Fund Size: £476.96m

Total screened & themed / SRI assets: £38576.79

Total Responsible Ownership assets: £57540.75

Total assets under management: £128419.89

As at: 31/03/25

Contact: benjamin.rumary@candriam.com

Overview

Filters

Fund information

Policy

Our thematic process starts by defining an eligible universe of companies for which enough evidence is available about their commitment to bring solutions of mitigation or adaptation to the climate issues facing the world. The resulting preliminary investment ideas are vetted by our climate specialists, either by excluding companies if for example they belong to sectors incompatible with the strategy, or by adding companies that the AI-engine did not spot. The result of this preliminary thematic screening is a long list of around 700 companies identified as potential investment ideas for the strategy.

The investment universe defined above is subjected to a preliminary ESG filter: We first apply our company exclusion policy for strategies classified article 9 SFDR, and our norms-based policy. Furthermore, we limit our investment scope to the companies receiving the best ESG scores based on a proprietary ESG analysis methodology, called Best-in-Universe. We only select the best companies with an ESG score of up to 5 (on a 1-10 scale, 1 being the best and 10 being the worst).

The screening combines the following features:

• Weapons and Controversial Activities screening,
• Norms-Based Analysis: companies must respect the ten principles of the UN Global Compact,
• Business Activities Analysis: we assess company exposure to five key sustainable challenges central to long-term sustainability,
• Stakeholders Analysis: companies are evaluated on their management of six types of stakeholders, Stewardship, through Dialogue and Proxy Voting, is a key constituent of our investment process.

Process

Candriam's ESG investment process is a two-step process that first of all calls for the definition of the eligible investment universe, followed by a financial selection which includes ESG considerations to select issuers within the eligible ESG universe. Any investment outside the ESG universe is prohibited.

The selection of ESG issuers is confirmed by the ESG team on a monthly basis, and on a one-off basis in exceptional circumstances.

ESG considerations are taken into account within the individual investment processes. Our ESG integration approach leverages on the frameworks and analysis conducted by the ESG Team. The analysis and views resulting from the ESG analysis are embedded in our financial frameworks. The consideration of ESG aspects in the financial framework will impact the final issuer score/color and valuation for our equity strategies. To this end, integrating ESG considerations will ultimately impact the construction of the final portfolio.

Key steps:

• Fundamental Analysis - Candriam’s fundamental analysis is based on five pillars: Quality of Management, Business Growth, Competitive Advantage, Value Creation and Financial Leverage. Each of these pillars receives a colour/score that determines the final assessment of a company.
• Company Valuation - We further evaluate the dynamics of their profitability and growth, the liquidity of the equity, and valuation. Our valuation is predominantly based on DCF models using at least five years of projected Free Cash Flow, based on our internal projections. We adjust the discount rate based on the final score/colour of a company which takes into account ESG criteria. For example, for green companies, we reduce the discounting rate within our DCF. This modification has a significant impact on the DCF- valuation.
• Portfolio Construction -within the eligible universe, the process is mainly colour-based, bottom-up stock selection; weightings in the portfolio are function of the global colours of the companies. The sector weight deviations from the benchmark are not a strategic objective; they result from our convictions on individual stocks, with top down sanity checks and other deviation boundaries. The weight is significantly impacted by the colour grade (including the ESG score), and the upside potential derived through our valuation analysis (that takes the ESG score into account as well). We favour companies that are 'green' in all aspects. An ‘orange’ company will have a lower weight and 'red' companies are in principle excluded, or extremely reduced, depending on the process.

Resources, Affiliations & Corporate Strategies

ESG Investments & Research Team

Candriam has an independent and dedicated ESG Investments & Research Team, who has developed Candriam’s own ESG analysis methodology applied to three types of issuers: corporations, governments, and supranational institutions.

The team is organised around various pillars:

• ESG Corporate Research
• ESG Sovereign Research
• Impact
• Proxy Voting and Engagement
• ESG Development
• ESG Quant Analytics and Research.

The organigram below describes the organisation of the team:

Date as of 31 January 2025

The ESG department is led by Wim Van Hyfte, PhD - Global Head of ESG Investments & Research and Vincent Compiègne, Deputy Global Head of ESG Investments & Research and Head of ESG Fundamental Research. Wim Van Hyfte, PhD has been portfolio manager for over a decade of one of Candriam’s flagship ESG funds and one of our largest ESG mandates. We believe we are one of the few investment managers to underscore the importance of integrating ESG factors in the investment process by naming an experienced ESG portfolio manager as global head of ESG research. Wim further enhances our research process with his academic research and doctorate in Financial Economics.

The ESG Investments & Research team is made up of 19 analysts dedicated to Corporate ESG Analysis, Sovereign ESG Analysis, Impact and Engagement & Voting. The corporate ESG analysts are specialised by sector. They integrate ESG risks and opportunities in both sector and company research.

The ESG analysts have designed an extensive database, which allows the management of all stages of our ESG investment process internally, from ESG analysis to portfolio construction and analysis. For the majority of our sustainable strategies, the ESG analysts determine the eligible ESG universe for the investment management team on the basis of the proprietary ESG analysis. The investment management teams then apply their respective investment processes and select issuers from the ESG Universe. For specific strategies, such as the Candriam Sustainable Equity Climate Action strategy, the eligibility of issuers is determined in conjunction with the investment teams.

The ESG Investments & Research Team also comprises dedicated ESG professionals for engagement activities and corporate responsible development. As a responsible investment manager, we are committed to engaging with issuers, and to exercising our shareholder voting and other rights in an educated and constructive fashion. We continuously expand our engagement with issuers, investors, and the public. In 2022, following a competitive submission, Candriam was named “Stewardship Team of the Year” at the Financial News Excellence in Institutional Fund Management Awards, in recognition of its constructive engagement and ESG proxy voting activities.

Our ESG Investments and Research Team is supported by an ESG Quant Analytics & Research team, specialised in ESG data analysis, and an ESG Development team, in charge of the commercial development and communication of Candriam’s ESG expertise.

Candriam governs its sustainability through several committees, each with specific roles and responsibilities:

• Strategic Sustainability Committee: Sets out strategic orientations for ESG investing and corporate sustainability, supported by ESG and CSR experts.
• Sustainability Risk Committee: Oversees and steers the management of extra-financial risks, including climate and human rights risks, and defines company-wide ESG investment restrictions.
• Proxy Voting Committee: Provides strategic guidance on proxy voting best practices and monitors Candriam’s voting policy.
• Candriam Institute for Sustainable Development: Oversees philanthropy and community impact programs, supporting initiatives in ESG research, education, social inclusion, environment, and cancer research.
• ESG Steering Committee: Coordinates the implementation of the strategic ESG roadmap, involving investment, operational, IT, and regulatory workstreams.
• CSR Steering Committee: Oversees and coordinates the implementation of the CSR roadmap across staff, clients, operational value chain, governance, and the community.

These committees ensure a comprehensive governance structure for sustainability at Candriam

Candriam’s sustainability approach across investment products and other dimensions of Candriam’s integration of sustainability considerations are described in detail through the following policies:

Sustainable Investment Policy, Exclusion Policy, Integration Policy, SRI Transparency Codes, Climate Policy, Biodiversity Policy, Sustainability Risk Policy, Principal Adverse Sustainability Impacts Statement, Human Rights Policy, Engagement Policy,  Proxy Voting Policy, CSR Report. 

Dialshifter

This fund is helping to ‘shift the dial from brown to green’ by...

...contributing to the advancement of the goals set by the Paris 2°C Agreement through the integration of ESG factors with a strong focus on environmental aspects. To this end, the strategyinvests in a diversified portfolio of Climate Change solutions providers for the mitigation and adaptation to climate change.

Climate change represents two main types of risks, physical and transitional risks. The first includes direct damage caused by weather events. The latter results from transitioning to a low-carbon economy and climateresilient future. For example, this risk entails the depreciation of assets, or stranded assets, as a result ofregulatory developments that would penalize or even prohibit certain activities deemed too intensive in theemission of greenhouse gases.

The degree of risk and opportunities varies across sectors. For instance, this isparticularly problematic in the Oil and Gas sector, which is currently experiencing an increase in stranded assets as demand for fossil fuel falls in the transition to a low-carbon economy. Our ESG analysts take into considerationthese two types of risk when assessing issuers.

Our organisation is helping to support the Paris Climate Agreement and the Race to Net Zero by...

• Moving beyond integrating scope 1 & 2 carbon footprinting, and extending the measurement of carbon performance to scope 3 emissions where relevant;
• The integration of climate goals in ESG research and investment objectives;
• Articulating our Climate Strategy around the core functions and activities of the organization:
  • investment management products and services,
  • corporate stewardship & active ownership,
  •  the company’s own operations.

We publish a certain number of metrics both at company level and fund level.

Literature

• Fund overview & literature (including factsheet)
• Candriam Article 8 & 9 Thematics Strategies

This document is provided by Candriam as an answer to a Request For Information issued by the recipient and is intended for the Recipient only. Please refer to the prospectus of the funds and to the key information document before making any investment decision. This communication does not constitute an offer to buy or sell financial instruments, nor does it represent an investment recommendation or confirm any kind of transaction, except where expressly agreed. Although Candriam selects carefully the data and sources within this document, errors or omissions cannot be excluded a priori. Candriam cannot be held liable for any direct or indirect losses as a result of the use of this document. The intellectual property rights of Candriam must be respected at all times, contents of this document may not be reproduced without prior written approval.

Warning: Past performance of a given financial instrument or index or an investment service or strategy, or simulations of past performance, or forecasts of future performance does not predict future returns. Gross performances may be impacted by commissions, fees and other expenses. Performances expressed in a currency other than that of the investor's country of residence are subject to exchange rate fluctuations, with a negative or positive impact on gains. If the present document refers to a specific tax treatment, such information depends on the individual situation of each investor and may change.

 In respect to money market funds, please be aware that an investment in a fund is different from an investment in deposits and that the investment’s principal is capable of fluctuation. The fund does not rely on external support for guaranteeing its liquidity or stabilizing its NAV per unit or share. The risk of loss of the principal is borne by the investor.

 Candriam consistently recommends investors to consult via our website https://www.candriam.com the key information document, prospectus, and all other relevant information prior to investing in one of our funds, including the net asset value (“NAV) of the funds. Investor rights and complaints procedure, are accessible on Candriam’s dedicated regulatory webpages https://www.candriam.com/en/professional/legal-information/regulatory-information/. This information is available either in English or in local languages for each country where the fund’s marketing is approved.

According to the applicable laws and regulations, Candriam may decide to terminate the arrangements made for the marketing of a relevant fund at any time.

Information on sustainability-related aspects: the information on sustainability-related aspects contained in this communication are available on Candriam webpage https://www.candriam.com/en/professional/sfdr/. The decision to invest in the promoted product should take into account all the characteristics or objectives of the promoted product as described in its prospectus, or in the information documents which are to be disclosed to investors in accordance with the applicable law.

Notice to investors in Switzerland: The information provided herein does not constitute an offer of financial instruments in Switzerland pursuant to the Swiss Financial Services Act ("FinSA") and its implementing ordinance. This is solely an advertisement pursuant to FinSA and its implementing ordinance for financial instruments.

Swiss representative: CACEIS (Switzerland) SA, Route de Signy 35, CH-1260 Nyon. The legal documents as well as the latest annual and semi-annual financial reports, if any, of the investment funds may be obtained free of charge from the Swiss representative.

Swiss paying agent: CACEIS Bank, Montrouge, succursale de Nyon/Suisse, Route de Signy, 35, CH-1260 Nyon.

Place of performance: Route de Signy 35, CH-1260 Nyon.

Place of jurisdiction: Route de Signy 35, CH-1260 Nyon.

Specific information for investors in France: the appointed representative and paying agent in France is CACEIS Bank, Luxembourg Branch, sis 1-3, place Valhubert, 75013 Paris, France. The prospectus, the key investor information, the articles of association or as applicable the management rules as well as the annual and semi-annual reports, each in paper form, are made available free of charge at the representative and paying agent in France.

Specific information for investors in Spain: Candriam Luxembourg Sucursal en España has its registered office at C/ Pedro Teixeira, 8, Edif. Iberia Mart I, planta 4, 28020 Madrid and is registered with the Comisión Nacional del Mercado de Valores (CNMV) as an European Economic Area management company with a branch.

Specific information for investors in Austria: The appointed Paying and Information Agent in Austria is Erste Bank der oesterreichischen Sparkassen AG, Am Belvedere 1, 1100 Vienna, Austria. The prospectus, the Key Investor Information Documents (KIIDs) relating to the portfolios of the Fund, the Articles, the audited annual accounts, the semi-annual accounts as well as the issuance and redemption prices are available in Austria free of charge (in the German language) at the Austrian Paying and Information Agent.”  

Last amended: 25/01/24 11:11