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Trecento

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

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

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.

Economic, social and environmental mutations today compel all stakeholders (investors, issuers, regulators, public authorities, NGOs) to an increased empowerment and to a new sense of collective enlightenment as regard sustainable and responsible investments.

As a long term investor, Trecento Asset Management bears a high degree of responsibility in promoting responsible investments to its clients and partners. Our vision of responsible investment is intented to reconcile economic performance with a social and environmental positive impact by financing companies and public entities that contribute to the sustainable development whatever their line of business.

This is why we decided in 2019 that our open-end investment funds would be invested according to strict socially responsible investment strategies, excluding most controversial issuers from the organisation's investment universes. Moreover, the process of selecting issuers with the best ESG practices (« best-in-class » approach) enables the management team :

- to identify and thus to mitigate the risks associated with each issuer that would deteriorate value creation for investors.

- to provide capital and funding to the best issuers and thus encourage other issuers to improve their ESG practices to gain acces to new capital

- to participate to the fight against global warming and energy transition.

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]

Our Responsible Investment approach is fully described in our SRI Transparency Code, available on our website at www.trecento-am.com.

It is structured around four main policies :

- Sectoral and normative exclusion policy

- ESG criteria incorporation and investment selection policy

- Engagement policy

- Voting policy

 

Sectoral and normative exclusion policy

Trecento AM has implemented an exclusion policy that applies before the investment selection and that restricts the potential investment universe of our SRI funds.

- Normative exclusion: elimination from our SRI investment universe of listed issuers that do not comply with international norms, including the 10 Principles of the the United Nations Global Compact.

- Sectoral exclusion: elimination from our SRI investment universe of listed issuers when their core activity is, according to Trecento AM, incompatible with the principles of socially responsible investment.

On its website (http://www.trecento-am.com), Trecento AM releases the list of sectors and issuers included in this sectoral and normative exclusion policy, as well as information and details on the choice of organisations we have deemed relevant as a source for this exclusion policy.

 

ESG incorporation and investment selection policy

Our vision of socially responsible investment is intented to reconcile economic performance with a social and environmental positive impact by financing companies and public entities that contribute to the sustainable development whatever their line of business.

We have therefore implemented an investment selection policy that focuses on identifying the issuers with the best ESG practices (« best-in-class » approach) in the sectors and sub-segments of investment of our thematic funds :

- to identify and thus to mitigate the risks associated with each issuer that would deteriorate value creation for investors.

- to provide capital and funding to the best issuers and thus encourage other issuers to improve their ESG practices to gain acces to new capital.

- to participate to the fight against global warming and energy transition.

This policy is fully described and available on our website: http://www.trecento-am.com

 

Engagement policy

Trecento AM has implemented a shareholder engagement policy that aims at encouraging issuers to incorporate ESG criteria and a Corporate Social Responsibility (CSR) approach in their development strategy and to keep on improving them in the long run.

Our engagement policy has three main objectives:

- to engage in a fruitful dialogue with issuers around the importance of incorporating ESG criteria in their activity and development strategy.

- to encourage the issuers to be more transparent and to release their approach and policies as regard CSR and extra-financial performance (KPI)

- to identify and evaluate the efforts undertaken and the progress made by the issuer on specific ESG criteria or controversies.

This engagement policy applies to all issuers whose securities are held by our investment funds as well as the issuers of the investment universes of our funds that may be included in our funds following a fundamental and extra-financial analysis.

Our engagement policy is structured around three pillars: dialogue with issuers, collective SRI initiatives and strengthening of our voting policy.

This policy is fully described and available on our website: http://www.trecento-am.com

 

Voting policy

Trecento AM has strengthened its voting policy to support its improved responsible investment strategy. It combined the RI & ESG approach of Trecento AM with the guidelines of the French Association of Financial Management. We indeed reckon that promoting best governance practices among issuers and participating to the general assembly of the issuers held in our investment funds are the foundation of our corporate shareholder responsibility. It also contributes to the improvement and strengthening of best governance and ESG practices.

The objective of this voting policy is to express an independant opinion in adequacy with the engagement and RI policy of Trecento AM, either on an individual basis or through collective undertakings, and in investors' best interests.

This policy is fully described and available on our website: http://www.trecento-am.com

 

ESG Committee

The ESG committee of Trecento AM sets up and monitors the responsible investment policies of the management company. Its role is also to rule on investment decisions concerning controversial issuers, ESG scores and the ESG scoring model as well was the best way to improve and develop it.

The ESG committee may authorise some variations or exceptions to your RI policy. This is notably the case for the Employees' Saving Plans that we manage, in view of their specific nature that somehow constrains our investment decisions.

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.

As a long term investor, incorporating climate-related risks is critical to support the Paris Agreements and its long-term temperature goal to keep the increase in global average temperature to well below 2 °C above pre-industrial levels; and to pursue efforts to limit the increase to 1.5 °C. All economic stakeholders must commit or strengthen their energy transition to substantially reduce their greenhouse gas emissions and thus mitigate the risks and impacts of climate change.

Asset management companies, on investors' behalf, have a key role to play in this effort to influence the environmental behaviour and strategic decisions of the issuers of which they hold financial securities.

Climate-related risks and opportunities are assessed by Trecento AM in the Environmental pillar of the ESG analysis that we perform on each issuer, depending on its sector & sub-sectors that influence the nomber of specific environmental risks that we analyse. The incorporation of the climate risk is therefore ubiquitous in the SRI strategy of Trecento AM since we :

- internally analyse issuers' strategy as regards environment and climate as well as the risks and opportunities of their activites on the environment ;

- also use external environmental analysis, including the RobecoSAM score for which the environmental criteria represents roughly 30% of the score.

The climate-related risk is also incorporated in our normative exclusion policy as we exclude issuers that have demonstrated strong violations of the principles set at the Rio Earth Summit. We also list all environmental controversies that arose for an issuer, in particular as regard climate change, and these controversies result in a penalty affecting the maximum weighting of an issuer in our investment funds.

In conclusion, the climate-related risks and opportunities are factored into the investments strategies at every step of our extra-financial analysis and fund management.

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.

We reckon that these climate-related risks and opportunities can materialise at any time, depending on their nature and type. We therefore assess them on the short, medium and long term.

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

As we have been implemented a comprehensive RI strategy over the course of 2019 and 2020, we are currently drafting a specific report to disclose our organisation-wide strategy regarding climate-related risks and opportunities. Some of our thinking and actions are already disclosed in other documents like our SRI Transparency Code or ESG criteria incorporation policy.

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

specify

          We release our strategy and disclosures regarding ESG and climate risks according to Article 173 of French Law on Energy Transition on our website.
        

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.

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

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02.3. Additional information [Optional].

All our documents, policies and reportings regarding our RI strategy are publicly available on our website www.trecento-am.com


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.

Trecento Asset Management places the utmost importance on its clients' interests. As such, Trecento AM implemented a conflict of interest policy to:

  • Prevent emergence of conflicts of interest by establishing strict rules and procedures:
    • Implementation of an internal control system;
    • Separation of functions that may generate conflicts of interest;
    • Verification that Trecento's products matches its clients’ profile and expectations;
    • Prohibition of market transactions in a personal capacity which would not comply with the rules laid down by the company;
    • Raising the awareness of all its employees to the best practices of the profession
  • Identify situations of potential conflicts of interest that may affect any clients’ interests, by mapping these risks. Operational arrangements and procedures to deal with potential conflicts are identified in the mapping.
  • Managing conflict of interest situations. Trecento AM is authorized to:
    • Carrying out the operation insofar it is possible to deal appropriately with the potential conflict of interest;
    • Inform the client if some conflicts of interest may subsist and communicate to him the necessary information about their nature and origin;
    • If necessary, do not carry out the operation leading to a conflict of interest.

This policy is updated at least once a year by the RCCI.

03.3. Additional information. [Optional]


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

Trecento AM has developped a monitoring tool, through a database, that enables the analysts and fund managers to identify, categorise and continuously monitor the incidents and controversies that impact the issuers whose securities are held in our investment funds.

This database is fed from multiple sources of information:

- financial and extra-financial database providers

- dialogue, presentations, press releases or information from issuers

- ESG research and information from sell-side analysts or consulting / auditing firms

- general and specialised media

- non governmental organisations (NGO)

- press releases or periodic reportings from issuers

- presentations, information or Q&A through direct engagement with issuers

 

The severity of each controversy is analysed and ranked, as well as the answers and actions undertaken by the issuers to mitigate the controversy.

The management team then decides what actions, if any, to take, depending on the ranking of the controversy. In severe cases, the issuer can be impacted by a penalty as regard its maximum weighting in our funds or could even be added to the exclusion list of Trecento AM.


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