FDC’s Board of Directors’ “Directive”, enshrining FDC’s investment strategy for the years 2023 to 2027, has been duly approved. While in terms of asset allocation and risk/return ratio, the revised investment strategy has not been materially changed, the main focus has been on further strengthening FDC’s responsible investor policy by introducing:

• A broadening of the principles underlying the companies on FDC's exclusion list. In addition to the normative exclusion of companies involved in controversial weapons-related activities and contravening international norms mainly covering human rights, the environment, international labour standards and anti-corruption, companies with a prolonged "under observation" status and no concrete prospects for improvement will also be excluded in the future. An “under observation” status is assigned to companies with no confirmed violation but at risk of contributing to a violation of international standards.
• The development and implementation of an engagement policy with major greenhouse gas emitting companies.
• The creation of an indexed bond sub-fund aligned with the Paris Agreement up to 500 million euros, following the creation of an indexed equity sub-fund aligned with the Paris Agreement in 2022.
• The creation of a specific renewable energy infrastructure sub-fund of up to 500 million euros.
• The reporting, on an annual basis, of the average carbon intensity of the FDC's equity and bond portfolios.
• The reporting, on a three-year basis, of the transition trajectory of FDC's equity and bond portfolios in order to assess the compatibility with an emissions trajectory compatible with the Paris Agreement.

In terms of asset allocation, the main changes can consequently be summarised as follows:

• Introduction of a 2% renewable energy infrastructure asset class.
• A slight increase of the global equities and global real estate strategic quotas.
• An equivalent reduction of the EUR and global bonds strategic quotas.

In terms of return and risk criteria, the risk budget has been maintained (i.e. a value at risk of 20%) and FDC expects, through its investment strategy, a net return of 4.08% per annum, which is almost 80 basis points above the set minimum target return of 3.30%.

The Directive can be downloaded here.