A strategic (S)RI trend toward complementary approaches

The (S)RI - (Socially) Responsible Investment - strategy of Groupama Asset Management is based on a three-fold approach. These three approaches are separate but complementary:

A Broad SRI approach, characterised by:

• integration of key ESG sectoral challenges to fundamental financial analysis (sector/value studies)
• integration of the ESG score tool among managers
• measurement of portfolio SRI quality
• setting of SRI quality objectives for portfolios

A Core SRI approach, the principal dimensions of which are:

• the specific ESG score methodology to establish a score (SRI score) and a hierarchical ordering of debt and/or equity issuers in each business line
• a qualitative analysis supplementing the quantitative approach (integrating sectoral Key Performance Indicators)
• construction of a universe of eligible investments
• the adherence of the SRI fund open to the public, to the AFG/FIR Transparency Code
• the option for the Novethic SRI label option

A specific SRI philosophy for short-term monetary management, the principal features of which are:

• a defined list of issuers
• exclusion of any complex securitisation activity
• exclusion of any issuances from tax havens
• the incorporation of certain specific criteria favouring general-interest and mutual financial companies

A specific ESG analysis methodology

A task carried out in tandem between financial and extra-financial analysts that allows for the enrichment of fundamental and credit analysis from a medium-/long-term perspective. The latter prepared an ESG analysis methodology that, with the collaboration of financial engineering, integrates internal and external research. This set of internal tools (research, sectoral analysis schedules, etc.) and external tools (sectoral studies and analyses by brokers, research, databases of extra-financial rating agencies, etc.) thus allows SRI analysts to:

• assess the level of integration of CSR policy to the economic models of companies in terms of risk assessment and management as well as the evaluation of opportunities for added value
• measure the SRI quality of debt and equity issuers in terms of challenges and opportunities
• formalise overall recommendations on debt and/or equity issuers
• define eligible investment universes

This approach is both progressive and pragmatic, aimed at generalising, over time, integration of SRI into the entire management activity.

A “Core” SRI offering

Although the goal over time is to generalise the integration of the SRI challenges into all its management activities (“Broad” SRI), Groupama Asset Management has implemented a distinctive SRI management with proven expertise, and the relevance of its strategy over the long term, particularly through two SRI investment funds, reflecting its experience and expertise:

• The Euro Capital Durable SICAV

Created in 2001, the Sicav is currently one of the market’s benchmark SRI Euro Equity funds. It invests in the best SRI securities in the eligible MSCI EMU universe according to the positive selection approach called “Best in Class.” The extra-financial portion of securities' selection applies by setting scores that reflect their SRI quality and through the exclusive selection of the best-performing companies in their activity sector.

• The Groupama Crédit Euro ISR Fund

This is a Bond fund of private euro issuers (credit) launched in December 2008. The Groupama Crédit Euro ISR Fund is directed toward investors seeking to combine a Sustainable Development dimension with their investment, and active management of a medium-/long-term bond risk portfolio invested in private issuers in the eurozone. The SRI approach used in the management process is a “Best in Class Return” approach combining three dimensions: the ESG score calculated monthly for all issuers of the eligible SRI Credit universe, with a classification by quintile of the investment universe; integrated extra-financial qualitative analysis (risk and opportunities in the medium/long terms, sectoral and regulatory dynamics, management quality and expected return “distorted” by the allocation of a bonus for the most virtuous issues; and a penalty for the least virtuous ones in terms of CSR policy.

Commitment and active contribution to market dialog

Groupama AM evidences a spirit of responsibility that is expressed in its management decisions as well as in its involvement in and commitment to the various work places or in corporate discussions

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