Describe the associated timescales linked to these risks and opportunities.

The assessment of climate risks and opportunities for a responsible investor like Mirova is extended on the maximum long-term timescale that we can apply as a market investor, striving to combine the search for financial value in a time-horizon adapted to the asset class considered on the one hand* (that does not always match with climate stakes are often materialised in a long timeframe (10-20 years at least), and the willingness to accerate the financing of the energy transition on the other hand.

The assessment of physical risks on short, middle and long timescale, according to the type of asset and investment considered. It is currently being integrated in our processes at asset level, to understand the exposure and mitigation of this type of risks. 

The transition risks and opportunities (mitigation and adaptation) are also integrated in the same type of 3-5 years timeframe but not only to assess the impact of climate change on the value and return of our portfolio: also to maximise our financing of the transition towards a low-carbon economy. 

* more than 2 years for fixed-income funds, more than 5 years for equities, and more than 10 years for non-listed assets

01.8 CC. Indicate whether the organisation publicly supports the TCFD?

01.9 CC. Indicate whether there is an organisation-wide strategy in place to identify and manage material climate-related risks and opportunities.

Describe

THe ESG research team is in charge of identifying and managing material climate-related risks and opportunities. 

Mirova has therefore set and objective to align all its funds with a temperature scenario of 2°C , so as to align with the Paris agreement. 

The PM team is also strongly involved in the process to align their investment decisions with these climat-objectives. It frequently interacts with the ESG research team and have developed a strong understanding of the underlying objectives. 

To meet these commitments, Mirova has developed a way to measure the carbon footprint of its investments, as well as those of major market indexes.

This methodology, unlike most developed previously on the market, adopts a “lifecycle” vision of the carbon footprint, taking into account emissions associated not only with a company’s activities, but also its supply chain and use of its products/services. We then measure the portfolio’s exposure to renewables, energy efficiency, clean transportation, etc. compared to the MSCI World, and compared to the International Energy Agency’s energy investment projections. The end result is a scenario alignment indicator, in °C degrees. We have used this indicator to set targets and measure our progress towards achieving them.

At the end of Q4 2019, Mirova’s consolidated equities portfolio was at 1.5°C. This is substantially lower than the level of reference stock index, 4°C for the Barclays Euro Aggregate Corporate.  It is well in line with our stringent objective: all of Mirova’s equity and fixed income funds must be aligned with a <2°C scenario. By managing the carbon footprint of our funds, we have gradually improved the climate performance of the funds will continuing to strive for strong performance. A broader, more transversal vision of environmental issues has made it possible to identify companies that provide solutions in all sectors of acitivity and improve the climate performance of Mirova’s consolidated equity portfolios and consolidated fixed income portfolios to 1.5°C.

1.10 CC. Indicate the documents and/or communications the organisation uses to publish TCFD disclosures.

specify

          Acting as a responsible investor : https://www.mirova.com/sites/default/files/2019-07/MirovaImpactReport2018.pdf
        

SG 02. Publicly available RI policy or guidance documents

 

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

URL/Attachment

URL/Attachment

URL/Attachment

URL/Attachment

URL/Attachment

URL/Attachment

URL/Attachment

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

URL/Attachment

URL/Attachment

Other description (1) analysis of ESG opportunities and contribution to the SDGs in our investment policy and processes
Other description (2) reporting of climate scenario associated with our funds

02.3. Additional information [Optional].

Mirova is fully committed to transparency and therefore discloses all relevant information that may help stakeholders, among which its clients, to understand its RI beliefs, approach and investment processes.

This information takes the form of several documents publicly available on its website (www.mirova.com). 

However being a pure player of responsible and sustainable investment makes it sometimes difficult to disentangle sustainable investment policy documents from general documents and considerations: 

for instance, the entire team of Mirova is dedicated to ESG all funds are dedicated to sustainability, with a set of different strategies designed to match clients preferences: this is already integrated in Mirova's overall approach. 


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

As regards the exercise of voting rights, Mirova excludes securities regarding which its impartiality could be contested, i.e., a significant client representing an important proportion of assets under management, and all entities of its parent company, Natixis. A procedure for preventing, identifying and managing conflicts of interests is also stipulated in Mirova’s voting policy,  page 13 of the document indicated below.

As regards investment activities, Mirova has established a dedicated prevention and management policy, that includes:

The mapping of conflicts of interest, updated at least once per year
A system for preventing conflicts of interest :

among actors: outreach, information barriers, employee statements, blacklists, remuneration, monitoring/review of service providers and voting policy.
at a structural level: compliance points identified by the regulations, i.e., conflicts of interest, operations between UCITS and portfolios managed by Mirova, operation of bank accounts, etc.

Implementation of a conflict resolution system: information provided by Compliance Department, clarity and transparency of the information communicated by Mirova to its clients.

Finally,  the activities of corporate/investment banking and asset management are housed in distinct entities within Natixis, with a Chinese Wall to ensure the independence of our investment, engagement and voting decisions.

03.3. Additional information. [Optional]

A procedure for identifying, preventing and managing conflicts of interests is also stipulated in Mirova’s voting policy,  page 13 of the document available at: 

https://www.mirova.com/sites/default/files/2020-02/MirovaVotingPolicy2020.pdf


SG 04. Identifying incidents occurring within portfolios

04.1. Indicate if your organisation has a process for identifying and managing incidents that occur within investee entities.

04.2. Describe your process on managing incidents

Responsible investment is at the core of Mirova’s positioning, and ESG factors are therefore at the heart of its investment process. In concrete terms, ESG analysis is incorporated at every stage of the investment process, from idea generation upstream to portfolio construction. ESG criteria are therefore decisive in determining whether or not an issuer can be admitted to Mirova’s investment universe. Strict ESG rules, suited to each asset, are formalized in the investment process. Should significant incidents occur, the investment team would divest (if the incident is sufficiently severe as to downgrade the ESG rating to below the eligibility threshold). For example, Mirova’s equity portfolios focus on companies that are positively exposed to the long-term trends that will shape the world ‘s future. An important step of the process therefore consists in applying a positive filter that aims to identify the companies that provide solutions to tackle sustainable development issues that Mirova classified across eight investment themes. This thematic filter, which forms an integral part of idea generation, is complemented by a review of companies’ ESG risks and a controversy alert. Finally, an overall opinion on company’s sustainability, obtained by combining these three last components, is used by portfolio managers. Only companies with an “engaged”, “positive” or “neutral” sustainability opinion are included in the eligible universe. The sell-discipline includes several cases, including two that are related to ESG matters:

- Deterioration of the sustainable development opinion: modification of the ESG risk profile, thematic change, etc.

- Controversy alert: human rights, pollution, business ethics, etc.

Besides, in case of ESG-related incidents, Mirova’s RI Research team can also engage in dialogue with impacted issuers, as part of its engagement approach. The purpose of such a dialogue is to better understand how the incident occurred, to recommend actions for progress and therefore encourage issuers to improve their ESG practices. However, it is worth highlighting that Mirova’s engagement approach is proactive and designed to anticipate potential incidents by analysing issuers’ practices and engaging in dialogue with companies before incidents occur, instead of only reacting to negative events.


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