The worsening health crisis currently
\nspreading around the world has shown us
\njust how extremely vulnerable our biological, environmental and social conditions
\nare. Considerable efforts are being made to
\nprevent the COVID-19 virus from spreading, but it is undoubtedly too soon to say
\nhow the epidemic will influence international opinions on global issues such as
\nclimate risk, personal protection and good
\ngovernance. <\/p>\n
Those investors who have opted to incorporate ESG and climate issues into
\ntheir portfolios will emerge from the crisis
\nwith even greater faith in their convictions
\nand all the keener to take more action for
\nthe future. New investors will undoubtedly soon join the movement to transform
\nour economies in the name of sustainable
\ndevelopment. Or at least we can hope so.<\/p>\n
The other challenge for asset management An investment universe All of us here at CPR AM have taken on Two quantitative approaches CPR AM\u2019s new fund, Climate Bonds, will Systematic strategies are free of emotional bias and more transparent, and CPR AM\u2019s Smart Beta Credit ESG fund \u201cOur guidelines for the Climate Bonds Liquidity risk controlled permanently<\/strong><\/p>\n \u201cThe fund managers also monitor liquidity risk continually in order to diversify the Close analysis of each When establishing its climate universe, \u201cOur approach is multi-sector and diversified, with the aim of promoting the transition to an economy that is globally compatible with the targets set out in the Paris CPR AM\u2019s climate investment universe includes companies that have Services to assess the impact Besides developing the investment building blocks from which to access the credit Company temperature is another of the \u201cWe are currently working on developing Those investors who have opted to incorporate ESG and climate issues intoIf the collective asset management
\nindustry is to meet the needs of these investors, it must strive to offer ESG and
\nclimate investment solutions covering a
\nwide range of asset classes. Steering credit
\ninvestments poses considerable challenges if we consider the growing share of
\ncorporate bonds in portfolio allocations
\nas sovereign bond yields have shrivelled.<\/quote><\/p>\n
\ncompanies is to develop a range of services
\nthat are suitably tailored to the requirements of each individual client in terms of
\nreporting, impact measurement and the
\nconstruction of customised ESG and climate investment universes.<\/p>\n
\nextending beyond the green
\nbonds market to target the
\nvery core of institutional
\ninvestment portfolios <\/strong><\/p>\n
\nboard the need to understand ESG and climate issues. All our staff members
\nhave now been made aware of ESG and
\nclimate risk issues so are better qualified to understand the needs and meet
\nthe expectations of our investors. CPR
\nAM launched Climate Action, an international equity fund dedicated to the
\ncompanies most committed to the energy
\ntransition, in December 2018; it is now
\ngoing to roll out this theme for bonds.
\n\u201cWhen it comes to bonds, we aim to incorporate the widest possible scope of issuers
\ncommitted to tackle global warming and
\nnot consider the emerging green bonds market specifically, which currently accounts
\nfor less than 5% of euro investment grade
\nbond indices and is not always synonymous with low carbon emissions\u201d,<\/em> points
\nout No\u00e9mie Hadjadj-Gomes, Head of Research at CPR AM. <\/p>\n
\nto incorporating ESG and
\nclimate criteria<\/strong><\/p>\n
\nfocused on the euro-denominated investment grade bond universe and will
\napply the same quantitative investment
\nphilosophy as the Smart Beta Credit ESG
\nfund launched in late 2018. CPR AM\u2019s
\nquantitative ESG and climate credit solutions are developed on the back of close
\ncollaboration between the research, fund
\nmanagement and credit analysis teams,
\nwith the support of the Amundi group\u2019s
\nnon-financial research (for ESG aspects)
\nand specialist external providers (for specific climate data). <\/p>\n
\nthey offer the advantage of covering broad
\ninvestment universes, which is particularly valuable given the growing size of
\nthe bond market. In addition, these quantitative approaches may easily be adapted
\ninto a dedicated format, for instance to
\nadhere to a specific ESG investment charter, to comply with financial regulations
\nrestricting the eligible investment universe or with a given regulatory capital
\nrequirement (SCR), or to match a duration structure suited to the investor\u2019s liabilities (ALM), etc. <\/p>\n
\noffers a defensive and ESG-based alternative to traditional euro investment
\ngrade bonds. \u201cWe take the view that it is
\nnot by overweighting companies with the
\nbest ESG behaviours that we will generate
\nperformance but rather by excluding companies with poor ESG behaviours because they may damage the reputation and hence
\nthe performance of issuers in the portfolio.
\nThis argument is even more valid in the
\nbond segment as specific incidents can take
\na heavy toll on performance\u201d<\/em>, says No\u00e9mie Hadjadj-Gomes. <\/p>\n
\nfund were to set up an investment strategy that would deliver returns similar to
\nthose of the bond asset class but with an
\ninvestment universe focused on factoring
\nin climate issues\u201d.<\/em> <\/p>\n
\nportfolio and optimise transaction costs.
\nThey do so by factoring in a liquidity score
\ncalculated in-house for each name, managing turnover constraints depending on market conditions, and working on the number
\nof portfolio lines\u201d<\/em>, emphasises No\u00e9mie
\nHadjadj-Gomes.<\/p>\nFund managers therefore do not follow
\na fully systematic approach. They incorporate the credit research team\u2019s opinions
\n(vetoes \/ top pans \/ top picks) and may
\ninvest in the primary market in order to
\ncapture issuance premiums.<\/quote>
\n \u201cIt is a wellknown phenomenon. A bond\u2019s price tends
\nto rise in the days following its issuance,
\nbefore being incorporated into the bond indices. By participating in the primary market, and provided the bonds pass through
\nthe filters used to build the ESG\/climate
\nuniverse and are approved by the credit research team, our fund managers are able to
\nimprove a portfolio\u2019s returns\u201d<\/em>, points out
\nNo\u00e9mie Hadjadj-Gomes.<\/p>\n
\ncompany\u2019s climate policy
\nand carbon footprint<\/strong><\/p>\n
\nwhether for its equity fund or for its dedicated bond solutions, CPR AM applies a transparent methodology developed in
\npartnership with CDP (Carbon Disclosure
\nProject), a pioneering non-governmental
\norganisation specialising in the disclosure of carbon data worldwide. <\/p>\n
\nAgreement. Our selection encourages companies that are in the best position to manage climate risk\u201d<\/em>, explains No\u00e9mie Hadjadj-Gomes. CDP\u2019s scoring methodology
\nis based on the climate policies published by companies rather than on econometric
\nsector models. <\/p>\n
\nreceived the best scores from CDP, as well
\nas companies whose carbon emissions are
\nconsistent with the target to limit global
\nwarming to 2 degrees as per the Paris
\nAgreement. This appraisal, referred to as
\nSBT (Science-Based Targets), is the result
\nof joint expert assessments carried out
\nby the World Wildlife Fund (WWF),
\nWorld Resources Institute (WRI), CDP
\nand UN Global Compact. We then apply
\ntwo other filters, one for ESG criteria and
\nanother to exclude companies involved in
\ncontroversies.<\/p>\n
\nof its investment decisions<\/strong><\/p>\n
\nmarket with an ESG and climate dimension, CPR AM provides services to measure the impact of the strategies applied
\nby its fund managers. Carbon reporting
\nis thus widespread in CPR AM\u2019s range of
\nfunds, and its fund management teams
\nare able to measure the impact of each
\ninvestment decision directly using their
\nfront office tool before placing any orders.<\/p>\n
\nindicators we follow to monitor the official
\nenvironmental targets set by companies
\non a long-term temperature trajectory.<\/p>\nAligning a portfolio with a 2\u00b0C trajectory
\n(corresponding to the upper end of the
\nglobal temperature range that the Paris
\nAgreement recommends not exceeding)
\nimplies picking companies which have
\ndecarbonisation strategies that are consistent with the requirements of the ecological transition. Around 90% of MSCI
\nEuro companies (in terms of capitalisation) replied to the CDP this year and
\nwill have their temperature measured.<\/quote><\/p>\n
\nan aggregation method that is more effective than a simple weighted average of the
\ntemperatures of companies in our portfolio,
\nas this will give us a more reliable gauge
\nof the temperature of our investments\u201d<\/em>,
\nconcludes No\u00e9mie Hadjadj-Gomes.<\/p>\n","protected":false},"excerpt":{"rendered":"
\ntheir portfolios will emerge from the crisis
\nwith even greater faith in their convictions
\nand all the keener to take more action for
\nthe future. New investors will undoubtedly soon join the movement to transform
\nour economies in the name of sustainable
\ndevelopment. Or at least we can hope so.<\/p>\n","protected":false},"author":1,"featured_media":90964,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1483],"tags":[1655,1856,1826,1682,1651,1807,1877,1453,2068],"_links":{"self":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts\/90966"}],"collection":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/comments?post=90966"}],"version-history":[{"count":0,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts\/90966\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/media\/90964"}],"wp:attachment":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/media?parent=90966"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/categories?post=90966"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/tags?post=90966"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}