Fonds de Compensation RESPONSIBLE INVESTMENT

As an institutional fund manager, FDC is aware of its ecological, social and good governance responsibilities. In 2010, FDC integrated a responsible investor policy. Since then, FDC's responsible investor policy has been evolving.

Principles

FDC invests long-term and globally and is therefore committed to a healthy and sustainable economy. As an institutional fund manager, FDC is aware of its ecological, social and good governance responsibilities. Such considerations are taken into account in FDC’s investment strategy as well as in its investment decisions.

While the consideration of sustainable criteria has gained considerable momentum especially in recent years, FDC started formalising a responsible investor policy as early as 2010. At the beginning of 2011, the Board of Directors decided to set up and implement an exclusion list based on international conventions ratified by the Grand Duchy of Luxembourg and covering the areas of environment as well as institutional, social and joint responsibility. In addition to the restrictions imposed by the legal provisions and international conventions in force, FDC considers thematic or sectoral exclusions require a change in the legal framework applicable to the FDC.

At the same time, FDC has proactively started to pay more attention to sustainable criteria and aspects in its public tenders for mandating external fund managers. In 2012 the first mandate with an investment approach based exclusively on ESG criteria was awarded. Since then, FDC's responsible investor policy has continuously evolved and deepened.

At the end of 2019, the Board of Directors took the initiative to prepare a dedicated report detailing the scope, various aspects and implementation of FDC's responsible investor policy.

The Paris Agreement on climate change, the 2030 Agenda for Sustainable Development of the United Nations or the 2030 Climate and Energy Policy Framework of the European Commission include environmental and social targets as well as objectives that will have an impact on the entire financial sector. Aware of the importance of these issues and in line with its fiduciary duty, the given report also included a detailed climate analysis of FDC’s portfolios.

With the first sustainable investor report published in 2020, FDC aimed to provide a transparent inventory and to publicly confirm its commitment as a responsible investor. Conscious of the constant evolvement of responsible investing, FDC will continuously monitor developments in the field of sustainability and adapt its responsible investor policy as necessary.

The pillars of FDC's responsible investor policy

Implementation of an exclusion list

Since 2011, FDC has ensured that all its investments through its SICAV comply with international conventions. More precisely, the integration of such a principle is actually implemented through a normative exclusion of companies that do not comply with international standards as enshrined in the ten principles of the United Nations Global Compact covering human rights, the environment, international labour standards and the fight against corruption. Equally excluded are companies involved in activities related to controversial weapons.

In addition to the excluded non-compliant companies, some companies are under observation. This status is in principle granted to companies for which investigations are not yet completed or for which engagement is still ongoing in order to put an end to the litigious facts. Depending on the progress of these investigations and discussions, these companies can be classified as either compliant or non-compliant. Thus, with its financial weight, FDC supports an engagement process led by its screening service provider with the aim to change the policy and governance mode of the companies in question. Almost 180 companies are currently under observation.

FDC's exclusion list
COMPANY NORM AREA
63 Moons Technologies Limited (India) Business Ethics
Adani Enterprises Limited (India) Environment
Adani Ports & Special Economic Zone Limited (India) Human Rights & Environment
Aerojet Rocketdyne Holdings (United States) Controversial Weapons
Airbus SE (Netherlands) Controversial Weapons
Alrosa PJSC (Russia) Human Rights
Alrosa-Nyurba PJSC (Russia) Human Rights
Anhui Great Wall Military Industry Limited (China) Human Rights & Controversial Weapons
Aryt Industries Limited (Israel) Controversial Weapons
Aselsan Elektronik Sanayi ve Ticaret AS (Turkey) Controversial Weapons
Avio S.p.A. (Italy) Controversial Weapons
Babcock International Group PLC (United Kingdom) Controversial Weapons
BAE Systems PLC (United Kingdom) Controversial Weapons
Bashneft PJSOC (Russia) Human Rights
Bharat Dynamics Limited (India) Human Rights & Controversial Weapons
Brookfield Asset Management (Canada) Controversial Weapons
Brookfield Business Partners L.P. (Bermuda) Controversial Weapons
BWX Technologies (United States) Controversial Weapons
CACI International (United States) Controversial Weapons
Carmat SA (France) Controversial Weapons
Central Telegraph PJSC (Russia) Human Rights
China Aerospace International Holdings Limited (Hong Kong) Controversial Weapons
China Isotope & Radiation Corporation (China) Controversial Weapons
China National Nuclear Power Company Limited (China) Controversial Weapons
China Northern Rare Earth Group High-Tech Company Limited (China) Environment
China Petroleum & Chemical Corporation (China) Human Rights
China Shipbuilding Industry Company Limited (China) Controversial Weapons
China Shipbuilding Industry Group Power Company Limited (China) Controversial Weapons
China Spacesat Company Limited (China) Human Rights & Controversial Weapons
CNIM Group SA (France) Controversial Weapons
CNNC International Limited (Hong Kong) Controversial Weapons
CNPC Capital Co.mpany Limited (China) Human Rights
Cox & Kings (India) Limited (India) Business Ethics
Dassault Aviation SA (France) Controversial Weapons
Ducommun Incorporation (United States) Controversial Weapons
El Sewedy Electric Company (Egypt) Environment
Energy Transfer LP (United States) Human Rights
Fluor Corporation (United States) Controversial Weapons
Gazprom Neft PJSC (Russia) Human Rights
Gazprom PJSC (Russia) Human Rights
Gazprombank OJSC (Russia) Human Rights
General Dynamics Corporation (United States) Controversial Weapons
Hangzhou Hikvision Digital Technology Company Limited (China) Human Rights
Hanwah Aerospace Company Limited (South Korea) Controversial Weapons
Hanwha Corporation (South Korea) Controversial Weapons
Hanwha Life Insurance Co.mpany Limited (South Korea) Controversial Weapons
Hanwah Solutions Corporation (South Korea) Controversial Weapons
Hensoldt AG (Germany) Controversial Weapons
Honeywell Automation India Limited (India) Controversial Weapons
Honeywell International Incorporation (United States) Controversial Weapons
Huneed Technologies (South Korea) Controversial Weapons
Huntington Ingalls Industries (United States) Controversial Weapons
ICL Group Limited (Israel) Controversial Weapons
Indian Hotels Company Limited (India) Controversial Weapons
Indostar Capital Finance Limited (India) Controversial Weapons
Inner Mongolia Baotou Steel Union Company Limited (China) Environment
InnoWireless Company Limited (South Korea) Controversial Weapons
Irkut Corporation (Russia) Human Rights
Jacobs Engineering Group Incorporation (United States) Controversial Weapons
Kangmei Pharmaceutical Company Limited (China) Business Ethics
L&T Finance Holdings Limited (India) Human Rights & Controversial Weapons
L&T Technology Services Limited (India) Human Rights & Controversial Weapons
L3Harris Technologies (United States) Controversial Weapons
Larsen & Toubro Infotech LimitedI (ndia) Human Rights & Controversial Weapons
Larsen & Toubro Limited (India) Human Rights & Controversial Weapons
Leidos Holdings Incorporation (United States) Controversial Weapons
Leonardo S.p.a. (Italy) Controversial Weapons
LIG Nex1 Company Limited (South Korea) Human Rights & Controversial Weapons
Lockheed Martin (United States) Human Rights & Controversial Weapons
ManTech International (United States) Controversial Weapons
Mattel Incorporation (United States) Human Rights
Metallurgical Corporation of China Limited (China) Environment
Mindtree Limited (India) Human Rights & Controversial Weapons
MMC Norilsk Nickel PJSC (Russia) Environment
Moog Incorporation (United States) Controversial Weapons
Mosenergo OAO (Russia) Human Rights
MTN Group Limited (South Africa) Human Rights
MTN Nigeria Communications Limited (Nigeria) Human Rights
Mumias Sugar Company Limited (Kenya) Business Ethics
NIS AD (Serbia) Human Rights
Norinco International Cooperation Limited (China) Controversial Weapons
Northrop Grumman (United States) Controversial Weapons
Novorossiysk Commercial Sea Port PJSC (Russia) Human Rights
Oceaneering International (United States) Controversial Weapons
Oil and Natural Gas Corporation Limited (India) Human Rights
Orascom Investment Holding SAE (Egypt) Human Rights
PetroChina Company Limited (China) Human Rights
PG&E Corporation (United States) Human Rights
Poongsan Corporation (South Korea) Human Rights & Controversial Weapons
Poongsan Holdings Corporation (South Korea) Human Rights & Controversial Weapons
Pretis (Bosnia-Herzegovina) Controversial Weapons
Raytheon Technologies (United States) Human Rights & Controversial Weapons
Rolls-Royce Holdings PLC (United Kingdom) Controversial Weapons
Rosneft Oil Company (Russia) Human Rights
Rostelecom PJSC (Russia) Human Rights
Safran SA (France) Controversial Weapons
Saudi Arabian Oil Company (Saudi Arabia) Human Rights
Saudi Basic Industries Corporation (Saudi Arabia) Human Rights
Sberbank Russia PJSC (Russia) Human Rights
Scancom PLC (Ghana) Human Rights
Sinopec Kantons Holdings Limited (Hong Kong) Human Rights
SNT DYNAMICS Co.mpany Limited (South Korea) Human Rights & Controversial Weapons
SNT Holdings Co.mpany Limited (South Korea) Human Rights & Controversial Weapons
S-Oil Corporation (South Korea) Human Rights
Tata Chemicals Limited (India) Controversial Weapons
Tata Communications Limited (India) Controversial Weapons
Tata Consultancy Services Limited (India) Human Rights & Controversial Weapons
Tata Consumer Products Limited (India) Controversial Weapons
Tata Elxsi Limited (India) Controversial Weapons
Tata Investment Corporation Limited (India) Human Rights & Controversial Weapons
Tata Motors Limited (India) Controversial Weapons
Tata Steel Limited (India) Controversial Weapons
Tata Teleservices (Maharashtra) Limited (IIndia) Controversial Weapons
Tatneft PJSC (Russia) Human Rights
Territorial Generating Co No 1 PJSC (Russia) Human Rights
Teva Pharmaceutical Industries Limited (Israel) Business Ethics
Textron (United States) Controversial Weapons
Thales SA (France) Controversial Weapons
The Boeing Company (United States) Controversial Weapons
The Tata Power Company Limited (India) Controversial Weapons
Titan Company Limited (India) Controversial Weapons
Tokyo Electric Power Company Holdings (Japan) Human Rights & Environment
Toshiba Corporation (Japan) Business Ethics
Transneft PJSC (Russia) Human Rights
Trent Limited (India) Controversial Weapons
Tronic's Microsystems SA (France) Controversial Weapons
Ultra Electronics Holdings PLC (United Kingdom) Controversial Weapons
Unitech Limited (India) Human Rights & Business Ethics
United Aircraft Corporation PJSC (Russia) Human Rights & Controversial Weapons
UPL Limited (India) Environment
Vale SA (Brazil) Human Rights & Environment
Voltas Limited (India) Controversial Weapons
Vozrozhdenie Bank PJSC (Russia) Human Rights
VTB Bank PJSC (Russia) Human Rights
Walchandnagar Industries Limited (India) Human Rights & Controversial Weapons
Wells Fargo & Company (United States) Business Ethics
Wirecard AG (Germany) Business Ethics

Consideration of sustainable aspects and criteria

The assets invested through the SICAV are managed by professional fund managers approved and duly appointed by FDC. Since 2011, the questionnaire for the selection of fund managers includes detailed questions on sustainable aspects and criteria taken into account by the tendering companies, particularly in relation to their investment process and asset allocation. This aspect has been strengthened over time so that from 2017 onwards, each tendering company participating in a tender for actively managed mandates is obliged to integrate a sustainable approach into the investment strategy proposed to FDC. As a result, all FDC’s fund managers have engagement policies in place, participate in various initiatives and are members of various organisations that promote, among others, sustainability and/or the transition to a low-carbon economy, are all signatories to the United Nations Principles for Responsible Investment and strive to align with the 17 Sustainable Development Goals of the United Nations. The fund managers’ sustainable approaches are monitored and audited. Eleven ESG labels and one Environment label have been awarded by the labelling agency LuxFLAG. These labels account for almost 87% of the actively managed assets in transferable securities within FDC’s SICAV at the end of September 2021.

The sustainble approaches of FDC's asset managers

Allianz Global Investors implements sustainable approaches for the Euro-denominated green bonds sub-fund and for an Euro-denominated bonds sub-fund. Both approaches are labelled ESG by LuxFLAG.

Click here to visualise Allianz Global Investors' sustainable approaches. (Pdf, 1.01 Mb)

 

 

Amundi Asset Management implements a sustainable approach for an Euro-denominated bonds sub-fund. The given approach is labelled ESG by LuxFLAG.

Click here to visualise Amundi Asset Management's sustainable approach. (Pdf, 245 Kb)

 

 

AXA Investment Managers implements sustainable approaches for the Euro-denominated liquidities sub-fund and for a global bonds sub-fund. Both approaches are labelled ESG by LuxFLAG.

Click here to visualise AXA Investment Managers' sustainable approaches. (Pdf, 1.12 Mb)

 

 

CBRE Global Investment Partners implements a sustainable approach for a global real estate sub-fund.

Click here to visualise CBRE Global Investment Partners' sustainable approach. (Pdf, 660 Kb)

 

 

Franklin Templeton Investment Management implements a sustainable approach for a global bonds sub-fund.

Click here to visualise Franklin Templeton Investment Management's sustainable approach. (Pdf, 183 Kb)



 

HSBC Global Asset Management implements sustainable approaches for a Euro-denominated bonds sub-fund as well as for a global equities sub-fund. The approach for the Euro-denominated bond sub-fund is labelled ESG by LuxFLAG.

Click here to visualise HSBC Global Asset Management's sustainable approaches. (Pdf, 3.41 Mb)

 

 

Impax Asset Management, to which the financial management is delegated by BNP Paribas Asset Management, implements a sustainable approach for the sustainable impact equities sub-fund. The given approach is labelled Environment by LuxFLAG.

Click here to visualise Impax Asset Management's sustainable approach. (Pdf, 733 Kb)

 

 

LaSalle Investment Management implements a sustainable approach for a global real estate sub-fund.

Click here to visualise LaSalle Investment Management's sustainable approach. (Pdf, 183 Kb)

 

 

MFS Investment Management Company implements a sustainable approach for an emerging markets equities sub-fund.

Click here to visualise MFS Investment Management Company's sustainable approach. (Pdf, 178 Kb)

 

 

Neuberger Berman Asset Management implements a sustainable approach for a global bonds sub-fund.

Click here to visualise Neuberger Berman Asset Management's sustainable approach. (Pdf, 225 Kb)

 

 

Robeco Institutional Asset Management implements a sustainable approach for a global equities sub-fund. The given approach is labelled ESG by LuxFLAG.

Click here to visualise Robeco Institutional Asset Management's sustainable approach. (Pdf, 4.03 Mb)

 

 

State Street Global Advisors Europe implements a sustainable approach for the Paris aligned global equities sub-fund.

Click here to visualise State Street Global Advisors Europe's sustainable approach. (Pdf, 170 Kb)

 

 

Union Investment Institutional implements a sustainable approach for a global equities sub-fund.

Click here to visualise Union Investment Institutional's sustainable approach. (Pdf, 894 Kb)

FDC's LuxFLAG labels
The LUXEMBOURG FINANCE LABELLING AGENCY (LuxFLAG) is an independent and international non-profit association created in Luxembourg in July 2006 by seven public and private founding partners.

Click here to visualise FDC's LuxFLAG labels. (Pdf, 3.41 Mb)

Dedicated positive impact investments

FDC makes dedicated positive impact investments in various forms. Dedicated sub-funds were created within the SICAV to invest in green bonds as well as in shares of companies that intend to generate environmental or social impact, in addition to financial returns. At the end of 2020, nearly 450 million euros were invested in these sub-funds. In this way, FDC contributes, for example, to the treatment and saving of water, the generation of renewable energy, the reduction of greenhouse gas emissions and the recycling and management of waste.

Through its stakes in the National Low-Cost Housing Administration and specific real estate acquisitions, FDC supports affordable housing.

As the owner of almost 700 hectares of forest labelled PEFC, FDC contributes to the absorption of CO2 emissions, among other things.

FDC's PEFC label
PEFC, the Programme for the Endorsement of Forest Certification, is a leading global alliance of national forest certification systems.

Click here to visualise FDC's PEFC label. (Pdf, 69 Kb)

High energy and environmental performance standards

With regard to FDC’s direct real estate, high standards in terms of energy efficiency and sustainability are targeted and ensured in particular through high level BREEAM labels.

FDC's BREEAM labels
BREEAM is the world’s leading sustainability assessment method for masterplanning projects, infrastructure and buildings.

Click here to visualise FDC's BREEAM labels. (Pdf, 1.27 Mb)

Climate analyses and inherent risk monitoring

On an individual basis, detailed analysis and assessment of climate risks are carried out by FDC's fund managers. The management of these risks forms an integral part of their investment process. At the same time, the use of external service providers or tools allows FDC to have a more consolidated and independent view of climate risks and appropriate means to monitor and assess them. In addition, an alignment to a global warming limited to 2°C can thus be analysed.

FDC's responsible investor report 2020 shows the results of the latest climate analyses done by the FDC.

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