Our responsible investment approach
ESG at the heart of Finaltis’ investment approach, from the outset.
Environmental. Social. Governance.
The integration of non-financial risk sits at the centre of Finaltis’ investment process, particularly in equities. The pursuit of durable corporate growth, which underpins our investment philosophy, requires taking account of non-financial issues that are, in reality, future financial risks for our investors.
We work in the exclusive interest of our clients, reflecting their convictions and seeking to preserve and grow their assets. Our non-financial methodology rests on respect for the values they express, and relies on sustained shareholder dialogue.
A company is excluded from our investment universe only as a last resort, once every avenue of dialogue and progress has been exhausted.
When formalising its ESG policy, Finaltis set aside the uniform approach, which would have meant applying the same process to every fund. A common base applies across all equity investment; a specific method is then defined for each process and each universe. The ESG issues facing a fund invested in digital stocks and one invested in gold mining are not the same.
A common base across all equity investment
Four rules apply whatever the investment process.
Norms-based exclusions
In line with the AFG position, Finaltis excludes companies involved in the production or distribution of anti-personnel mines and cluster munitions, on the grounds of non-compliance with the Oslo Convention and the Ottawa Treaty.
Sector exclusions
Finaltis excludes companies deriving more than 10% of revenue from coal.
Elective exclusions
The ESG Committee draws up a list of conduct-based exclusions. It relies on the analysis of Norges Bank Investment Management and on that of the Finaltis ESG team. The companies concerned are those contributing to, or responsible for, the following:
- serious or systematic human rights violations, such as murder, torture, deprivation of liberty, forced labour and the worst forms of child labour
- serious violations of individual rights in war or conflict situations
- severe environmental damage
- acts or omissions leading, at company level, to unacceptable greenhouse gas emissions
- corruption
- other particularly serious breaches of fundamental ethical norms
Active shareholder engagement
Finaltis enters into dialogue with the companies held in its funds. That dialogue may bear on the exercise of voting rights, lead to a reduction in the position, or to exclusion of the holding. It is triggered by:
- a lack of transparency
- a controversy alert
- a specific ESG risk
Dialogue also takes place with the managers of funds held within discretionary mandates, in order to assess the place of non-financial criteria in their process.
A method for each investment process
The common base is completed, fund by fund, by a method suited to the investment universe.
Quantitative and systematic management
Best in class
A discriminating filter has been applied since 2018: securities whose ESG rating falls in the lowest-rated quartile of their sector are excluded. The portfolio’s overall ESG score is thereby improved without introducing sector bias into the allocation.
Reinforced norms-based exclusions
The fund adds to the exclusion list those companies insufficiently implementing the ten principles of the UN Global Compact.
Quantamental management
Quantitative modulation of the allocation
The allocation to each holding is modulated according to its ESG score and other non-financial criteria. Country risk — both the country of the company’s management and the country where extraction sites are located — is high and leads to jurisdictional exclusions. On that basis, Finaltis divested fully and immediately from Chinese and Russian holdings as soon as it took over management of the sub-fund, on 8 November 2021.
Risks specific to gold mining
The sector presents particular risks of adverse impact on biodiversity (PAI 7) and water (PAI 8).
Discretionary management
Idiosyncratic risk analysis
The ESG risk specific to each holding is taken into account in the managers’ analysis, who know the universe of their funds. The pursuit of durable growth and of development models that respect all stakeholders — clients, suppliers, employees, shareholders, states — largely overlaps with ESG best practice.
Best in universe
The objective is a score above that of the universe after eliminating the bottom quintile. The approach gives equal weight to environmental, social and governance factors, tracks the dynamics of controversies, and holds to a measurable framework.
Principal adverse impacts
Finaltis monitors the adverse impacts of investments on sustainability factors. Controversies assessed as high or critical in severity are tracked; companies presenting a critical controversy are excluded, save for an exception confirmed by the ESG Committee.
Publications
Regulatory documents and detailed policies.
| Article 29 report, French Energy-Climate law | coming soon |
| Exclusion policy — Finaltis EfficientBeta Euro | coming soon |
| AFG note — investing in the defence industry | coming soon |
The information on this page describes the management company’s non-financial approach. The sustainability characteristics specific to each fund are set out in its prospectus and key information document.