FP Carmignac European Leaders Fund

SRI Style:

ESG Plus

SDR Labelling:

Working towards adopting label

Product:

OEIC

Fund Region:

Europe ex UK

Fund Asset Type:

Equity

Launch Date:

15/05/2019

Last Amended:

Jul 2024

Dialshifter ():

Fund Size:

£93.00m

(as at: 28/03/2024)

Total Screened Themed SRI Assets:

£297.00m

Total Responsible Ownership Assets:

£25902.00m

Total Assets Under Management:

£27075.00m

ISIN:

GB00BJHPHZ49, GB00BNDQ7N71, GB00BJHPXB21, GB00BNDQ7P95

Objectives:

The Fund is an equity fund focused on stock-picking across Europe, excluding the UK. Through a disciplined, bottom-up investment process, the manager aims to pick quality stocks that benefit from the long-term compounding effect to profitability and profit reinvestment.

 

The Fund typically targets companies with 1bn market capitalisation or higher, but exceptions exist. The Fund seeks to invest sustainability for long-term growth and implements a socially responsible investment approach.

 

The Fund undertakes a holistic view to managing sustainability risk by identifying and assessing the sustainability risks related to its investments and their stakeholders.

 

The Fund aims to outperform its MSCI Europe Ex UK Index (USD) over the recommended investment period of 5 years. As part of its objective, the Fund seeks to invest sustainably and implements a socially responsible investment approach.

 

Sustainable, Responsible
&/or ESG Overview:

The Fund follows an active, bottom-up, fundamental approach. Stock selection focuses on identifying companies with the most attractive long-term prospects, as demonstrated by two key characteristics: high and sustainable levels of profitability and reinvestment (internal or external).

 

This combo drives growth and expansion of a business’ capital base. It produces an intrinsic compounding effect in the company’s value and helps retain the profitability gap.

 

It is this effect (independent of the stock price) that the manager tries to capture in his investments. Therefore, a long holding period (ideally between 3 to 5 years) aims to capitalize on this compounding effect.

 

Finally, investments are made in the names with the best asymmetric risk/return profiles and in accordance with the strategy’s sustainable commitment.

 

The investment team adds value through their deep knowledge of European companies, acquired through more than almost three decades of experience in the industry. This experience, combined with the expertise of the members of the extended Carmignac investment team, helps them to identify companies with superior risk/return profiles and generate strong risk adjusted returns.

Primary fund last amended:

Jul 2024

Information directly from fund manager.

Fund Filters

Sustainability - General
Sustainability policy

Funds that have policies that consider (environmental and social) sustainability issues. Strategies vary but are likely to consider environmental issues like climate change, carbon emissions, biodiversity loss, resource management, environmental impacts; and social issues like equal opportunities, human rights, labour standards, diversity and adherence to internationally recognised codes. See fund information.

Sustainability focus

Find funds which substantially focus on sustainability issues

UN Global Compact linked exclusion policy

Find funds that use the UN Global Compact to inform or help direct where they can or cannot invest and will typically not invest in companies with significant breaches (low standards) - although strategies vary. (The UNGC covers a wide range of issues - search 'UNGC'). See https://unglobalcompact.org/

UN Sustainable Development Goals (SDG) focus

Find funds that specifically aim to invest (and manage assets) in ways that help to address all or some of the UN's Sustainable Development Goals (SDGs). See https://sdgs.un.org/goals).

Report against sustainability objectives

Find funds that publicly report their performance against specifically named sustainability objectives (in addition to reporting their financial performance)

Environmental - General
Environmental policy

Funds that have policies which relate to environmental issues. These will typically set out the fund's stance on issues such as pollution, climate change, resource management, biodiversity loss, carbon emissions, plastics and/or additional environmental impacts. Strategies vary. See fund information for further information.

Limits exposure to carbon intensive industries

Funds that limit or 'reduce' their exposure to carbon intensive industries (ie sectors which are major contributors to climate change. Funds vary - some funds may be 'underweight' in this area which means they may have some investment in highly carbon intensive areas. Funds of this kind may choose companies they consider to be 'best in sector' and encourage ever higher standards. Strategies vary. See fund information for further details.

Environmental damage and pollution policy

Funds that have written policies explaining the approach they take when companies damage the environment or are significant polluters. Funds of this kind may work with companies to encourage higher standards, or exclude companies - sometimes dependent on the situation. Strategies vary. See fund information for further detail.

Resource efficiency policy or theme

Find funds that have a policy or theme that relates to managing natural resources more efficiently. Funds with this policy will be likely to favour companies that make (or enable the) more efficient use of resources - and either avoid or encourage change amongst companies with lower standards. Strategies vary. See fund information for further detail.

Favours cleaner, greener companies

Funds that aim to invest in companies with strong or market leading environmental policies and practices. Strategies vary - in particular the balance between 'financial' aspects and environmental benefits. Some may invest substantially in solutions or 'positive impact' companies - others may invest in more conventional companies providing certain environmental criteria are met. See fund information for further detail.

Nature & Biodiversity
Biodiversity / nature policy

Find funds that have a written biodiversity policy or theme aimed at encouraging and improving environmental protection and safeguarding the natural world (sometimes referred to as the preservation or enhancement of 'natural capital'). See eg https://www.un.org/en/climatechange/science/climate-issues/biodiversity

Climate Change & Energy
Climate change / greenhouse gas emissions policy

Funds that have policies (documented strategies that explain their position on) climate change related issues such as greenhouse gas/carbon emissions, net zero, transitioning to lower carbon. Strategies vary. Read fund details for further information.

Coal, oil & / or gas majors excluded

Funds that avoid investing in major coal, oil and/or gas (extraction) companies. Funds vary: some may exclude all companies that extract oil. Others may have exposure to oil extraction via more diversified energy companies. See fund literature to confirm details.

Fracking and tar sands excluded

Funds that avoid companies involved in fracking and tar sands - which are widely regarded as controversial methods of oil and gas extraction. Strategies vary. See fund information for further information.

Arctic drilling exclusion

Funds that avoid companies that are involved in extracting oil from the Arctic regions. See fund literature for further details.

Fossil fuel reserves exclusion

Funds that avoid investing in companies with coal, oil and gas reserves. See fund information for further details.

TCFD reporting requirement (Becoming IFRS)

Will only invest in companies that report greenhouse gas emissions reduction strategies in line with the framework set out the by the Taskforce for Climate Related Financial Disclosure, which is increasingly becoming mandatory. See https://www.fsb-tcfd.org/ https ://www.ifrs.org/sustainability/tcfd/

Ethical Values Led Exclusions
Ethical policies

Find funds that have policies that set out their position on ethical or 'personal values' based issues. Strategies vary. See fund information for further detail.

Tobacco and related product manufacturers excluded

Companies are excluded if they are involved in any aspect of the production chain for tobacco products, including cigarettes, vaping, e-cigarettes, chewing tobacco and cigars.

Tobacco and related products - avoid where revenue > 5%

Companies are excluded if they make more than 5% of their revenue from the manufacture, sale or distribution of tobacco products including cigarettes, vaping, e-cigarettes, chewing tobacco and cigars.

Armaments manufacturers avoided

Find funds that avoid companies that manufacture products intended specifically for military use. Fund strategies vary - particularly with regard to non-strategic military products. See fund literature for fund specific details.

Civilian firearms production exclusion

Find funds with a written civilian firearms exclusion policy - meaning that they will not invest in companies that make (or perhaps also sell) handguns made for non-military users.

Alcohol production excluded

Find funds that avoid investment in companies involved in the production of alcohol. Strategies vary; some funds allow a small proportion of profits to come from this area. See fund literature for further information.

Gambling avoidance policy

Find funds that avoid companies with significant involvement in the gambling industry. Some funds may allow a small proportion of profits to come from this area. See fund policy for further details.

Pornography avoidance policy

Find funds that avoid companies that derive significant income from pornography and related areas. Strategies vary. See fund details for further information.

Gilts & Sovereigns
Does not invest in sovereigns

Find funds that do not invest in / exclude 'sovereigns' - debt issued by governments. See eg https://www.investopedia.com/terms/s/sovereign-debt.asp

Governance & Management
Governance policy

Find fund options that have policies that relate to corporate governance issues such as board structure, executive remuneration, bribery and/or corporate corruption. These funds will typically avoid companies with poor practices. Strategies vary. See fund literature for further information.

UN sanctions exclusion

Exclude companies that are subject to United Nations sanctions. See eg https://main.un.org/securitycouncil/en/content/un-sc-consolidated-list

Targeted Positive Investments
Invests >25% of fund in environmental/social solutions companies

Find funds that invest >25% of their capital towards companies where a major part of their business is focused on helping to address environmental or social challenges.

Invests >50% of fund in environmental/social solutions companies

Find funds that invest >50% of their capital in companies where a major part of their business is focused on helping to address environmental or social challenges.

How The Fund Works
Positive selection bias

Find funds that focus on finding and investing in companies with positive / beneficial attributes. This strategy can be applied in addition to exclusion criteria and engagement/stewardship activity.

Negative selection bias

Find funds where their main 'ethical approach' is to avoid companies by using negative screening criteria. Read fund literature for further information.

Assets mapped to SDGs

Find funds that have 'mapped' (reviewed) their investment selection and management strategies to identify which of the UN Sustainable Development Goals (SDGs) the fund is helping to address.

Combines norms based exclusions with other SRI criteria

Find funds that make significant use of internationally agreed 'norms' (e.g. United Nations Global Compact - UNGC - or the UN Sustainable Development Goals - SDGs) as part of their investment selection process alongside additional SRI criteria such as positive or negative stock selection policies and/or stewardship strategies.

Norms focus

Find funds that use internationally agreed standards, conventions and 'norms' to help direct where the fund can and cannot invest (e.g. the UN Global Compact, UN Sustainable Development Goals). Read fund literature for further information.

Focus on ESG risk mitigation

A major focus of these funds is the careful management of environmental, social and governance (ESG) related risks - typically by avoiding or being underweight in companies seen as posing major risks in these areas (i.e. not necessarily by using themes, exclusions etc).

SRI / ESG / Ethical policies explained on website

Find funds that have published explanations of their ethical, social and/or environmental policies online (i.e. fund decision making strategies/ buy/sell &/or asset management strategies).

Unscreened Assets & Cash
Assets typically aligned to sustainability objectives 70 - 79%

The percentage of assets held within the fund that match the fund’s sustainability objectives and are not being held purely for risk management purposes, such as derivatives and cash equivalent assets.

Assets typically aligned to sustainability objectives 80 – 89%

The percentage of assets held within the fund that match the fund’s sustainability objectives and are not being held purely for risk management purposes, such as derivatives and cash equivalent assets.

Assets typically aligned to sustainability objectives > 90%

The percentage of assets held within the fund that match the fund’s sustainability objectives and are not being held purely for risk management purposes, such as derivatives and cash equivalent assets

Intended Clients & Product Options
Intended for investors interested in sustainability

Finds funds designed to meet the needs of individual investors with an interest in sustainability issues.

Intended for clients interested in ethical issues

Find funds designed for clients who care about ethical and values-based issues, often alongside sustainability issues also.

Labels & Accreditations
SFDR Article 9 fund / product (EU)

Finds funds classified under Article 9 of the EU’s SFDR (Sustainable Finance Disclosure Requirements). Article 9 of the SFDR applies to financial products that have sustainable investment 'objectives' - including emissions reduction objectives. (These may currently be referred to as 'impact' funds or aiming to deliver clear, specific positive outcomes.) These rules do not currently apply in the UK so fund managers may leave this field blank.

Fund Management Company Information

About The Business
Responsible ownership / stewardship policy or strategy (AFM company wide)

Finds fund management companies that have a published company wide stewardship, engagement and / or responsible ownership policy or strategy that covers all investments. Stewardship typically involves encouraging higher ESG standards through voting and dialogue.

ESG / SRI engagement (AFM company wide)

Find fund management companies that actively encourage higher 'environmental, social and governance' and/or 'sustainable and responsible investment' practices across investee companies - typically where the aim is to encourage positive change that is aligned with the best interests of investors. Strategies vary. See additional information and options.

Diversity, equality & inclusion engagement policy (AFM company wide)

Find fund management companies that encourage the companies they invest in to have strong diversity, race, gender and other equality policies across all assets held, not simply screened or themed SRI/ESG funds. (ie Asset Management company wide).

Collaborations & Affiliations
PRI signatory

Find fund management companies that have signed up to the UN backed 'Principles of Responsible Investment'.

Investment Association (IA) member

Fund management entity is a member of the Investment Association https://www.theia.org/

Accreditations
PRI A+ rated (AFM company wide)

Finds organisations / fund managers that have an A+ PRI rating - meaning they are highly rated according to the 'Principles of Responsible Investment'

Company Wide Exclusions
Controversial weapons avoidance policy (AFM company wide)

Find fund management companies (not funds) that avoid investment in 'controversial weapons' across all of their funds and other investment vehicles.

Tobacco avoidance policy (AFM company wide)

Find fund management companies that avoid investment in tobacco (manufacturing) companies across all their assets.

Fossil fuel exclusion policy (AFM company wide)

Find fund management companies that avoid investment in fossil fuel companies (e.g. coal, oil and gas) across all of their funds. (and/ or other assets.)

Coal exclusion policy (group wide coal mining exclusion policy)

This asset manager excludes direct investment in the coal mining industry. Managers ability to do this may depend on the geographic regions in which they invest.

Transparency
Publish responsible ownership / stewardship report (AFM company wide)

Find fund management companies that publish a report detailing their responsible investment ownership - also known as 'Stewardship' - activity.

Full SRI / responsible ownership policy information on company website

Find companies that publish information about their sustainable and responsible investment strategies on their company website.

Publish full voting record (AFM company wide)

Fund management companies that publish a full record of how they vote their shares at AGMs (annual general meetings) and EGMs (extraordinary general meetings). Voting strategies have an important role to play encouraging higher environmental, social and governance standards.

Sustainability transition plan publicly available (AFM company wide)

This asset management company has published a plan that explains how they are to become a sustainable business - without significant negative environmental or social impacts.

Paris Alignment plan publicly available (AFM company wide)

This asset management company has published a plan that explains how they will align to the climate change commitments made at the Paris Climate Talks, COP21.

Net Zero transition plan publicly available (AFM company wide)

This asset management company has published a plan that explains how they are going to achieve net zero greenhouse gas / CO2e emissions.

Sustainable, Responsible &/or ESG Policy:

ESG analysis is performed for each investment (objective: ESG analysis applied to at least 90% of issuers). Exclusion lists are used in the screening stage, access to the START platform provides our managers and analysts with insight into third party research as well as our proprietary internal reviews. The Sustainable team helps with specific ESG analysis and/or company engagements.

 

Fund managers and analysts are responsible for ESG qualitative analysis and engagement and are assisted by Governance and ESG Analysts. During the due diligence directly with corporations as part of the investment rationale, ESG risk and opportunities are identified and discussed. External ESG data sources are aggregated on our START platform from: Trucost, TR Refinitiv, MSCI and ISS. MSCI ratings are updated annually. The overall portfolio is monitored frequently for assessment of average ratings.

 

An active voting policy has been adopted with the objective of participating in all possible voting actions. The Proxy voting leader ISS is our partner helping us to report and identify specific issues related to ESG aspects.

 

 

Carbon emissions screening

Carmignac Gestion has made climate awareness a formal component of its investment process, joining the efforts undertaken as part of the Cop21 initiatives and adhering to Energy Transition (Article 29).

The Fund has proven to have a very low level of fossil fuel involvement and specifically targets a carbon intensity of 50% below its reference indicator as measured by tCO2/ M USD (Scope 1 and 2, GHG Protocol).

In no way does the Fund replicates any low carbon index members or sectors given its very non benchmarked nature.

 

 

Controversies management

Engagements occur directly with companies regarding E, S or G issues and are subject to specific reporting via email or summary in the front office database (Verity). For companies we invest in, there are regular discussions and follow-up of topics during meetings with them. When controversies occur, fund managers and equity analysts are responsible for the engagement and follow up with their respective companies. ESG Analysts can also assist in engaging with a company on a specific topic or controversy. Should no resolution be achieved a decision is taken to reduce or exit the investment.

 

 

Compliance with ESG/SRI principles

Our ESG restrictions are configured within our internal risk management system Bloomberg AIM CMGR to avoid investments in stocks, sectors or countries that do not comply with our internal ESG policy. The exclusions list exhaustiveness is reviewed quarterly by the Stewardship director and the Compliance department. Ad-hoc reviews are also done at the discretion of the Sustainability team.

First-level control systems are carried out by the Sustainable Investment team. Second-level controls are carried out by the Compliance and Internal Control Department given the ESG thematic is fully integrated into the Annual Compliance Monitoring Program. The Compliance and Internal Control Department also performs yearly reviews on the ESG activity to ensure our statutory, regulatory and commitments as UNPRI signatories are met. Moreover, the Compliance department takes an active role in ensuring company exclusions are adhered to.

 

 

Communicating with our investors

Carmignac’ s mainstream ESG approach, its specific Socially Responsible Funds and the low carbon approach of Carmignac Portfolio Grande Europe are identified on Carmignac’ s RI Hub and the Fund’s page.

The annual report of the Fund contains a full commentary on ESG issues and its ESG assessment.

  • The results of the Funds studied for emissions are also thoroughly discussed in the respective Funds’ annual reports and in our RI Hub.
  • Carbon emissions per Million USD invested, total carbon emissions and carbon intensity are detailed. In the annual report of 2020, the Fund’s carbon emission reference will be Carbon intensity to allow comparison across asset classes together with fossil fuel revenues.

 

Process:

The Fund’s investment process leverages the combined emphasis of a robust financial screening on one side – which quantifies the quality and growth characteristics we consider essential for an investment to be included in the final portfolio – and our commitment to SRI on the other – which sets for us specific targets and goals.

 

The investment process starts with an SRI filter to narrow down the stock universe (Western European companies with min 1bn market capitalization – but exceptions exist). Through negative and positive screenings, the stock universe is reduced by ca 40%. A financial filter aimed at finding the most attractive opportunities in Europe based on companies’ financials follows. As a result, the universe is further reduced by another 30%. Lastly, fundamental analysis is done for each potential investment. Through this process, the manager seeks to create a concentrated Fund which targets 35 to 40 holdings. ESG analysis and risk management are part of ongoing portfolio monitoring and are fully integrated in the process.

 

SRI Filter

As part of its objective, the Fund seeks to invest sustainably for long-term growth and implements a socially responsible investment approach. The Fund’s SRI Filter comprises negative as well as positive screenings. The Fund aims to invest at least 80% of its net assets (100% of invested assets) in shares of companies that are considered aligned with relevant United Nations Sustainable Development Goals (UN SDGs) – in accordance with Carmignac Outcomes Framework. The SRI filter reduces the stock universe from ca 1200 to ca 700 names.

 

Negative Screening

Exclusion lists are used in the screening stage. Controversial weapon companies, tobacco producers, wholesale distributors and suppliers – among others – are excluded across all funds.

 

Positive Screening

On top of excluding harmful businesses, we also want to emphasize companies that contribute positively to either the environment or the society. In order to do so, we leverage the United Nations Sustainable Development Goals.

As mentioned, the Fund aims to invest in companies that align positively with selected SDGs as per our proprietary Outcomes Framework.

In order to be considered aligned, a company must meet one of the following thresholds:

  • Product and services: the company derives at least 50% of its revenue from goods and services that are related to one of the following nine SDGs: (1) No Poverty, (2) No Hunger, (3) Good Health and Well Being, (4) Quality Education, (6) Clean Water, (7) Affordable and Clean Energy, (9) Industry, Innovation and Infrastructure, (11) Sustainable Cities and Communities, (12) Responsible Consumption and Production;
  • Capital expenditure: the company invests at least 30% of its capital expenditure in business activities that are related to one of the previously mentioned SDGs;
  • Operations:
    • the company achieves an “aligned” status for operational alignment for at least 3 out of all 17 SDGs, based on the evidence provided by the investee company of available policies, practices and targets addressing such SDGs. An “aligned” status represents an operational alignment score of ≥2 (on a scale of -10 to +10) as determined by an external scoring provider (MSCI SDGs Operational Alignment Score); and
    • the company does not achieve a “misaligned” status for operational alignment for any SDG. A company is considered “misaligned” when its score is ≤-2 (on a scale of -10 to +10), as determined by an external scoring provider (MSCI SDGs Operational Alignment Score).

In practice, negative (exclusions) and positive screenings (UN SDGs alignment) are applied to the stock universe and, in conjunction with the elimination of companies with excessive carbon emissions (CO2 limit) as well as poor ESG credentials (MSCI CCC), these criteria all together reduce the Fund’s initial universe by ca 40%. 

 

 

Financial Filter

Our proprietary financial screen is based on metrics of historic profitability and reinvestment rate. This screening – which additionally reduces our universe to ca 300 names – ranks companies on five factors assessing profitability, stability of margins and reinvestment in future growth. Companies are assigned a combined score based on the above criteria and we calculate a score for our portfolio based on the weighted average score of its holdings. This financial screen is a starting point for further work, or a tool for validating the ideas of the investment team, corporate and market developments, stockbroker’s analysis or information from the companies themselves.

 

Stocks are ranked on five historic factors, then weighted – according to a pre-defined coefficient – so to get a global score which is ultimately representative of that specific stock within the universe. The lower the score, the better.

This financial screen aims to identify companies with the most attractive long-term growth prospects. It favors companies with a longer track record of high and stable profitability but not only. Indeed, stocks with a score above the median score of the investment universe are excluded a priori, but exceptions exist.

Additionally, we also aim for the average score of the portfolio to rank in the first quartile of the investment universe. Therefore, we could invest in companies that do not meet our criteria but possess attractive prospects. However, these companies cannot be over-represented in the portfolio to an extent that would deteriorate the portfolio’s score below the first quartile threshold.

This screening points us in the direction where we are likely to find names that meet our philosophy.  Our process is not a quantitative approach as we follow up with fundamental research and analysis which is the backbone of our method. It is a starting point for ideas, or a check of financial soundness and of ideas sourced externally. The screen does not favor only defensive names – technology, business services, industrials names are all more cyclically exposed but indeed meet the approach. Overall, the Financial Filter reduces the stock universe by another 30%.

As a result, by applying both lenses (SRI Filter on one side and Financial Filter on the other) to the initial stock universe, we define the so called: sustainable investable universe which comprises ca 300 names.

 

 

Validation/Research/Valuation

This initial stage to define the sustainable investable universe is then followed by specific and proprietary fundamental company analysis and valuation. The investment team focuses on understanding business models through examination of company-published accounting and corporate information, as well as management meetings.

During this phase, the investment team interacts with the company as part of fundamental research but also to identify any Environment, Social or Governance risks. ESG research has a direct impact on portfolio construction.  Our proprietary rating system START allows a comparative to MSCI ratings, with a broad coverage and aggregated data set and what we believe to be a superior peer group comparing: Capitalisations, Region – EM or DM, and 90 industry groups over 30 ESG indicators if there is coverage. Corporate sustainability reports, specialized ESG corporate research such as MSCI ESG Ratings are consulted, and potential controversies are discussed.

In addition, the investment team will consult with the relevant internal analyst as well as external stockbroker’s analysts. The team will also build proprietary financial models. The investment thesis and the valuation models for each of the securities in the portfolio are documented in our research management tool, Verity, which centralises the research of our analysts and managers.

 

 

Portfolio construction

Companies that meet our investment criteria and have sufficient growth potential are considered for inclusion in the portfolio. Portfolio construction is the result of stock selection. Thus, geographical and sectoral allocation depends mainly on our stock picking capabilities. The final selection of securities is guided by our assessment of the underlying business through fundamental analysis, our valuation and the potential investment return based on our risk adjusted price target. ESG assessment will also influence the weighting of holdings in the portfolio.

The portfolio is focused but diversified.  Each initial position ranges between 1 to 5%, based on the strength of the investment thesis, and as a result of a high conviction approach, the fund manager targets a number of portfolio holdings within a range of 35 to 40 stocks.

If the size of a position exceeds 5%, in the event of a strong investment thesis, such position would be closely monitored from a risk perspective, and the investment case re-assessed frequently.

 

 

Monitoring and Risk management

Risk management is at the heart of the investment process and the construction of the portfolio. We are always monitoring our investment cases to check they are developing according to our thesis and if not, then re-assess the investment case thereby seeking to minimise the risk. The weighting of holdings in the Fund is continuously monitored and weights are altered when financial and extra-financial assessments change.

The risk of the portfolio is also monitored by an independent risk control team, who can make recommendations on an ad hoc basis. This team also meets every month with the fund managers at our monthly Risk Committee where key risk indicators of the portfolio are reviewed.

 

Resources, Affiliations & Corporate Strategies:

PHILOSOPHY

Carmignac, empowered through its independence and transparency since 1989, has maintained a long-held practice of investing responsibly, aware of its corporate duty to its investors and stewardship in the European fund management industry. As Risk Managers, Carmignac seeks to mitigate as many risk factors as it can identify, this very resolutely includes risks associated with ESG issues. Since 2012, Carmignac, as a PRI signatory (Principles of Responsible Investment) and a French investment firm (under the French government’s directive Grenelle II Law, art 224-238, 2010), has raised its level of transparency regarding the application of Environment, Social and Governance (ESG) criteria in the investment process. Each PRI principle has been implemented across most of its Fund range.

 

 

OUR ESG OBJECTIVES AND DEFINITIONS

Carmignac has committed to implement Environmental, Social and Governance criteria in its relations with companies in which we invest. Carmignac believes that engaging with corporate leaders on sustainability issues will heighten awareness and accountability. Identifying both risks and opportunities associated with ESG factors we believe will enhance returns, as well as lower volatility of the funds. We seek to mitigate risks associated with environmental challenges particularly in respect of fossil fuel reserves, poor governance and shareholder underrepresentation and irreverence to social issues such as health and safety.

 

Environment

The scope of our interest includes the impact of companies on the environment and their ability to propose services and products which respond to environmental challenges. Environmental issues we consider could include company’s treatment of carbon emissions, pollution, waste, water usage.

Social

We focus on monitoring the impact of companies with all of its stakeholders (suppliers, employees, consumers) and the increasing public expectations of social responsibility. Social issues we consider could include all types of employment abuses, staff turnover metrics, diversity, workplace health and safety, income distribution, and product safety.

Governance

We focus on the enhanced value created by companies that encourage governance ethics.

Governance issues we consider could include any tendency towards uses of bribery and corruption, government’s involvement and impact on management, board independence, executive compensation, and anticompetitive practices.

In addition, there are 30+ ESG indicators of company data that can be monitored on the Carmignac proprietary ESG system START.

 

 

THE RESPONSIBLE INVESTMENT TEAM

The Sustainable Investment team has a total of seven members including 4 ESG analysts and a dedicated Sustainable Investment Specialists team.

 

Ultimately, the portfolio managers are responsible for implementing an ESG approach in their portfolios. The whole Investment team have been given the responsibility and requirement to assess ESG risks in investment rationales, supported by the ESG Analysts.

 

Lloyd McAllister is the Head of Sustainable Investment. His role is to oversee the implementation of the socially responsible investment process, corporate and investor communication, industry thought leadership and new product innovation. Lloyd reports to Maxime Carmignac, Executive board member and CEO of Carmignac UK Ltd.

 

Portfolio Managers and Analysts are directly responsible for the implementation and oversight of ESG criteria in their portfolio. A Sustainable Investment Director, 4 ESG Analysts, a Sustainable Investment Specialists dedicated team support the investment team in important stages of the investment process: screening for controversies, external ESG research provider coordination, active voting and engagement framework, socially responsible certification, maintenance and control of controversial sector exclusion lists, ESG consultant services and investor communication.

 

 

Understanding the investment universe

Inside START, our proprietary ESG system

Effective management of ESG factors is inherently linked with long-term performance and risk management. Our latest ESG development is the implementation of our interactive proprietary system START (System for Tracking and Analysis of a Responsible Trajectory), systemizing the integration of ESG analysis in our Funds’ investment process. It provides:

  • Systematic assessment of ESG criteria across all Funds and all equity, credit and sovereign debt assets (TR Refiniv Raw company data and Beyond Ratings)
  • Ability to do scenario analysis and carbon analysis for issuers (S&P, Trucost)
  • Appreciation of the company’s impact on the environment and society (MSCI impact, Impact-cubed)
  • A centralised platform that also includes controversies data (ISS ESG)
  • ESG sentiment assessment based on AI to identify company ESG turnaround (Truevalue Labs)

 

START provides forward-looking ESG analysis that gives our investment team the insight they need to make appropriate investment decisions, to best serve our clients’ long-term interests.

 

Overall, we analyse 31 specific ESG indicators that we have defined as financially material for around 8000 companies, to which we add controversy and impact data. START allows our teams to add unique human insight and conduct company engagement surrounding these key indicators.

 

Environmental

  • Carbon Emissions
  • Carbon Intensity
  • Flaring of Natural Gas
  • Total Energy / Revenues
  • Renewable Energy / Total Energy
  • Total Energy Consumption
  • Total Waste / Revenues
  • Waste Recycled / Total Waste
  • Direct and Accidental Oil Spills
  • Water Use / Revenues
  • Water Recycled
  • Total Fresh Water Withdrawal

 

Social

  • Employee Satisfaction
  • Employee Turnover
  • Incidence of Female Managers
  • Employee Training Hours
  • Lost Time Due to Injury
  • Employee Fatalities
  • CEO Salary Gap with Average Salary
  • Gender Pay Gap
  • Customer Satisfaction

 

Governance

  • Audit Committee Independence
  • Compensation Committee Independence
  • Nomination Committee Involvement
  • Board Size
  • Independent Board Members
  • Average Board Tenure
  • Board Gender Diversity
  • Highest Remuneration Package
  • Long Term Objective-Linked Executive Compensation
  • Sustainability Compensation Incentives

 

We will soon launch START 2.0, the second iteration of our ESG proprietary research platform. START 2.0 is Carmignac's new ESG proprietary scoring system that builds upon START 1.0. START 2.0 will encompass bespoke peer grouping based on multiple factors such as revenue splits, region, and market cap. It follows the Sustainability Accounting Standards Board (SASB) framework and includes a broader range of KPIs for ESG data, including historic, current, and forward-looking data from multiple data vendors assessed based on materiality and coverage. The scoring system will use AI powered sentiment data to dynamically compute the most and least material SASB categories for each entity. 

 

 

Integration of ESG criteria:

Identifying risk factors and adopting responsible behaviour. Comply with a list of excluded companies and identify potential controversies in our investments.

 

The Portfolio Managers and Analysts complete a rationale for investment case which includes comments on E, S and G issues, and engage with companies on relevant ESG topics and controversies. These exchanges, along with the investment rationale, are documented in the front office database Verity.

 

The START system aggregated and collated within 90 proprietary peer groups, thus creating a company score and ranking that incorporates climate data, controversies screening, impact analysis and ESG indicators. Proprietary qualitative analysis is then incorporated, and this overall ESG risk assessment is built into the investment rational.

 

 

Exclusion policy and Coal Exit Strategy:

We believe our investments should be made in companies with sustainable business models and which are exhibiting long-term growth perspectives. As such, we have compiled an exclusion list with companies that do not meet Carmignac’s investment standards, due to their activity in areas such as controversial weapons, tobacco, adult entertainment, and thermal coal producers (1), or because they contravene global standards on environmental protection, human rights, labour standards, and anti-corruption. (2) Furthermore, Carmignac has committed to a total exit of coal mining and coal-fired power generating companies by 2030 across OECD countries and the rest of world.

 

 

Firm-Wide Hard restrictions

(Transactions are prohibited and blocked on trading tools)

  • Controversial weapons manufacturers that produce products that do not comply with treaties or legal bans
  • All tobacco producers + wholesale distributors and suppliers with revenues over 5% from such products
  • Thermal coals miners with over 10% revenues or 20 million tonnes from extraction
  • Power generators that produce more CO2 than the defined threshold
  • Adult entertainment and pornography producers and distributers with over 2% revenues from such product
  • International Global Norms violations including OECD business principle, ILO principles, UNGC principles, EU, UN or OFAC sanctions

 

 

Regulatory and EU or UN regulatory sanctions and restrictions – e.g. Russian Economy Financing, Office of Foreign Assets Control (OFAC) Sanction are also enforced exclusions.

 

Our ESG restrictions are configured within our internal risk management system CMGR to avoid investments in stocks, sectors or countries that do not comply with our internal ESG policy. The exclusion list is controlled by the Compliance & Internal Control and Risk teams.

 

 

Voting policy

We have partnered with Institutional Shareholder Services (ISS), a leading provider in Corporate Governance and Proxy Voting Analysis & Processing. While benefiting from ISS’s global reach and their comprehensive governance research and recommendations, we maintain total control of our voting decisions. We have adopted ISS’s sustainability guidelines.

 

Since 2015, an active voting participation has been adopted and reported in our annual voting reports. The objective for our funds is to participate in all possible votes.

 

The Fund Management team is responsible for deciding how votes are to be cast. Decisions are taken either at management committee meetings, or individually, having regard to the principles set out in the “voting policy” document.

 

 

Engagement policy

Carmignac is committed to engaging with companies in which it is invested and implementing effective stewardship. Our Engagement Policy explains our active engagement approach to investee companies. A more complete description with a selection of engagements can be found in the Funds’ respective annual reports.

 

 

Climate Policy

We have made climate awareness a formal component of our investment process, joining the efforts undertaken as part of the Paris Agreement and applying article 173 on carbon reporting and ESG implementation across our Funds. As of 31/12/2020, €21.8 billion were measured and monitored in terms of carbon emissions. The carbon footprint of these investments was 53% lower than their reference indicators per million EUR invested.

 

 

Outcomes Policy

As part of being a responsible investor, we believe it is important to understand the sustainability outcomes that we have caused, have contributed to, and are directly linked to. This Policy underpins our work looking at environmental and social good and harm.

 

 

Carmignac Sustainable ‘SRI funds’ offer

Our Socially Responsible Investment (SRI) and Thematic ESG Funds take a broader approach to ESG integration depending on their philosophy, investment process and Fund Manager’s convictions. These funds can feature a wider range of investment exclusions, a low carbon footprint objective, a thematic bias or a positive screening filter.

 

SRI Funds adopt a socially conscious approach to investing (e.g. excluding high carbon-emitting or unethical sectors or investing in companies contributing positively to the planet).

 

Thematic ESG Funds adopt a thematic (E, S or G) investment approach (e.g. investing exclusively in companies actively addressing or contributing to climate change mitigation). Thematic ESG Funds at Carmignac are:

  • Carmignac Portfolio Family Governed (Governance)
  • Carmignac Portfolio Climate Transition (Environment)
  • Carmignac Human Xperience (Social)

 

 

Best in Universe

Regarding best in class, as a non-benchmarked, active investor, our socially responsible funds apply a best in universe approach where specific sectors are excluded. Secondly, those funds that seek a low carbon emission have near zero exposure to the energy and the materials sectors. Companies that are improving their operational risk management in specific E S or G issues are also considered for investment, particularly if these improvements are a result of our engagements. Lastly, within the sustainable universe, we seek to invest in companies that are providing positive solutions to the environment and people, the objectives of which are either broadly or specifically aligned with the UN SDGs depending on the strategies.

 

 

ESG Reporting and Communication

Minimum Standards:

An ESG assessment commentary, key engagements, and carbon emissions assessment in accordance with the French Energy Transition law can be found in each Funds’ annual reports. This mandatory comment is made on ESG issues that the fund may have experienced, as well as a qualitative comment on the evolution of the funds’ annual MSCI ESG analytical assessment.

 

Periodic Reports:

  • ESG Factsheets: We produce dedicated, monthly ESG reporting for our 6 SRI funds and which is now part of our monthly Factsheet
  • Annual Voting and Engagement Reports
  • The Annual ESG and HR indicator report
  • Carbon reporting: (Cop21 initiatives and adhering to Energy Transition Law Article N.173 of the Monetary and Financial Code of the French government L533-22-1 du Code Monétaire et Financier).
  • UNPRI Transparency report and Assessment

All firm-wide policies and reports can be found here.

 

Other SRI Fund reports:

  • Outcomes reports through our ESG Outcomes Calculator
  • Fund Sustainability-related disclosures
  • Detailed Voting policy and report per Fund
  • Transparency Codes

 

SDR Labelling:

Working towards adopting label

Key Performance Indicators:

The Fund is committed to applying the SFDR level II 2019/2088 Regulatory Technical Standards (RTS) annex 1 related to Principal Adverse Impacts whereby 14 mandatory and 2 optional environmental and social indicators (selected by the Sustainable Investment team for pertinence and coverage) will be monitored to show the impact of such sustainable investments against these indicators: Greenhouse gas emissions, Carbon footprint, GHG intensity (investee companies), Exposure to companies in fossil fuel sector, Non-renewable energy consumption and production, Energy consumption intensity per high-impact climate sector, Activities negatively affecting biodiversity-sensitive areas, Emissions to water, Hazardous waste ratio, Water usage and recycling (optional choice), Violations of UN Global Compact principles or OECD

Guidelines for Multinational Enterprises, Lack of processes and compliance mechanisms to monitor compliance with UN Global Compact and OECD Guidelines for Multinational Enterprises, Unadjusted gender pay gap, Board gender diversity, Exposure to controversial weapons, Excessive CEO pay ratio (optional choice).

Fund Holdings

Disclaimer

Disclaimer

This document is intended for professional clients. The decision to invest in the promoted fund should take into account all its characteristics or objectives as described in its prospectus.

 

his material may not be reproduced, in whole or in part, without prior authorisation from the Management Company.  This material does not constitute a subscription offer, nor does it constitute investment advice. This material is not intended to provide, and should not be relied on for, accounting, legal or tax advice. This material has been provided to you for informational purposes only and may not be relied upon by you in evaluating the merits of investing in any securities or interests referred to herein or for any other purposes. The information contained in this material may be partial information and may be modified without prior notice. They are expressed as of the date of writing and are derived from proprietary and non-proprietary sources deemed by Carmignac to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. Access to the Funds may be subject to restrictions regarding certain persons or countries. This material is not directed to any person in any jurisdiction where (by reason of that person’s nationality, residence or otherwise) the material or availability of this material is prohibited. Persons in respect of whom such prohibitions apply must not access this material. Taxation depends on the situation of the individual. The Funds are not registered for retail distribution in Asia, in Japan, in North America, nor are they registered in South America. Carmignac Funds are registered in Singapore as restricted foreign scheme (for professional clients only). The Funds have not been registered under the US Securities Act of 1933. The Funds may not be offered or sold, directly or indirectly, for the benefit or on behalf of a «U.S. person», according to the definition of the US Regulation S and FATCA. Company. The risks, fees and ongoing charges are described in the KIID/KID. The KIID/KID must be made available to the subscriber prior to subscription. The subscriber must read the KID/KIID. Investors may lose some or all their capital, as the capital in the funds are not guaranteed. The Funds’ prospectus, KIDs, KIIDs, NAV and annual reports are available at www.carmignac.com, or upon request to the Management Company. Investors have access to a summary of their rights in French, English, German, Dutch, Spanish, Italian at section 6 of "regulatory information page" on the following link: https://www.carmignac.com/en_US

 

Carmignac Portfolio refers to the sub-funds of Carmignac Portfolio SICAV, an investment company under Luxembourg law, conforming to the UCITS Directive. The French investment funds (fonds communs de placement or FCP) are common funds in contractual form conforming to the UCITS or AIFM Directive under French law. The Management Company can cease promotion in your country anytime.

Past performance is not necessarily indicative of future performance. Performances are net of fees (excluding possible entrance fees charged by the distributor). The return may increase or decrease as a result of currency fluctuations, for the shares which are not currency-hedged.

 

Reference to certain securities and financial instruments is for illustrative purposes to highlight stocks that are or have been included in the portfolios of funds in the Carmignac range. This is not intended to promote direct investment in those instruments, nor does it constitute investment advice. The Management Company is not subject to prohibition on trading in these instruments prior to issuing any communication. The portfolios of Carmignac funds may change without previous notice.

The reference to a ranking or prize, is no guarantee of the future results of the UCIS or the manager.

 

Morningstar Rating™ :  © 2023 Morningstar, Inc. All Rights Reserved. The information contained herein: is proprietary to Morningstar and/or its content providers; may not be copied or distributed; and is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Citywire Fund Manager Ratings and Citywire Rankings are proprietary to Citywire Financial Publishers Ltd (“Citywire”) and © Citywire 2022. All rights reserved. Citywire information is proprietary and confidential to Citywire Financial Publishers Ltd (“Citywire”), may not be copied and Citywire excludes any liability arising out its use.

Copyright: The data published in this presentation are the exclusive property of their owners, as mentioned on each page.

 

In Switzerland: the prospectus, KIDs and annual report are available at www.carmignac.ch, or through our representative in Switzerland, CACEIS (Switzerland), S.A., Route de Signy 35, CH-1260 Nyon. The paying agent is CACEIS Bank, Montrouge, succursale de Nyon/Suisse, Route de Signy 35, 1260 Nyon.

 

UK: This document was prepared by Carmignac Gestion and/or Carmignac Gestion Luxembourg and is being distributed in the UK by Carmignac Gestion Luxembourg.

 

FP CARMIGNAC ICVC (the “Company”) is an Investment Company with variable capital incorporated in England and Wales under registered number 839620 and is authorised by the Financial Conduct Authority (the “FCA”) with effect from 04/04/2019 and launched on 15 May 2019. FundRock Partners Limited is the Authorised Corporate Director (the “ACD”) of the Company and is authorised and regulated by the Financial Conduct Authority. Registered Office: Hamilton Centre, Rodney Way, Chelmsford, England, CM1 3BY, UK (Registered in England and Wales under No 4162989).  Carmignac Gestion Luxembourg SA has been appointed as the Investment Manager and distributor in respect of the Company. Carmignac UK Ltd (Registered in England and Wales with number 14162894) has been appointed as a Sub-Investnent Manager of the Company and is authorised and regulated by the Financial Conduct Authority with FRN:984288.

 

CARMIGNAC ALTS ICAV (the “Fund”) is an Irish Collective Asset-management Vehicle with segregated liability between Sub-Funds and limited liability incorporated under the laws of Ireland with registration number C475684 effective 11 April 2022. Carmignac UK Ltd (Registered in England and Wales with number 14162894)) is authorised and regulated by the Financial Conduct Authority with FRN:984288 and Carmignac Gestion S.A. have been appointed as Investment Managers of the Fund and Sub-Funds. Carmignac Gestion Luxembourg SA has been appointed as the distributor of the Fund and Sub-Funds.

 

Copyright: The data published in this presentation are the exclusive property of their owners, as mentioned on each page.

 

CARMIGNAC GESTION

24, place Vendôme - F-75001 Paris - Tél : (+33) 01 42 86 53 35

Investment management company approved by the AMF

Public limited company with share capital of € 13,500,000 - RCS Paris B 349 501 676

 

CARMIGNAC GESTION Luxembourg

City Link - 7, rue de la Chapelle - L-1325 Luxembourg - Tel : (+352) 46 70 60 1

Subsidiary of Carmignac Gestion - Investment fund management company approved by the CSSF

Public limited company with share capital of € 23,000,000 - RC Luxembourg B 67 549

 

 

Fund Name SRI Style SDR Labelling Product Region Asset Type Launch Date Last Amended

FP Carmignac European Leaders Fund

ESG Plus Working towards adopting label OEIC Europe ex UK Equity 15/05/2019 Jul 2024

Objectives

The Fund is an equity fund focused on stock-picking across Europe, excluding the UK. Through a disciplined, bottom-up investment process, the manager aims to pick quality stocks that benefit from the long-term compounding effect to profitability and profit reinvestment.

 

The Fund typically targets companies with 1bn market capitalisation or higher, but exceptions exist. The Fund seeks to invest sustainability for long-term growth and implements a socially responsible investment approach.

 

The Fund undertakes a holistic view to managing sustainability risk by identifying and assessing the sustainability risks related to its investments and their stakeholders.

 

The Fund aims to outperform its MSCI Europe Ex UK Index (USD) over the recommended investment period of 5 years. As part of its objective, the Fund seeks to invest sustainably and implements a socially responsible investment approach.

 

Fund Size: £93.00m

(as at: 28/03/2024)

Total Screened Themed SRI Assets: £297.00m

(as at: 28/03/2024)

Total Responsible Ownership Assets: £25902.00m

(as at: 28/03/2024)

Total Assets Under Management: £27075.00m

(as at: 28/03/2024)

ISIN: GB00BJHPHZ49, GB00BNDQ7N71, GB00BJHPXB21, GB00BNDQ7P95

Contact Us: rfp@carmignac.com

Sustainable, Responsible &/or ESG Overview

The Fund follows an active, bottom-up, fundamental approach. Stock selection focuses on identifying companies with the most attractive long-term prospects, as demonstrated by two key characteristics: high and sustainable levels of profitability and reinvestment (internal or external).

 

This combo drives growth and expansion of a business’ capital base. It produces an intrinsic compounding effect in the company’s value and helps retain the profitability gap.

 

It is this effect (independent of the stock price) that the manager tries to capture in his investments. Therefore, a long holding period (ideally between 3 to 5 years) aims to capitalize on this compounding effect.

 

Finally, investments are made in the names with the best asymmetric risk/return profiles and in accordance with the strategy’s sustainable commitment.

 

The investment team adds value through their deep knowledge of European companies, acquired through more than almost three decades of experience in the industry. This experience, combined with the expertise of the members of the extended Carmignac investment team, helps them to identify companies with superior risk/return profiles and generate strong risk adjusted returns.

Primary fund last amended: Jul 2024

Information received directly from Fund Manager

Please select what you would like to read:

Fund Filters

Sustainability - General
Sustainability policy

Funds that have policies that consider (environmental and social) sustainability issues. Strategies vary but are likely to consider environmental issues like climate change, carbon emissions, biodiversity loss, resource management, environmental impacts; and social issues like equal opportunities, human rights, labour standards, diversity and adherence to internationally recognised codes. See fund information.

Sustainability focus

Find funds which substantially focus on sustainability issues

UN Global Compact linked exclusion policy

Find funds that use the UN Global Compact to inform or help direct where they can or cannot invest and will typically not invest in companies with significant breaches (low standards) - although strategies vary. (The UNGC covers a wide range of issues - search 'UNGC'). See https://unglobalcompact.org/

UN Sustainable Development Goals (SDG) focus

Find funds that specifically aim to invest (and manage assets) in ways that help to address all or some of the UN's Sustainable Development Goals (SDGs). See https://sdgs.un.org/goals).

Report against sustainability objectives

Find funds that publicly report their performance against specifically named sustainability objectives (in addition to reporting their financial performance)

Environmental - General
Environmental policy

Funds that have policies which relate to environmental issues. These will typically set out the fund's stance on issues such as pollution, climate change, resource management, biodiversity loss, carbon emissions, plastics and/or additional environmental impacts. Strategies vary. See fund information for further information.

Limits exposure to carbon intensive industries

Funds that limit or 'reduce' their exposure to carbon intensive industries (ie sectors which are major contributors to climate change. Funds vary - some funds may be 'underweight' in this area which means they may have some investment in highly carbon intensive areas. Funds of this kind may choose companies they consider to be 'best in sector' and encourage ever higher standards. Strategies vary. See fund information for further details.

Environmental damage and pollution policy

Funds that have written policies explaining the approach they take when companies damage the environment or are significant polluters. Funds of this kind may work with companies to encourage higher standards, or exclude companies - sometimes dependent on the situation. Strategies vary. See fund information for further detail.

Resource efficiency policy or theme

Find funds that have a policy or theme that relates to managing natural resources more efficiently. Funds with this policy will be likely to favour companies that make (or enable the) more efficient use of resources - and either avoid or encourage change amongst companies with lower standards. Strategies vary. See fund information for further detail.

Favours cleaner, greener companies

Funds that aim to invest in companies with strong or market leading environmental policies and practices. Strategies vary - in particular the balance between 'financial' aspects and environmental benefits. Some may invest substantially in solutions or 'positive impact' companies - others may invest in more conventional companies providing certain environmental criteria are met. See fund information for further detail.

Nature & Biodiversity
Biodiversity / nature policy

Find funds that have a written biodiversity policy or theme aimed at encouraging and improving environmental protection and safeguarding the natural world (sometimes referred to as the preservation or enhancement of 'natural capital'). See eg https://www.un.org/en/climatechange/science/climate-issues/biodiversity

Climate Change & Energy
Climate change / greenhouse gas emissions policy

Funds that have policies (documented strategies that explain their position on) climate change related issues such as greenhouse gas/carbon emissions, net zero, transitioning to lower carbon. Strategies vary. Read fund details for further information.

Coal, oil & / or gas majors excluded

Funds that avoid investing in major coal, oil and/or gas (extraction) companies. Funds vary: some may exclude all companies that extract oil. Others may have exposure to oil extraction via more diversified energy companies. See fund literature to confirm details.

Fracking and tar sands excluded

Funds that avoid companies involved in fracking and tar sands - which are widely regarded as controversial methods of oil and gas extraction. Strategies vary. See fund information for further information.

Arctic drilling exclusion

Funds that avoid companies that are involved in extracting oil from the Arctic regions. See fund literature for further details.

Fossil fuel reserves exclusion

Funds that avoid investing in companies with coal, oil and gas reserves. See fund information for further details.

TCFD reporting requirement (Becoming IFRS)

Will only invest in companies that report greenhouse gas emissions reduction strategies in line with the framework set out the by the Taskforce for Climate Related Financial Disclosure, which is increasingly becoming mandatory. See https://www.fsb-tcfd.org/ https ://www.ifrs.org/sustainability/tcfd/

Ethical Values Led Exclusions
Ethical policies

Find funds that have policies that set out their position on ethical or 'personal values' based issues. Strategies vary. See fund information for further detail.

Tobacco and related product manufacturers excluded

Companies are excluded if they are involved in any aspect of the production chain for tobacco products, including cigarettes, vaping, e-cigarettes, chewing tobacco and cigars.

Tobacco and related products - avoid where revenue > 5%

Companies are excluded if they make more than 5% of their revenue from the manufacture, sale or distribution of tobacco products including cigarettes, vaping, e-cigarettes, chewing tobacco and cigars.

Armaments manufacturers avoided

Find funds that avoid companies that manufacture products intended specifically for military use. Fund strategies vary - particularly with regard to non-strategic military products. See fund literature for fund specific details.

Civilian firearms production exclusion

Find funds with a written civilian firearms exclusion policy - meaning that they will not invest in companies that make (or perhaps also sell) handguns made for non-military users.

Alcohol production excluded

Find funds that avoid investment in companies involved in the production of alcohol. Strategies vary; some funds allow a small proportion of profits to come from this area. See fund literature for further information.

Gambling avoidance policy

Find funds that avoid companies with significant involvement in the gambling industry. Some funds may allow a small proportion of profits to come from this area. See fund policy for further details.

Pornography avoidance policy

Find funds that avoid companies that derive significant income from pornography and related areas. Strategies vary. See fund details for further information.

Gilts & Sovereigns
Does not invest in sovereigns

Find funds that do not invest in / exclude 'sovereigns' - debt issued by governments. See eg https://www.investopedia.com/terms/s/sovereign-debt.asp

Governance & Management
Governance policy

Find fund options that have policies that relate to corporate governance issues such as board structure, executive remuneration, bribery and/or corporate corruption. These funds will typically avoid companies with poor practices. Strategies vary. See fund literature for further information.

UN sanctions exclusion

Exclude companies that are subject to United Nations sanctions. See eg https://main.un.org/securitycouncil/en/content/un-sc-consolidated-list

Targeted Positive Investments
Invests >25% of fund in environmental/social solutions companies

Find funds that invest >25% of their capital towards companies where a major part of their business is focused on helping to address environmental or social challenges.

Invests >50% of fund in environmental/social solutions companies

Find funds that invest >50% of their capital in companies where a major part of their business is focused on helping to address environmental or social challenges.

How The Fund Works
Positive selection bias

Find funds that focus on finding and investing in companies with positive / beneficial attributes. This strategy can be applied in addition to exclusion criteria and engagement/stewardship activity.

Negative selection bias

Find funds where their main 'ethical approach' is to avoid companies by using negative screening criteria. Read fund literature for further information.

Assets mapped to SDGs

Find funds that have 'mapped' (reviewed) their investment selection and management strategies to identify which of the UN Sustainable Development Goals (SDGs) the fund is helping to address.

Combines norms based exclusions with other SRI criteria

Find funds that make significant use of internationally agreed 'norms' (e.g. United Nations Global Compact - UNGC - or the UN Sustainable Development Goals - SDGs) as part of their investment selection process alongside additional SRI criteria such as positive or negative stock selection policies and/or stewardship strategies.

Norms focus

Find funds that use internationally agreed standards, conventions and 'norms' to help direct where the fund can and cannot invest (e.g. the UN Global Compact, UN Sustainable Development Goals). Read fund literature for further information.

Focus on ESG risk mitigation

A major focus of these funds is the careful management of environmental, social and governance (ESG) related risks - typically by avoiding or being underweight in companies seen as posing major risks in these areas (i.e. not necessarily by using themes, exclusions etc).

SRI / ESG / Ethical policies explained on website

Find funds that have published explanations of their ethical, social and/or environmental policies online (i.e. fund decision making strategies/ buy/sell &/or asset management strategies).

Unscreened Assets & Cash
Assets typically aligned to sustainability objectives 70 - 79%

The percentage of assets held within the fund that match the fund’s sustainability objectives and are not being held purely for risk management purposes, such as derivatives and cash equivalent assets.

Assets typically aligned to sustainability objectives 80 – 89%

The percentage of assets held within the fund that match the fund’s sustainability objectives and are not being held purely for risk management purposes, such as derivatives and cash equivalent assets.

Assets typically aligned to sustainability objectives > 90%

The percentage of assets held within the fund that match the fund’s sustainability objectives and are not being held purely for risk management purposes, such as derivatives and cash equivalent assets

Intended Clients & Product Options
Intended for investors interested in sustainability

Finds funds designed to meet the needs of individual investors with an interest in sustainability issues.

Intended for clients interested in ethical issues

Find funds designed for clients who care about ethical and values-based issues, often alongside sustainability issues also.

Labels & Accreditations
SFDR Article 9 fund / product (EU)

Finds funds classified under Article 9 of the EU’s SFDR (Sustainable Finance Disclosure Requirements). Article 9 of the SFDR applies to financial products that have sustainable investment 'objectives' - including emissions reduction objectives. (These may currently be referred to as 'impact' funds or aiming to deliver clear, specific positive outcomes.) These rules do not currently apply in the UK so fund managers may leave this field blank.

Fund Management Company Information

About The Business
Responsible ownership / stewardship policy or strategy (AFM company wide)

Finds fund management companies that have a published company wide stewardship, engagement and / or responsible ownership policy or strategy that covers all investments. Stewardship typically involves encouraging higher ESG standards through voting and dialogue.

ESG / SRI engagement (AFM company wide)

Find fund management companies that actively encourage higher 'environmental, social and governance' and/or 'sustainable and responsible investment' practices across investee companies - typically where the aim is to encourage positive change that is aligned with the best interests of investors. Strategies vary. See additional information and options.

Diversity, equality & inclusion engagement policy (AFM company wide)

Find fund management companies that encourage the companies they invest in to have strong diversity, race, gender and other equality policies across all assets held, not simply screened or themed SRI/ESG funds. (ie Asset Management company wide).

Collaborations & Affiliations
PRI signatory

Find fund management companies that have signed up to the UN backed 'Principles of Responsible Investment'.

Investment Association (IA) member

Fund management entity is a member of the Investment Association https://www.theia.org/

Accreditations
PRI A+ rated (AFM company wide)

Finds organisations / fund managers that have an A+ PRI rating - meaning they are highly rated according to the 'Principles of Responsible Investment'

Company Wide Exclusions
Controversial weapons avoidance policy (AFM company wide)

Find fund management companies (not funds) that avoid investment in 'controversial weapons' across all of their funds and other investment vehicles.

Tobacco avoidance policy (AFM company wide)

Find fund management companies that avoid investment in tobacco (manufacturing) companies across all their assets.

Fossil fuel exclusion policy (AFM company wide)

Find fund management companies that avoid investment in fossil fuel companies (e.g. coal, oil and gas) across all of their funds. (and/ or other assets.)

Coal exclusion policy (group wide coal mining exclusion policy)

This asset manager excludes direct investment in the coal mining industry. Managers ability to do this may depend on the geographic regions in which they invest.

Transparency
Publish responsible ownership / stewardship report (AFM company wide)

Find fund management companies that publish a report detailing their responsible investment ownership - also known as 'Stewardship' - activity.

Full SRI / responsible ownership policy information on company website

Find companies that publish information about their sustainable and responsible investment strategies on their company website.

Publish full voting record (AFM company wide)

Fund management companies that publish a full record of how they vote their shares at AGMs (annual general meetings) and EGMs (extraordinary general meetings). Voting strategies have an important role to play encouraging higher environmental, social and governance standards.

Sustainability transition plan publicly available (AFM company wide)

This asset management company has published a plan that explains how they are to become a sustainable business - without significant negative environmental or social impacts.

Paris Alignment plan publicly available (AFM company wide)

This asset management company has published a plan that explains how they will align to the climate change commitments made at the Paris Climate Talks, COP21.

Net Zero transition plan publicly available (AFM company wide)

This asset management company has published a plan that explains how they are going to achieve net zero greenhouse gas / CO2e emissions.

Sustainable, Responsible &/or ESG Policy:

ESG analysis is performed for each investment (objective: ESG analysis applied to at least 90% of issuers). Exclusion lists are used in the screening stage, access to the START platform provides our managers and analysts with insight into third party research as well as our proprietary internal reviews. The Sustainable team helps with specific ESG analysis and/or company engagements.

 

Fund managers and analysts are responsible for ESG qualitative analysis and engagement and are assisted by Governance and ESG Analysts. During the due diligence directly with corporations as part of the investment rationale, ESG risk and opportunities are identified and discussed. External ESG data sources are aggregated on our START platform from: Trucost, TR Refinitiv, MSCI and ISS. MSCI ratings are updated annually. The overall portfolio is monitored frequently for assessment of average ratings.

 

An active voting policy has been adopted with the objective of participating in all possible voting actions. The Proxy voting leader ISS is our partner helping us to report and identify specific issues related to ESG aspects.

 

 

Carbon emissions screening

Carmignac Gestion has made climate awareness a formal component of its investment process, joining the efforts undertaken as part of the Cop21 initiatives and adhering to Energy Transition (Article 29).

The Fund has proven to have a very low level of fossil fuel involvement and specifically targets a carbon intensity of 50% below its reference indicator as measured by tCO2/ M USD (Scope 1 and 2, GHG Protocol).

In no way does the Fund replicates any low carbon index members or sectors given its very non benchmarked nature.

 

 

Controversies management

Engagements occur directly with companies regarding E, S or G issues and are subject to specific reporting via email or summary in the front office database (Verity). For companies we invest in, there are regular discussions and follow-up of topics during meetings with them. When controversies occur, fund managers and equity analysts are responsible for the engagement and follow up with their respective companies. ESG Analysts can also assist in engaging with a company on a specific topic or controversy. Should no resolution be achieved a decision is taken to reduce or exit the investment.

 

 

Compliance with ESG/SRI principles

Our ESG restrictions are configured within our internal risk management system Bloomberg AIM CMGR to avoid investments in stocks, sectors or countries that do not comply with our internal ESG policy. The exclusions list exhaustiveness is reviewed quarterly by the Stewardship director and the Compliance department. Ad-hoc reviews are also done at the discretion of the Sustainability team.

First-level control systems are carried out by the Sustainable Investment team. Second-level controls are carried out by the Compliance and Internal Control Department given the ESG thematic is fully integrated into the Annual Compliance Monitoring Program. The Compliance and Internal Control Department also performs yearly reviews on the ESG activity to ensure our statutory, regulatory and commitments as UNPRI signatories are met. Moreover, the Compliance department takes an active role in ensuring company exclusions are adhered to.

 

 

Communicating with our investors

Carmignac’ s mainstream ESG approach, its specific Socially Responsible Funds and the low carbon approach of Carmignac Portfolio Grande Europe are identified on Carmignac’ s RI Hub and the Fund’s page.

The annual report of the Fund contains a full commentary on ESG issues and its ESG assessment.

  • The results of the Funds studied for emissions are also thoroughly discussed in the respective Funds’ annual reports and in our RI Hub.
  • Carbon emissions per Million USD invested, total carbon emissions and carbon intensity are detailed. In the annual report of 2020, the Fund’s carbon emission reference will be Carbon intensity to allow comparison across asset classes together with fossil fuel revenues.

 

Process:

The Fund’s investment process leverages the combined emphasis of a robust financial screening on one side – which quantifies the quality and growth characteristics we consider essential for an investment to be included in the final portfolio – and our commitment to SRI on the other – which sets for us specific targets and goals.

 

The investment process starts with an SRI filter to narrow down the stock universe (Western European companies with min 1bn market capitalization – but exceptions exist). Through negative and positive screenings, the stock universe is reduced by ca 40%. A financial filter aimed at finding the most attractive opportunities in Europe based on companies’ financials follows. As a result, the universe is further reduced by another 30%. Lastly, fundamental analysis is done for each potential investment. Through this process, the manager seeks to create a concentrated Fund which targets 35 to 40 holdings. ESG analysis and risk management are part of ongoing portfolio monitoring and are fully integrated in the process.

 

SRI Filter

As part of its objective, the Fund seeks to invest sustainably for long-term growth and implements a socially responsible investment approach. The Fund’s SRI Filter comprises negative as well as positive screenings. The Fund aims to invest at least 80% of its net assets (100% of invested assets) in shares of companies that are considered aligned with relevant United Nations Sustainable Development Goals (UN SDGs) – in accordance with Carmignac Outcomes Framework. The SRI filter reduces the stock universe from ca 1200 to ca 700 names.

 

Negative Screening

Exclusion lists are used in the screening stage. Controversial weapon companies, tobacco producers, wholesale distributors and suppliers – among others – are excluded across all funds.

 

Positive Screening

On top of excluding harmful businesses, we also want to emphasize companies that contribute positively to either the environment or the society. In order to do so, we leverage the United Nations Sustainable Development Goals.

As mentioned, the Fund aims to invest in companies that align positively with selected SDGs as per our proprietary Outcomes Framework.

In order to be considered aligned, a company must meet one of the following thresholds:

  • Product and services: the company derives at least 50% of its revenue from goods and services that are related to one of the following nine SDGs: (1) No Poverty, (2) No Hunger, (3) Good Health and Well Being, (4) Quality Education, (6) Clean Water, (7) Affordable and Clean Energy, (9) Industry, Innovation and Infrastructure, (11) Sustainable Cities and Communities, (12) Responsible Consumption and Production;
  • Capital expenditure: the company invests at least 30% of its capital expenditure in business activities that are related to one of the previously mentioned SDGs;
  • Operations:
    • the company achieves an “aligned” status for operational alignment for at least 3 out of all 17 SDGs, based on the evidence provided by the investee company of available policies, practices and targets addressing such SDGs. An “aligned” status represents an operational alignment score of ≥2 (on a scale of -10 to +10) as determined by an external scoring provider (MSCI SDGs Operational Alignment Score); and
    • the company does not achieve a “misaligned” status for operational alignment for any SDG. A company is considered “misaligned” when its score is ≤-2 (on a scale of -10 to +10), as determined by an external scoring provider (MSCI SDGs Operational Alignment Score).

In practice, negative (exclusions) and positive screenings (UN SDGs alignment) are applied to the stock universe and, in conjunction with the elimination of companies with excessive carbon emissions (CO2 limit) as well as poor ESG credentials (MSCI CCC), these criteria all together reduce the Fund’s initial universe by ca 40%. 

 

 

Financial Filter

Our proprietary financial screen is based on metrics of historic profitability and reinvestment rate. This screening – which additionally reduces our universe to ca 300 names – ranks companies on five factors assessing profitability, stability of margins and reinvestment in future growth. Companies are assigned a combined score based on the above criteria and we calculate a score for our portfolio based on the weighted average score of its holdings. This financial screen is a starting point for further work, or a tool for validating the ideas of the investment team, corporate and market developments, stockbroker’s analysis or information from the companies themselves.

 

Stocks are ranked on five historic factors, then weighted – according to a pre-defined coefficient – so to get a global score which is ultimately representative of that specific stock within the universe. The lower the score, the better.

This financial screen aims to identify companies with the most attractive long-term growth prospects. It favors companies with a longer track record of high and stable profitability but not only. Indeed, stocks with a score above the median score of the investment universe are excluded a priori, but exceptions exist.

Additionally, we also aim for the average score of the portfolio to rank in the first quartile of the investment universe. Therefore, we could invest in companies that do not meet our criteria but possess attractive prospects. However, these companies cannot be over-represented in the portfolio to an extent that would deteriorate the portfolio’s score below the first quartile threshold.

This screening points us in the direction where we are likely to find names that meet our philosophy.  Our process is not a quantitative approach as we follow up with fundamental research and analysis which is the backbone of our method. It is a starting point for ideas, or a check of financial soundness and of ideas sourced externally. The screen does not favor only defensive names – technology, business services, industrials names are all more cyclically exposed but indeed meet the approach. Overall, the Financial Filter reduces the stock universe by another 30%.

As a result, by applying both lenses (SRI Filter on one side and Financial Filter on the other) to the initial stock universe, we define the so called: sustainable investable universe which comprises ca 300 names.

 

 

Validation/Research/Valuation

This initial stage to define the sustainable investable universe is then followed by specific and proprietary fundamental company analysis and valuation. The investment team focuses on understanding business models through examination of company-published accounting and corporate information, as well as management meetings.

During this phase, the investment team interacts with the company as part of fundamental research but also to identify any Environment, Social or Governance risks. ESG research has a direct impact on portfolio construction.  Our proprietary rating system START allows a comparative to MSCI ratings, with a broad coverage and aggregated data set and what we believe to be a superior peer group comparing: Capitalisations, Region – EM or DM, and 90 industry groups over 30 ESG indicators if there is coverage. Corporate sustainability reports, specialized ESG corporate research such as MSCI ESG Ratings are consulted, and potential controversies are discussed.

In addition, the investment team will consult with the relevant internal analyst as well as external stockbroker’s analysts. The team will also build proprietary financial models. The investment thesis and the valuation models for each of the securities in the portfolio are documented in our research management tool, Verity, which centralises the research of our analysts and managers.

 

 

Portfolio construction

Companies that meet our investment criteria and have sufficient growth potential are considered for inclusion in the portfolio. Portfolio construction is the result of stock selection. Thus, geographical and sectoral allocation depends mainly on our stock picking capabilities. The final selection of securities is guided by our assessment of the underlying business through fundamental analysis, our valuation and the potential investment return based on our risk adjusted price target. ESG assessment will also influence the weighting of holdings in the portfolio.

The portfolio is focused but diversified.  Each initial position ranges between 1 to 5%, based on the strength of the investment thesis, and as a result of a high conviction approach, the fund manager targets a number of portfolio holdings within a range of 35 to 40 stocks.

If the size of a position exceeds 5%, in the event of a strong investment thesis, such position would be closely monitored from a risk perspective, and the investment case re-assessed frequently.

 

 

Monitoring and Risk management

Risk management is at the heart of the investment process and the construction of the portfolio. We are always monitoring our investment cases to check they are developing according to our thesis and if not, then re-assess the investment case thereby seeking to minimise the risk. The weighting of holdings in the Fund is continuously monitored and weights are altered when financial and extra-financial assessments change.

The risk of the portfolio is also monitored by an independent risk control team, who can make recommendations on an ad hoc basis. This team also meets every month with the fund managers at our monthly Risk Committee where key risk indicators of the portfolio are reviewed.

 

Resources, Affiliations & Corporate Strategies:

PHILOSOPHY

Carmignac, empowered through its independence and transparency since 1989, has maintained a long-held practice of investing responsibly, aware of its corporate duty to its investors and stewardship in the European fund management industry. As Risk Managers, Carmignac seeks to mitigate as many risk factors as it can identify, this very resolutely includes risks associated with ESG issues. Since 2012, Carmignac, as a PRI signatory (Principles of Responsible Investment) and a French investment firm (under the French government’s directive Grenelle II Law, art 224-238, 2010), has raised its level of transparency regarding the application of Environment, Social and Governance (ESG) criteria in the investment process. Each PRI principle has been implemented across most of its Fund range.

 

 

OUR ESG OBJECTIVES AND DEFINITIONS

Carmignac has committed to implement Environmental, Social and Governance criteria in its relations with companies in which we invest. Carmignac believes that engaging with corporate leaders on sustainability issues will heighten awareness and accountability. Identifying both risks and opportunities associated with ESG factors we believe will enhance returns, as well as lower volatility of the funds. We seek to mitigate risks associated with environmental challenges particularly in respect of fossil fuel reserves, poor governance and shareholder underrepresentation and irreverence to social issues such as health and safety.

 

Environment

The scope of our interest includes the impact of companies on the environment and their ability to propose services and products which respond to environmental challenges. Environmental issues we consider could include company’s treatment of carbon emissions, pollution, waste, water usage.

Social

We focus on monitoring the impact of companies with all of its stakeholders (suppliers, employees, consumers) and the increasing public expectations of social responsibility. Social issues we consider could include all types of employment abuses, staff turnover metrics, diversity, workplace health and safety, income distribution, and product safety.

Governance

We focus on the enhanced value created by companies that encourage governance ethics.

Governance issues we consider could include any tendency towards uses of bribery and corruption, government’s involvement and impact on management, board independence, executive compensation, and anticompetitive practices.

In addition, there are 30+ ESG indicators of company data that can be monitored on the Carmignac proprietary ESG system START.

 

 

THE RESPONSIBLE INVESTMENT TEAM

The Sustainable Investment team has a total of seven members including 4 ESG analysts and a dedicated Sustainable Investment Specialists team.

 

Ultimately, the portfolio managers are responsible for implementing an ESG approach in their portfolios. The whole Investment team have been given the responsibility and requirement to assess ESG risks in investment rationales, supported by the ESG Analysts.

 

Lloyd McAllister is the Head of Sustainable Investment. His role is to oversee the implementation of the socially responsible investment process, corporate and investor communication, industry thought leadership and new product innovation. Lloyd reports to Maxime Carmignac, Executive board member and CEO of Carmignac UK Ltd.

 

Portfolio Managers and Analysts are directly responsible for the implementation and oversight of ESG criteria in their portfolio. A Sustainable Investment Director, 4 ESG Analysts, a Sustainable Investment Specialists dedicated team support the investment team in important stages of the investment process: screening for controversies, external ESG research provider coordination, active voting and engagement framework, socially responsible certification, maintenance and control of controversial sector exclusion lists, ESG consultant services and investor communication.

 

 

Understanding the investment universe

Inside START, our proprietary ESG system

Effective management of ESG factors is inherently linked with long-term performance and risk management. Our latest ESG development is the implementation of our interactive proprietary system START (System for Tracking and Analysis of a Responsible Trajectory), systemizing the integration of ESG analysis in our Funds’ investment process. It provides:

  • Systematic assessment of ESG criteria across all Funds and all equity, credit and sovereign debt assets (TR Refiniv Raw company data and Beyond Ratings)
  • Ability to do scenario analysis and carbon analysis for issuers (S&P, Trucost)
  • Appreciation of the company’s impact on the environment and society (MSCI impact, Impact-cubed)
  • A centralised platform that also includes controversies data (ISS ESG)
  • ESG sentiment assessment based on AI to identify company ESG turnaround (Truevalue Labs)

 

START provides forward-looking ESG analysis that gives our investment team the insight they need to make appropriate investment decisions, to best serve our clients’ long-term interests.

 

Overall, we analyse 31 specific ESG indicators that we have defined as financially material for around 8000 companies, to which we add controversy and impact data. START allows our teams to add unique human insight and conduct company engagement surrounding these key indicators.

 

Environmental

  • Carbon Emissions
  • Carbon Intensity
  • Flaring of Natural Gas
  • Total Energy / Revenues
  • Renewable Energy / Total Energy
  • Total Energy Consumption
  • Total Waste / Revenues
  • Waste Recycled / Total Waste
  • Direct and Accidental Oil Spills
  • Water Use / Revenues
  • Water Recycled
  • Total Fresh Water Withdrawal

 

Social

  • Employee Satisfaction
  • Employee Turnover
  • Incidence of Female Managers
  • Employee Training Hours
  • Lost Time Due to Injury
  • Employee Fatalities
  • CEO Salary Gap with Average Salary
  • Gender Pay Gap
  • Customer Satisfaction

 

Governance

  • Audit Committee Independence
  • Compensation Committee Independence
  • Nomination Committee Involvement
  • Board Size
  • Independent Board Members
  • Average Board Tenure
  • Board Gender Diversity
  • Highest Remuneration Package
  • Long Term Objective-Linked Executive Compensation
  • Sustainability Compensation Incentives

 

We will soon launch START 2.0, the second iteration of our ESG proprietary research platform. START 2.0 is Carmignac's new ESG proprietary scoring system that builds upon START 1.0. START 2.0 will encompass bespoke peer grouping based on multiple factors such as revenue splits, region, and market cap. It follows the Sustainability Accounting Standards Board (SASB) framework and includes a broader range of KPIs for ESG data, including historic, current, and forward-looking data from multiple data vendors assessed based on materiality and coverage. The scoring system will use AI powered sentiment data to dynamically compute the most and least material SASB categories for each entity. 

 

 

Integration of ESG criteria:

Identifying risk factors and adopting responsible behaviour. Comply with a list of excluded companies and identify potential controversies in our investments.

 

The Portfolio Managers and Analysts complete a rationale for investment case which includes comments on E, S and G issues, and engage with companies on relevant ESG topics and controversies. These exchanges, along with the investment rationale, are documented in the front office database Verity.

 

The START system aggregated and collated within 90 proprietary peer groups, thus creating a company score and ranking that incorporates climate data, controversies screening, impact analysis and ESG indicators. Proprietary qualitative analysis is then incorporated, and this overall ESG risk assessment is built into the investment rational.

 

 

Exclusion policy and Coal Exit Strategy:

We believe our investments should be made in companies with sustainable business models and which are exhibiting long-term growth perspectives. As such, we have compiled an exclusion list with companies that do not meet Carmignac’s investment standards, due to their activity in areas such as controversial weapons, tobacco, adult entertainment, and thermal coal producers (1), or because they contravene global standards on environmental protection, human rights, labour standards, and anti-corruption. (2) Furthermore, Carmignac has committed to a total exit of coal mining and coal-fired power generating companies by 2030 across OECD countries and the rest of world.

 

 

Firm-Wide Hard restrictions

(Transactions are prohibited and blocked on trading tools)

  • Controversial weapons manufacturers that produce products that do not comply with treaties or legal bans
  • All tobacco producers + wholesale distributors and suppliers with revenues over 5% from such products
  • Thermal coals miners with over 10% revenues or 20 million tonnes from extraction
  • Power generators that produce more CO2 than the defined threshold
  • Adult entertainment and pornography producers and distributers with over 2% revenues from such product
  • International Global Norms violations including OECD business principle, ILO principles, UNGC principles, EU, UN or OFAC sanctions

 

 

Regulatory and EU or UN regulatory sanctions and restrictions – e.g. Russian Economy Financing, Office of Foreign Assets Control (OFAC) Sanction are also enforced exclusions.

 

Our ESG restrictions are configured within our internal risk management system CMGR to avoid investments in stocks, sectors or countries that do not comply with our internal ESG policy. The exclusion list is controlled by the Compliance & Internal Control and Risk teams.

 

 

Voting policy

We have partnered with Institutional Shareholder Services (ISS), a leading provider in Corporate Governance and Proxy Voting Analysis & Processing. While benefiting from ISS’s global reach and their comprehensive governance research and recommendations, we maintain total control of our voting decisions. We have adopted ISS’s sustainability guidelines.

 

Since 2015, an active voting participation has been adopted and reported in our annual voting reports. The objective for our funds is to participate in all possible votes.

 

The Fund Management team is responsible for deciding how votes are to be cast. Decisions are taken either at management committee meetings, or individually, having regard to the principles set out in the “voting policy” document.

 

 

Engagement policy

Carmignac is committed to engaging with companies in which it is invested and implementing effective stewardship. Our Engagement Policy explains our active engagement approach to investee companies. A more complete description with a selection of engagements can be found in the Funds’ respective annual reports.

 

 

Climate Policy

We have made climate awareness a formal component of our investment process, joining the efforts undertaken as part of the Paris Agreement and applying article 173 on carbon reporting and ESG implementation across our Funds. As of 31/12/2020, €21.8 billion were measured and monitored in terms of carbon emissions. The carbon footprint of these investments was 53% lower than their reference indicators per million EUR invested.

 

 

Outcomes Policy

As part of being a responsible investor, we believe it is important to understand the sustainability outcomes that we have caused, have contributed to, and are directly linked to. This Policy underpins our work looking at environmental and social good and harm.

 

 

Carmignac Sustainable ‘SRI funds’ offer

Our Socially Responsible Investment (SRI) and Thematic ESG Funds take a broader approach to ESG integration depending on their philosophy, investment process and Fund Manager’s convictions. These funds can feature a wider range of investment exclusions, a low carbon footprint objective, a thematic bias or a positive screening filter.

 

SRI Funds adopt a socially conscious approach to investing (e.g. excluding high carbon-emitting or unethical sectors or investing in companies contributing positively to the planet).

 

Thematic ESG Funds adopt a thematic (E, S or G) investment approach (e.g. investing exclusively in companies actively addressing or contributing to climate change mitigation). Thematic ESG Funds at Carmignac are:

  • Carmignac Portfolio Family Governed (Governance)
  • Carmignac Portfolio Climate Transition (Environment)
  • Carmignac Human Xperience (Social)

 

 

Best in Universe

Regarding best in class, as a non-benchmarked, active investor, our socially responsible funds apply a best in universe approach where specific sectors are excluded. Secondly, those funds that seek a low carbon emission have near zero exposure to the energy and the materials sectors. Companies that are improving their operational risk management in specific E S or G issues are also considered for investment, particularly if these improvements are a result of our engagements. Lastly, within the sustainable universe, we seek to invest in companies that are providing positive solutions to the environment and people, the objectives of which are either broadly or specifically aligned with the UN SDGs depending on the strategies.

 

 

ESG Reporting and Communication

Minimum Standards:

An ESG assessment commentary, key engagements, and carbon emissions assessment in accordance with the French Energy Transition law can be found in each Funds’ annual reports. This mandatory comment is made on ESG issues that the fund may have experienced, as well as a qualitative comment on the evolution of the funds’ annual MSCI ESG analytical assessment.

 

Periodic Reports:

  • ESG Factsheets: We produce dedicated, monthly ESG reporting for our 6 SRI funds and which is now part of our monthly Factsheet
  • Annual Voting and Engagement Reports
  • The Annual ESG and HR indicator report
  • Carbon reporting: (Cop21 initiatives and adhering to Energy Transition Law Article N.173 of the Monetary and Financial Code of the French government L533-22-1 du Code Monétaire et Financier).
  • UNPRI Transparency report and Assessment

All firm-wide policies and reports can be found here.

 

Other SRI Fund reports:

  • Outcomes reports through our ESG Outcomes Calculator
  • Fund Sustainability-related disclosures
  • Detailed Voting policy and report per Fund
  • Transparency Codes

 

SDR Labelling:

Working towards adopting label

Key Performance Indicators:

The Fund is committed to applying the SFDR level II 2019/2088 Regulatory Technical Standards (RTS) annex 1 related to Principal Adverse Impacts whereby 14 mandatory and 2 optional environmental and social indicators (selected by the Sustainable Investment team for pertinence and coverage) will be monitored to show the impact of such sustainable investments against these indicators: Greenhouse gas emissions, Carbon footprint, GHG intensity (investee companies), Exposure to companies in fossil fuel sector, Non-renewable energy consumption and production, Energy consumption intensity per high-impact climate sector, Activities negatively affecting biodiversity-sensitive areas, Emissions to water, Hazardous waste ratio, Water usage and recycling (optional choice), Violations of UN Global Compact principles or OECD

Guidelines for Multinational Enterprises, Lack of processes and compliance mechanisms to monitor compliance with UN Global Compact and OECD Guidelines for Multinational Enterprises, Unadjusted gender pay gap, Board gender diversity, Exposure to controversial weapons, Excessive CEO pay ratio (optional choice).

Fund Holdings

Disclaimer

Disclaimer

This document is intended for professional clients. The decision to invest in the promoted fund should take into account all its characteristics or objectives as described in its prospectus.

 

his material may not be reproduced, in whole or in part, without prior authorisation from the Management Company.  This material does not constitute a subscription offer, nor does it constitute investment advice. This material is not intended to provide, and should not be relied on for, accounting, legal or tax advice. This material has been provided to you for informational purposes only and may not be relied upon by you in evaluating the merits of investing in any securities or interests referred to herein or for any other purposes. The information contained in this material may be partial information and may be modified without prior notice. They are expressed as of the date of writing and are derived from proprietary and non-proprietary sources deemed by Carmignac to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. Access to the Funds may be subject to restrictions regarding certain persons or countries. This material is not directed to any person in any jurisdiction where (by reason of that person’s nationality, residence or otherwise) the material or availability of this material is prohibited. Persons in respect of whom such prohibitions apply must not access this material. Taxation depends on the situation of the individual. The Funds are not registered for retail distribution in Asia, in Japan, in North America, nor are they registered in South America. Carmignac Funds are registered in Singapore as restricted foreign scheme (for professional clients only). The Funds have not been registered under the US Securities Act of 1933. The Funds may not be offered or sold, directly or indirectly, for the benefit or on behalf of a «U.S. person», according to the definition of the US Regulation S and FATCA. Company. The risks, fees and ongoing charges are described in the KIID/KID. The KIID/KID must be made available to the subscriber prior to subscription. The subscriber must read the KID/KIID. Investors may lose some or all their capital, as the capital in the funds are not guaranteed. The Funds’ prospectus, KIDs, KIIDs, NAV and annual reports are available at www.carmignac.com, or upon request to the Management Company. Investors have access to a summary of their rights in French, English, German, Dutch, Spanish, Italian at section 6 of "regulatory information page" on the following link: https://www.carmignac.com/en_US

 

Carmignac Portfolio refers to the sub-funds of Carmignac Portfolio SICAV, an investment company under Luxembourg law, conforming to the UCITS Directive. The French investment funds (fonds communs de placement or FCP) are common funds in contractual form conforming to the UCITS or AIFM Directive under French law. The Management Company can cease promotion in your country anytime.

Past performance is not necessarily indicative of future performance. Performances are net of fees (excluding possible entrance fees charged by the distributor). The return may increase or decrease as a result of currency fluctuations, for the shares which are not currency-hedged.

 

Reference to certain securities and financial instruments is for illustrative purposes to highlight stocks that are or have been included in the portfolios of funds in the Carmignac range. This is not intended to promote direct investment in those instruments, nor does it constitute investment advice. The Management Company is not subject to prohibition on trading in these instruments prior to issuing any communication. The portfolios of Carmignac funds may change without previous notice.

The reference to a ranking or prize, is no guarantee of the future results of the UCIS or the manager.

 

Morningstar Rating™ :  © 2023 Morningstar, Inc. All Rights Reserved. The information contained herein: is proprietary to Morningstar and/or its content providers; may not be copied or distributed; and is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Citywire Fund Manager Ratings and Citywire Rankings are proprietary to Citywire Financial Publishers Ltd (“Citywire”) and © Citywire 2022. All rights reserved. Citywire information is proprietary and confidential to Citywire Financial Publishers Ltd (“Citywire”), may not be copied and Citywire excludes any liability arising out its use.

Copyright: The data published in this presentation are the exclusive property of their owners, as mentioned on each page.

 

In Switzerland: the prospectus, KIDs and annual report are available at www.carmignac.ch, or through our representative in Switzerland, CACEIS (Switzerland), S.A., Route de Signy 35, CH-1260 Nyon. The paying agent is CACEIS Bank, Montrouge, succursale de Nyon/Suisse, Route de Signy 35, 1260 Nyon.

 

UK: This document was prepared by Carmignac Gestion and/or Carmignac Gestion Luxembourg and is being distributed in the UK by Carmignac Gestion Luxembourg.

 

FP CARMIGNAC ICVC (the “Company”) is an Investment Company with variable capital incorporated in England and Wales under registered number 839620 and is authorised by the Financial Conduct Authority (the “FCA”) with effect from 04/04/2019 and launched on 15 May 2019. FundRock Partners Limited is the Authorised Corporate Director (the “ACD”) of the Company and is authorised and regulated by the Financial Conduct Authority. Registered Office: Hamilton Centre, Rodney Way, Chelmsford, England, CM1 3BY, UK (Registered in England and Wales under No 4162989).  Carmignac Gestion Luxembourg SA has been appointed as the Investment Manager and distributor in respect of the Company. Carmignac UK Ltd (Registered in England and Wales with number 14162894) has been appointed as a Sub-Investnent Manager of the Company and is authorised and regulated by the Financial Conduct Authority with FRN:984288.

 

CARMIGNAC ALTS ICAV (the “Fund”) is an Irish Collective Asset-management Vehicle with segregated liability between Sub-Funds and limited liability incorporated under the laws of Ireland with registration number C475684 effective 11 April 2022. Carmignac UK Ltd (Registered in England and Wales with number 14162894)) is authorised and regulated by the Financial Conduct Authority with FRN:984288 and Carmignac Gestion S.A. have been appointed as Investment Managers of the Fund and Sub-Funds. Carmignac Gestion Luxembourg SA has been appointed as the distributor of the Fund and Sub-Funds.

 

Copyright: The data published in this presentation are the exclusive property of their owners, as mentioned on each page.

 

CARMIGNAC GESTION

24, place Vendôme - F-75001 Paris - Tél : (+33) 01 42 86 53 35

Investment management company approved by the AMF

Public limited company with share capital of € 13,500,000 - RCS Paris B 349 501 676

 

CARMIGNAC GESTION Luxembourg

City Link - 7, rue de la Chapelle - L-1325 Luxembourg - Tel : (+352) 46 70 60 1

Subsidiary of Carmignac Gestion - Investment fund management company approved by the CSSF

Public limited company with share capital of € 23,000,000 - RC Luxembourg B 67 549