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.

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.

Novethic

Novethic

A subsidiary of Caisse des Dé©pé´ts et Consignations, Novethic is a leading center for resources, information and expertise pertaining to SRI and corporate social and environmental responsibility. Its web site http://www.novethic.fr is a comprehensive resource for responsible economic actors.

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