Our ESG analysis methodology
We have been shaping our own ESG company analysis and rating methodology since 2007. Our fund management team applies it systematically and rigorously to all the stocks present in our investment funds. The methodology is specially adapted for funds subject to ESG integration.
A policy of sectoral and normative exclusions
Our responsible investment approach is based first and foremost on a policy of sectoral and normative exclusions. By refusing to finance certain controversial sectors and practices, we avoid the negative social and/or environmental impact of the companies concerned. A common set of exclusions applies to all managed funds, covering, for example, controversial weapons, tobacco production and thermal coal. From a normative point of view, companies that are mired in controversy, including those guilty of violating the United Nations Global Compact, are also excluded. Stricter exclusion policies apply to our SRI funds, especially our impact funds. Sectors such as fossil fuels, weapons, gambling and GMOs may be excluded on this basis.
Find out more about our exclusion policy
Company valuation
Environmental, social and governance (ESG) analysis of companies is an essential part of our investment process, both to gain a better understanding of the companies in which we invest and to better assess the risks associated with them. The methodology presented below applies to all Echiquier funds. All Tocqueville funds have the SRI label. They are based on the GREaT analysis methodology, shareholder engagement for sustainability, transparent exclusions and a holistic thematic policy for a committed range of funds.
Governance
Industry & Services
≈ 60% of the ratingSkill of the management team
Checks and balances
Respect for minority shareholders
Evaluation of non-financial risks
Environment
Industry ≈ 20% of the rating
Services ≈ 15% of the rating
Policy & actions
Results
Suppliers
Environmental impact of products
Social
Industry ≈ 20% of the rating
Services ≈ 25% of the rating
Loyalty & progression
Protection
Suppliers
Social impact of products
Relationship with civil society
Penalty for controversies
Depending on the severity of the controversy, the overall ESG score of the company (out of 10) can be penalised by a maximum of 2 points.Case-by-case analysis of controversies and focus on their materiality for the company analysed.
An Ethics Committee rules on the most sensitive cases.
Proprietary methodologies
We can also draw on the complementary methodologies and exacting expertise developed by our shareholder LBP AM, particularly GREaT. Adapted to the specific features of different asset classes, this SRI analysis method aims to assess companies on two dimensions: the responsibility of their practices and the contribution of their products and services to solving sustainability challenges. Nearly 10,000 issuers have received GREaT quantitative analysis.
SDG contributions
To identify companies that make a positive contribution to the UN Sustainable Development Goals (SDGs). A core methodology within the Echiquier Positive Impact Europe management process, which is based on an in-depth analysis of companies’ products and services and the impact of their CSR initiatives.
Climate transition
To assess the maturity of companies in how they address climate and biodiversity issues. This “Climate & Biodiversity Maturity” methodology is central to the Echiquier Climate & Biodiversity Impact Europe management process.
Responsible practices
To analyse the non-financial rating of the funds and the commitment of the management companies, and to select only those whose approaches seems to us the most rigorous. This “SRI Maturity” methodology has developed from a partnership between our RI research and asset allocation teams.
Beyond the analysis, a shareholder dialogue
Shareholder dialogue is an integral part of our responsible investment approach. For all our funds, we aim to vote systematically at general meetings and in this way to make our contribution to improving corporate governance. For a number of years, we have also adopted a shareholder engagement approach, sharing progress on ESG challenges with the companies in which we invest and monitoring their progress over time.
In addition, we participate in collaborative engagement initiatives alongside other investors, with the sole aim of helping companies improve their ESG practices. See the details of our Voting and Engagement Policy and our Voting and Engagement Report.
Transparency
Transparency is both a challenge and a fundamental requirement. It is crucial that we report on our methodologies and investments with the utmost transparency. We make every effort to share our know-how and insights. We produce clear and precise content. We are in favour of increased transparency on climate-related financial risks, and therefore support the Task Force on Climate-related Financial Disclosures (TCFD). All the documentation we produce is readily accessible on our website.