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Corporate Social Responsibility
News
3.16.2004 ET
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Novethic Presents a Milestone in Socially Responsible Investment in France: RFP Launched by the French Pensions Reserve Fund (FRR)
(CSRwire) Paris - Today’s Rencontre Novethic was devoted to the
role of SRI (Socially Responsible Investment) in the investment philosophy
of the FRR (Fonds de Réserve des Retraites*). Antoine de Salins, a
member of the Executive Board chaired by Francis Mayer, stated that FRR
intends to gradually integrate sustainable development criteria into its
investment decisions, a goal that is expected to have a profound impact on
the field of socially responsible investment.
A long-term investor whose purpose is to support inter-generational
solidarity
FRR’s recently launched request for proposal, valued at 16 billion
euros, uses SRI criteria to screen possible managers for a mandate valued
at three billion of the total (the equivalent of the entire SRI market in
France). Several hundred European and global asset managers submitted
proposals to the innovative RFP. In terms of size, status and missions,
FRR is a benchmark institutional investor, serving the interests of the
broader community. According to Antoine de Salins, FRR’s goal
“is to tackle certain issues, such as sustainable development,
with determination.”
A key player in the establishment of a durable SRI benchmark
Because the fund is founded on the notion of inter-generational
solidarity, which is key to sustainable development, SRI forms an integral
part of the French fund’s identity. Today, the application of SRI
criteria can be compared to a three-stage rocket:
Stage 1: Corporate governance practices and proxy voting by asset
managers. The FRR intends to be proactive, gradually exercising its proxy
voting rights in various markets in accordance with the guidelines set
forth by its Supervisory Board.
Stage 2: The FRR plans to establish a dedicated SRI component, the
amount of which has not yet been determined by the Executive Board, but
which will be large enough to enable genuine experimentation.
Stage 3: Asset class permitting (Euro/Europe equities), the FRR has
requested that asset managers being considered for the mandate:- Seek
out and analyze relevant and reliable information on the social and
environmental behavior and practices of companies being considered for
investment;
- Share the information they acquire on companies, and disclose how they
implement their methods and their track record as managers, so that the FRR
can eventually build its own benchmark and method.
This is a gradual
and cooperative process that involves all stakeholders (asset managers,
rating agencies, etc.). As Mr. de Salins noted, “If it is to
succeed, this effort must not remain isolated. It must be shared among all
stakeholders.”
If the effort succeeds, “It will be extended to all of the
FRR’s portfolios and, within three to four years, will lead the Fund
to play an active role as shareholder.”
A European trend that is gaining strength
The approach adopted by the FRR is indicative of a broader trend in
Europe: a number of major long-term investors in Europe, with ties to
public policymakers (such as the Flemish Health Ministry in Belgium and
the Petroleum Fund in Norway), like a number of large pension funds, are
developing novel forms of SRI asset management. In addition, as the
FRR’s grows larger – it expects to be the largest European
institutional investor by 2020 – its SRI philosophy could inspire
other large institutional investors. In the words of Antoine de Salins:
“We should be thinking about forming a network that will allow
Europe’s largest institutional investors to exchange SRI practices
and information.”
Photos of the Rencontre are available on request
*The Fonds de Réserve des Retraites is a public agency that was
set up at the behest of the French government and Parliament to manage the
pool set up to help absorb the shock of profound demographic changes. The
aim of the fund is to enable pay-as-you go retirement plans to adapt to
demographic trends by amassing a total of 150 billion euros by 2020.
About Novethic
A subsidiary of Caisse des dépôts et consignations, Novethic is
France’s top centre for resources, information and expertise
pertaining to SRI and corporate social and environmental responsibility.
Its web site (www.novethic.fr) is a comprehensive resource, covering all
aspects of sustainable development and corporate citizenship.
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