Socially Responsible Investment

SRI Strategy of the FRR

The initial focus of the FRR’s socially responsible investment strategy is twofold:
  • An active policy of voting proxies at the shareholder meetings of corporations in which the FRR invests, via its managers, in compliance with the relevant sections of the French decree dated December 19, 2001. On February 10, 2005, the FRR published a set of broad proxy voting guidelines for managers under mandate. In fact, mandates are awarded in part on the basis of managers to fulfill this fiduciary duty on a large scale and in compliance with client guidelines. This active policy of voting proxies is currently being rolled out.
  • The incorporation of environmental, social and governance criteria into the portfolio management process and investment decisions.
For the FRR’s first SRI RFP (2003), the managers to manage European large-cap equity mandates were asked to demonstrate their commitment in certain key areas:
  • A commitment to research and analysis, integrating relevant and reliable information on the social and environmental behavior and practices of companies being considered for investment, and assessing their merits on the basis of the ten principles of the UN’s Global Pact in particular (see attached document);
  • An effort to include the findings of this research in their stock-picking process;
  • A commitment to transparency and reporting on the way in which extra-financial criteria have been integrated and any problems encountered;
  • A commitment to exchange with the FRR on method and research

The development of SRI by managing several mandates dedicated, to this approach, with the dual aim of gaining a better grasp of the specific characteristics of extra-financial analysis that can be implemented in line with the Fund’s core philosophy (in particular its Principles for Socially Responsible Investment), and improving the ability over time to measure the value added of SRI processes in terms of investment performance. The RFP launched by the FRR on June 28, 2005 and finalized on April 25, 2006, enabled the Fund to select managers for these dedicated SRI mandates.

In 2006, the FRR initiated a process aimed at assessing its entire portfolio on the basis of extra-financial criteria.

And in 2008, the FRR’s Supervisory Board adopted a socially responsible investment strategy based on 5 core objectives:
  • Go further in the effort to include ESG issues in portfolio management. The FRR wishes to gradually extend its socially responsible investment approach to all asset classes.
  • Improve the prevention of extra-financial risks. To this end, the Supervisory Board has formed a socially responsible investment committee.
  • Continue to promote the active exercise of proxies at shareholder meetings.
  • Refine the analysis of the impact of environmental issues on the FRR’s investment strategy.
  • Participate actively in research efforts in France and abroad on the issue of socially responsible investment.

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