AMF Position-Recommendation - DOC-2020-03 - Information to be provided by collective investment schemes incorporating
non-financial approaches
Document created on 11 March 2020, amended on 27 July 2020
This translation is for information purposes only 12/20
- the type of approach(es) used (e.g. best-in-class,
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best-in-universe,
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best-effort,
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thematic, binding and
significant ESG integration, etc.). It is also recommended to define the significance of these various strategies to
ensure that the document can be easily understood, and indicate whether the approach can lead to the selection
of certain sectors or not;
- a summary of the process of consideration of non-financial characteristics (e.g. filters, ratings, etc.) and its
sequencing relative to the financial strategy;
- a few examples of some of the most important non-financial criteria analysed (e.g. two or three examples).
In general, the AMF recommends that in its communication a collective investment scheme should not use
expressions having an environmental, social or governance meaning inappropriate for the investment policy
implemented via the collective investment product. For example, when an approach takes several criteria into
consideration without placing one significantly above the others, the AMF recommends not announcing specific
objectives for a single criterion (e.g. best-in-universe SRI approach making equally weighted consideration for the
E, S and G criteria and announcing solely or primarily a contribution to the mitigation of global warming).
Position 3 applicable to collective investment products making non-financial characteristics a key aspect of
communication
When the KIID mentions consideration of non-financial criteria, it should describe concisely the main
methodological limits to the non-financial strategy implemented when they are significant (within the size limits
stipulated by the KIID and referring to the prospectus for more details when these aspects require detailed
explanations). When the KIID does not provide such information, these explanations should appear in the
prospectus.
This information is designed to enable investors to understand in summary form the non-financial analysis
performed by the asset management company and its limits.
Note that the limits to the non-financial strategy include, in particular:
- For funds of funds: Potential inconsistency between the SRI/ESG strategies of the underlying funds
(criteria, approaches, constraints, etc.), especially when the AMC selects funds that it does not manage
and which have approaches taking various non-financial criteria into consideration (e.g. different criteria,
analyses, weightings or measurable objectives);
- For funds using various approaches taking non-financial criteria into consideration via several investment
pockets: Potential inconsistency regarding the selection of issuers in the various pockets and/or maximum
percentage associated with one or more pockets having different strategies/objectives (e.g. a pocket of
"directly held" equities in "stock picking" with a qualitative and quantitative filter combined with an
investment in green bonds, solidarity companies and SRI-labelled funds).
When a collective investment scheme is considering selecting green bonds, social bonds or sustainability bonds, it
is recommended explaining to what extent the selected bonds will comply with current market standards, in
particular the Green Bond Principles (GBP) and the Social Bond Principles of the International Capital Market
Association (ICMA), or the European standard (EU Green Bond Standard) undergoing discussion.
Recommendation 4: Specificity of investments in green bonds, social bonds or sustainability bonds
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For example, Novethic defines this approach as: "a type of ESG selection consisting of giving priority to the companies best rated from a
non-financial viewpoint within their sector of activity, without favouring or excluding one sector relative to the stock market index used as a
basis for starting".
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For example, Novethic defines this approach as: "a type of ESG selection consisting of giving priority to the issuers best rated from a non-
financial viewpoint irrespective of their sector of activity, and accepting sector biases, because the sectors which are considered more virtuous
on the whole will be more heavily represented."
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For example, Novethic defines this approach as "a type of ESG selection consisting of giving priority to the issuers demonstrating an
improvement in or good prospects for their ESG practices and performance over time."