FRR 2016 ANNUAL REPORT34
The FRR withdraws from coal
The FRR has been firmly committed to the eco- logical and energy transition theme these past two years. It has signed up to several interna- tional initiatives aimed at reducing its portfolio s greenhouse gas emissions. It has also joined a coalition of investors demanding greater trans- parency in how businesses approach energy transition.
To reflect this commitment, the FRR has imple- mented an ambitious policy aimed at reducing its portfolio s CO2 emissions through low carbon management. This is achieved through bench- marks that reduce CO2 emissions by at least half relative to standard indices, and by asking pas- sive managers on most of the other indices to implement a management process that seeks to reduce the portfolio s carbon footprint. Going even further, in 2016 the FRR decided to exclude companies whose thermal coal mining or elec- tricity generation business exceeds 20% of their revenue.
THE FRR S INTERNATIONAL COMMITMENTS
Involvement in drafting the United sInvestment
At the beginning of 2005, the Secretary General of the United Nations invited a few of the world s biggest institutional investors, including the FRR, to come together and establish a number of principles for promoting the incorporation of socially responsible investment practices into financial management. After six working ses- sions, and with expert help from representatives of the various stakeholders (companies, NGOs, researchers, etc.), the Principles for Responsi- ble Investment were established before being officially signed in New York and Paris during the spring of 2006.
The PRI now reflect the shared values of a group of investors having a long-term investment hori- zon and diversified portfolios, including insurers and reinsurers, pension funds and other private and public institutional investors. They are fully compatible with the FRR s SRI strategy.
Adoption of the Carbon Disclosure Project (CDP)
Supported by the United Nations Environment Programme, the CDP is one of the most impor- tant international initiatives for the environment
and climate change. Wanting better information on companies behaviour with regard to the envi- ronment, energy consumption and the effects of climate change, the FRR gave the CDP its back- ing in 2005, before the biggest 120 French com- panies were questioned.
Signature of the Montreal Pledge
Signed by 35 institutional investors at the Prin- ciples of Responsible Investment conference in Montreal on 25 September 2014, it is backed up by the PRI and United Nations Environment Pro- gramme Financial Initiative (UNEP-FI). The investors who signed the Montreal Pledge have undertaken to publish the carbon footprint of their equity investments each year.
Membership of the Portfolio Decarbonization Coalition
Launched in September 2014, this collaborative initiative aims to reduce greenhouse gas emis- sions by mobilising a critical mass of institu- tional investors committed to measuring and decarbonising their portfolios. The FRR is at the forefront of this coalition.
Signature of the climate change declaration at the UN summit held on 23 september 2014
In signing this initiative, the FRR committed to: collaborate with the authorities to take meas- ures that encourage financing of energy tran- sition towards a low-carbon economy;
identify and assess low-carbon investment opportunities;
develop investors ability to assess risks and opportunities linked to climate change, and incorporate this into investment methodologies;
foster dialogue on the issue of climate change with companies included in the portfolios;
publish the initiatives taken and progress made.