sustainable investment
Approach
At ODDO BHF Asset Management, we are convinced that the investment world must actively contribute to this transformation, which, while being an imperative, creates tremendous opportunities. This is why we are committed to playing an active role in a positive revolution, through the sustainable management of our investments as well as through engaging in a dialogue with companies.
Our ESG approach
We have been committed to sustainable investment
since 2006.
Our active participation in major initiatives such as the Forum for Responsible
Investment (FIR), the Forum Nachhaltige Geldanlagen (FNG), the Principles for Responsible
Investment (PRI) and the United Nations Global Compact has over the years forged
our footprint as a responsible asset manager.
This strong commitment has been gradually translated into our various investment
capabilities. Extra-financial analysis, taking into account Environmental, Social
and Governance (ESG) criteria, has thus been added to a fundamental analysis that
was hitherto purely financial. These two complementary ways of analyzing companies
contribute to informed and responsible decision making. For investors, they offer
the opportunity to participate in sustainable development while identifying material
risks and opportunities for long-term growth.
Our commitment is also reflected in the close relationships we maintain with companies:
regular dialogue with management teams enables us to encourage them to adapt their
business models to new social and environmental challenges.
We are convinced that sustainable investment
can be a driver of long-term performance.
Committed to our independence in terms of analysis, we have developed our own ESG
rating model that perfectly reflects our vision of sustainable investment, particularly
on governance and human capital aspects. In our view, companies with an appropriate
governance structure and a strong focus on human capital are more likely to outperform
over the long term. The ESG rating derived from our internal model, enriched by
various external databases (MSCI, CDP), thus has a direct impact on the construction
of portfolios.
In the majority of our investment capabilities, we have also made a marked and differentiating
choice by opting for a best-in-universe approach, thus favouring the best-rated
companies across the entire investment universe, and not just within each sector.
We believe that this approach, whose objective is to invest in the highest rated
companies in absolute terms, allows us to participate effectively in sustainable
transformation and maximize our impact. It also provides a comprehensive view of
each company’s risks and opportunities.
Sustainable management, which is at the heart
of our investment philosophy, is ensured by our team of seasoned professionals.
Our conviction-based approach aims at generating outperformance through strong investment
choices over a long-term horizon.
This management approach has become the cornerstone of several of our investment
capabilities. Our main investment strategies take into account ESG criteria. Nine
of our equity and bond funds have received the label ISR (Socially Responsible Investment)
label(1) in France and four have been awarded the
FNG (Forum Nachhaltige Geldanlagen)(2) label in
Germany for the quality of their responsible management. Our ambition is to extend
ESG integration to all of our portfolios and obtain a number of labels meeting ever
more demanding specifications.
(1) ODDO BHF Avenir, ODDO BHF Avenir Euro, ODDO
BHF Avenir Europe, ODDO BHF Génération, ODDO BHF Green Planet, ODDO
BHF Sustainable European Convertibles, ODDO BHF Sustainable Euro Corporate Bond,
ODDO BHF Sustainable Credit Opportunities, ODDO BHF Algo Sustainable Leaders.
(2) ODDO BHF Algo Sustainable Leaders, ODDO
BHF Green Planet, ODDO BHF Sustainable Credit Opportunities, ODDO BHF Sustainable
Euro Corporate Bond
The 3 systematic steps of our ESG approach
Norm-based and sector exclusions
We have established an exclusion policy concerning certain controversial activities
or sectors and/or practices that are contrary to major international conventions.
Controversies are identified by exclusively using data provided by MSCI.
Depending on their nature, these exclusions may apply to all open-ended funds or
only to funds integrating ESG criteria into their investment process, or may be
decided on a case-by-case basis at the management team’s discretion (ethical
sector exclusions).
Learn more about the sector and norm-based exclusions applied across ODDO BHF Asset
Management’s range of fund integrating ESG criteria in their investment process.
| Coal* |
Unconventional
oil & gas* |
Arctic
exploration* | Tobacco* |
Unconventional
weapons* | UNGC* | Biodiversity* |
Conventional
oil & gas** | Nuclear power** | Gambling** |
Conventional
weapons** | GMOs** | Alcohol** |
Adult
entertainment** | |
| Equities | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ODDO BHF Avenir | Y | Y | Y | Y | Y | Y | Y | Y | N | Y | N | N | Y | N |
| ODDO BHF Avenir Euro | Y | Y | Y | Y | Y | Y | Y | Y | N | Y | N | N | Y | N |
| ODDO BHF Avenir Europe | Y | Y | Y | Y | Y | Y | Y | Y | N | Y | N | N | Y | N |
| ODDO BHF Génération | Y | Y | Y | Y | Y | Y | Y | N | Y | Y | N | N | N | N |
| ODDO BHF Algo Sustainable Leaders | Y | Y | Y | Y | Y | Y | Y | N | Y | Y | Y | Y | Y | Y |
| ODDO BHF Green Planet | Y | Y | Y | Y | Y | Y | Y | Y | Y | Y | Y | Y | Y | Y |
| ODDO BHF Immobilier | Y | Y | Y | Y | Y | Y | Y | N | Y | N | Y | N | N | N |
| ODDO BHF Active Small Cap | Y | Y | Y | Y | Y | Y | Y | N | N | N | Y | N | N | N |
| Fixed income | ||||||||||||||
| ODDO BHF Sustainable Euro Corporate Bond | Y | Y | Y | Y | Y | Y | Y | N | Y | Y | Y | Y | N | N |
| ODDO BHF Green Bond | Y | Y | Y | Y | Y | Y | Y | N | N | N | N | N | N | N |
| ODDO BHF Sustainable European Convertibles | Y | Y | Y | Y | Y | Y | Y | N | N | N | N | N | N | N |
| ODDO BHF Sustainable Credit Opportunities | Y | Y | Y | Y | Y | Y | Y | N | Y | Y | Y | Y | N | N |
| ODDO BHF Euro Credit Short Duration | Y | Y | Y | Y | Y | Y | Y | N | N | N | N | N | N | N |
| ODDO BHF Euro High Yield Bond | Y | Y | Y | Y | Y | Y | Y | N | N | N | N | N | N | N |
| Multi-Asset | ||||||||||||||
| ODDO BHF Exklusiv: Polaris Balanced | Y | Y | Y | Y | Y | Y | Y | N | N | Y | Y | N | N | Y |
| ODDO BHF Exklusiv: Polaris Dynamic | Y | Y | Y | Y | Y | Y | Y | N | N | Y | Y | N | N | Y |
| ODDO BHF Polaris Flexible | Y | Y | Y | Y | Y | Y | Y | N | N | Y | Y | N | N | Y |
| ODDO BHF Polaris Moderate | Y | Y | Y | Y | Y | Y | Y | N | N | Y | Y | N | N | Y |
| ODDO BHF WerteFonds | Y | Y | Y | Y | Y | Y | Y | N | N | N | Y | Y | N | N |
| Other open-ended funds | Y | Y | Y | Y | Y | Y | Y | - | - | - | - | - | - | - |
Situation as of November 2021
Internal model
By factoring in the “execution risk” regarding a company’s long-term
strategy, the results of our ESG analysis have a direct impact on the construction
of portfolios (valuation of securities, weighting, buying and selling discipline).
In order to reflect the “best-in-universe” applied to most of the funds,
the universe analysed is broken down into five ESG levels: Strong Opportunity
, Opportunity
, Neutral
, Moderate Risk
and High Risk
.
Systematic dialogue with poorly rated companies
Our approach to shareholder engagement focuses on two areas:
- Dialogue and Engagement with companies: we meet companies represented in our portfolios in pursuit of progress on business practices and transparency on Environmental, Social and Governance issues. Besides maintaining regular dialogue, we also promote individual and collaborative engagement with companies when we believe they face significant ESG risks. Our engagement process involves identifying and systematically establishing explicit areas in which we expect progress to be made. Our approach is deemed successful if dialogue with an issuer leads to greater ESG transparency and/or an improvement in ESG practices within 18 to 24 months. If engagement is unsuccessful (with dialogue proving non-existent or unsatisfactory), we may establish an escalation process (initiation of a collaborative engagement, opposing vote at the AGMs, divestment).
- Shareholder engagement policy: ODDO BHF AM considers the exercise of voting rights to be an integral part of its responsibility as a shareholder, consistent with its commitments as a signatory of the PRI regarding Environmental, Social and Governance criteria. Participating in AGMs helps to ensure that entrepreneurs’ strategies, risk management and governance are creating long-term value, which is a source of return for their shareholders. Thus, ODDO BHF AM has prepared a shareholder engagement policy for each of its legally separate management companies.
Our Transition Strategy
A signatory of the Carbon Disclosure Project (CDP) since 2006, supporting and taking part in several global initiatives (Climate Action 100+ in 2018, Investor Agenda in 2019, Task Force on Climate-related Financial Disclosures in 2020), ODDO BHF Asset Management has for several years placed the climate issue at the heart of its thinking.
The 3 steps of our Transition strategy
Exclusions
ODDO BHF AM wide norm-based exclusions:
Non-compliance with UN Global Compact
Coal (mining and thermal) exclusions along a trajectory
Controversial weapons
Sector-based exclusions, dependent on the investment strategy, they can include tobacco, nuclear, adult entertainment, GMO pesticides, weapons, shale oil & gas, alcohol, natural gas
Integration
Internal model covering 1000+ companies based on inhouse research and MSCI
Impact on portfolio construction in equity and bond selection and weighting across asset classes
Portfolio's ESG rating based on internal model (1-5)
Active ownership
Regular dialogue with companies within the investment universe on ESG topics
Individual and collaborative engagement with companies for which we see improvement potentials for ESG topics
Divestment if no positive development within 18 to 24 months for some ESG strategies
ODDO BHF AM affirms its differentiated approach to the Transition strategy by integrating
a qualitative analysis of the contribution of portfolios to the achievement of climate
objectives. To this end, we have developed an Energy Transition Analysis (ETA),
which is used to measure the contribution of each company to a low-carbon economy.
We also support the recommendations of the TCFD (Task Force on Climate-related Financial
Disclosures) for the implementation of regulatory climate reporting that places
climate risks and opportunities at the heart of each company's strategy.
In addition, we have broadened the scope of our Transition to Green Transition strategy
by focusing on the interrelationships of climate and environmental risks.
ETA | OUR INTERNAL "ECOLOGICAL TRANSITION" SCORE FOR COMPANY ANALYSIS
| Sector positionning |
| Clean energy (SDG 7, 13) |
| Energy efficiency (SDG 7, 9, 11) |
| Biodiversity (SDG 6, 12, 14, 15) |
| Circular economy (SDG 11, 12) |
| Sustainable empowerment (SDG 9, 11, 13) |
| Score ETA : 30% |
| Environmental analysis |
| Environmental management system |
Products and/or services
|
| Score ETA : 70% |
In the near future, we will also implement a number of concrete actions to strengthen the dialogue on social risks and opportunities in the context of the "Just Transition".