SRI-labelling A European perspective. Norsif SRI Seminar, Oslo

Transcription

1 SRI-labelling A European perspective Norsif SRI Seminar, Oslo September 13, 2016 Dominique Blanc, Head of research

2 NOVETHIC A RESEARCH CENTRE DEDICATED TO SRI An expert in responsible investment, Novethic provides valuable insights on the SRI market and ESG integration across asset classes Fostering greater transparency and impact in SRI funds. Since 2009, the Novethic SRI Label has provided investors with a quality standard Independent Since its creation in 2001, Novethic has carried out its research independently

3 SRI LABELLING: KEY QUESTIONS How to tackle the fact that investment products (funds) differ significantly from usual consumer products? From transparency to impact and quality assessment, where and how to set the bar? Should SRI labelling focus on ratings of funds holdings or SRI processes? Is there a European Standard or do domestic markets predominate?

4 CURRENT LABELLING LANDSCAPE SRI Labels Green Funds Labels

5 NOVETHIC S SOLUTIONS AND AUDITING EXPERTISE From transparency to impact quality

6 NOVETHIC, EUROPE S FIRST SRI LABEL All European UCITS funds are eligible 7-year track record: funds analysed In 2015, 113 funds certified from 38 European asset managers They trust the Novethic Labels:

7 A STRONG DEVELOPMENT United Kingdom 5% Belgium 3% Netherlands 8% France 71% Switzerland 10% Austria 3% NOVETHIC S LABELS IN EUROPE

8 BENEFITS FOR INVESTORS The Novethic Labels offer: A unique quality benchmark, within a substantial supply of SRI funds in Europe * Yearly opportunity to obtain a second opinion on SRI funds A guarantee of transparency and robustness of the SRI process A must have for institutional investors, platforms and individuals * Source: KPMG

9 MAIN CRITERIA Transparency requirements: Answer to the Eurosif Transparency Code, with a clear description of the SRI process Regular reporting including: Information on the fund s ESG characteristics Full portfolio holdings publicly available E, S and G analysis of the portfolio ESG impact on asset selection: Exclusion of at least 15% of companies analyzed on ESG criteria Demonstration of the portfolio s higher ESG quality compared with its investment universe

10 ESG STRATEGIES Required Robust ESG analysis Best-in-class or best-in-universe ESG selection Optional Engagement Norm-based exclusion Sector-based exclusions Not enough Engagement only Norm-based exclusions only Sector-based exclusions only

11 FNG LABEL PROJECT Novethic s 1 st role as strategic partner of a third party label Context: Strong growth: 400 «sustainable» funds are distributed in the DACH-region No common understanding of what defines a sustainable fund This leads to intransparency on the market Solution: FNG, the German Forum for Sustainable Investments launches the project in 2012 and selects Novethic as developper and exclusive auditor (2014) A level model, combined with minimum requirements, offers a high level of granularity A Labelling committee ensures external validation of the audit 35 funds certified in 2015

12 FNG LABEL METHODOLOGY Impact Selection (Exclusion, Best-in-class or equivalent, thematic) Dialogue (Voting, Dialogue, Engagement) ESG Key Performance Indicators 70% Product Standard Research process ESG analysis quality Reporting 20% Institutional Credibility CSR and SRI policy Initiatives 10% Product Standards FNG Matrix Transparency Kodex ESG Analysis of at least 90% of issuers Exclusions Eligibility Companies (Nuclear energy, Weapons, UN Global Compact) Countries (Human rights and democracy, Environment, Corruption, Controversial weapons) Open funds UCITS compliant or equivalent Distributed in Germany, Austria, Switzerland, Liechtenstein

13 LEVEL MODEL By improving their ESG research and investment processes asset managers are able to achieve a higher label level 70 % or more in the level model 3 funds More than 50 % in the level model 14 funds More than 25 % in the level model, At least 10 points in the impact section Up to 25 % in the level model Compliance with minimum criteria 15 funds 3 funds

14 FNG LABEL AUDIT PROCESS Intensive and constructive dialogue between candidate and Novethic Compliance check and possible request for additional information First assessment of the fund by two analysts and internal discussion Questions to the candidate following first review, provision of additional information if needed Further analysis and transmission of preliminary audit results to the candidate Discussion of these results with the candidate; provision of final complements if needed Drafting and submission of final audit report to FNG

15 BENEFITS FOR ASSET MANAGERS The ESG research process of asset managers will be challenged by an independent and experienced auditor Identification of room for improvement Strengthening of ESG research processes and transparency Transparency: candidates will get a feedback report on their performance Higher reputation and credibility in the market, in the public and towards investors Possibility to use label in sales and marketing activities

16 GREEN FUND CERTIFICATIONS Green funds offer specific environmental impact New asset classes are concerned Green listed and private equity funds Green bonds funds Infrastructure funds

17 THANK YOU FOR YOUR ATTENTION! Contact details: Dominique Blanc, Head of research AVENUE DE L OPERA F PARIS FRANCE