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Sycomore Asset Management

PRI reporting framework 2020

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You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes » (C) Implementation: Integration of ESG factors

(C) Implementation: Integration of ESG factors

LEI 08. Review ESG issues while researching companies/sectors

08.1. Indicate the proportion of actively managed listed equity portfolios where E, S and G factors are systematically researched as part of your investment analysis.

ESG issues

Proportion impacted by analysis
Environmental

Environmental

Social

Social

Corporate Governance

Corporate Governance

08.2. Additional information. [Optional]

Sycomore AM has developed a proprietary methodology to store information, analyse, screen, score and monitor companies from an ESG standpoint. The SPICE (Suppliers & Society, People, Investors, Clients and Environment) analysis and scoring tool is composed of 80 criteria fully integrating ESG. The ESG team is mainly responsible for inputing ESG data in the database but the other mainstream fund managers also input ESG information in the database and use relevant ESG information.


LEI 09. Processes to ensure integration is based on robust analysis

09.1. Indicate which processes your organisation uses to ensure ESG integration is based on robust analysis.

          The robustness of our ESG analysis is also ensured through meetings with companies: OtO meetings or specific interviews enable to complete our analysis.
        

09.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your integration strategy.

09.4. Indicate how frequently you review internal research that builds your ESG integration strategy.

09.5. Describe how ESG information is held and used by your portfolio managers.

          The final ESG rating of an issuer impacts its beta in our financial valuation tool SYCOVALO.
        

09.6. Additional information. [Optional]

Please see previous information provided on Sycomore AM's internal database SYCOVALO where all financial and extra-financial information are disclosed.

Our ESG integration strategy is reviewed on a regular basis in order to reflect the best practices and to ensure the last evolution of ESG issues are captured in our analysis. As an example, in 2019, we reviewed our Environment pillar to split our analysis into three dimensions: transition risks, physical risks and environment integration and strategy.


LEI 10. Aspects of analysis ESG information is integrated into

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

10.1. Indicate which aspects of investment analysis you integrate material ESG information into.

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

10.2. Indicate which methods are part of your process to integrate ESG information into fair value/fundamental analysis.

10.3. Describe how you integrate ESG information into portfolio weighting.

Sycomore AM integrates ESG criteria across all its investments, according to the following 3-step approach:

1. Each company’s beta is automatically adjusted in our valuation model according to the stock’s ESG and fundamental analysis. It can be adjusted from -40% to +40% depending on the risks and opportunities we identify in our analysis.

2. If a company has a poor ESG and fundamental analysis score, we will require a higher margin of safety.  

3. ESG and fundamental analysis has a direct impact on portfolio construction as it adjusts the target weight of each stock in the portfolio.

For our SRI funds, a specific portfolio construction tool allows us to screen companies in our initial investment universe that respect all our exclusion and selection criteria.

10.4. Describe the methods you have used to adjust the income forecast/valuation tool.

Each company’s beta is automatically adjusted in our valuation model according to the stock’s ESG and fundamental analysis. It can be adjusted from -/+40% depending on the risks and opportunities we identify in our analysis.

10.5. Describe how you apply sensitivity and /or scenario analysis to security valuations.

Our Net Environmental Contribution (NEC) methodology partly relies on scenario analysis.

10.6. Additional information. [OPTIONAL]


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