Describe any specific features of your approach to responsible investment that you believe are particularly innovative.
Sycomore AM's responsible investment approach relies on the following criteria that we believe are complementary and key to ensure ESG integration through our investments:
- SPICE: The ESG analysis model is integrated into a "fundamental analysis" model named SPICE. SPICE is based on a stakeholder approach (Society & Suppliers, People, Investors, Clients and Environment) and integrates economic and financial analysis. Thus, the result of the fundamental analysis, namely the SPICE rating, is a mix of ESG and financial analysis, which reflects our view of the company's ability to create value for its stakeholders over the long term.
ESG risk premium: for over 10 years, ESG criteria have had a direct impact on company valuations across Sycomore AM's investment universe. Company SPICE scores impact our target prices through beta adjustment, and portfolio construction with a direct impact on required margins of safety.
- Centralised database: Sycomore AM's investment team uses a centralised database, which combines financial and ESG information within the same valuation tool.
- Engagement monitoring tool: Sycomore AM integrated a centralised engagement database within its proprietary research and valuation tool, allowing any investment team member to record engagement actions and information on the goal of the engagement, the reaction of the company as well as progress achieved.
- ESG performance reporting: Since 2017, we publish an annual ESG performance report for our SRI funds, displaying the evolution of key ESG metrics aggregated at portfolio level, as well as examples of tangible social or environmental impacts of companies held in the portfolio and engagement actions conducted during the year. Since 2018, we have improved this reporting by adding information on how ESG criteria are integrated in our SRI funds, how they impact the SPICE rating as well as a full reporting on our engagement and voting activities. These reports, published on our website, are entitled "Sycoway as an investor". They are published at Sycomore AM level as well as for each fund over 500 millions euros in AUM and for each SRI fund.
- Influence and proactivity: we always put into question our way of working to ensure the high quality of our investment process. To do so, we actively take part in discussions with our peers and other SRI stakeholders through dedicated working groups and work with consultants and academics to develop innovative tools to improve ESG integration.
For more information, please refer to our ESG documentation: https://en.sycomore-am.com/Our-responsible-approach#documentation