La Financière de l’Echiquier adopts a climate strategy and toughens its coal policy
La Financière de l’Echiquier (LFDE) is bolstering its commitment to the fight against climate change by adopting an ambitious climate strategy. This strategy breaks down into nine commitments with the aim of adjusting its climate governance as well as galvanising clients and companies, going beyond the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). The scope of LFDE’s climate strategy is identical to that of its integrated Environmental, Social, and Governance (ESG) approach.
This strategy’s key points are as follows:
- The close involvement of LFDE’s governance: To respond to the climate emergency, LFDE, a pioneer in responsible investing in France, is deploying a pragmatic and transparent climate strategy in conjunction with an annual evaluation and revision process. Designed in partnership with I Care & Consult, this ambitious strategy includes training LFDE’s Board of Directors and Executive Committee, as well as all teams, in climate finance matters, so as to incorporate climate issues into all of the company’s business lines and decisions.
- The intention to add both a climate risk measurement and a climate maturity analysis of companies into the management approach: In order to gain greater control of its exposure to climate risks, LFDE undertakes to measure the physical and transition risks of SRI funds between now and the end of 2021, and of all the other funds by end-2022. Deployment of carbon footprint measurement across all portfolios will be extended to Scope 3, and deployment of green share measurement will be aligned with European taxonomy. These will be effective end of 2021.
- LFDE’s climate strategy is based on the Climate Maturity score, determined using proprietary methods, covering governance and climate commitments as well as fair transition. An approach that is used to pinpoint the climate quality of issuers and select those whose transition is on the right track and with which LFDE could do business.
- Mobilisation of the companies in the portfolio: LFDE is consolidating its commitment and reinforcing the climate priorities of its voting policy, systematically incorporating climate issues into its dialogue with companies, and intensifying its requirements of the highest-emission sectors, as part of a strict coal policy (see below).
- Lastly, reaching out to involve its clients in the transition of their investment management: to accomplish this, LFDE is deploying educational initiatives including special guidance in the recognition of climate issues.
Outreach to companies and clients will also feature an annual Climate Seminar, the only initiative of its kind on the Paris financial marketplace at this time, assembling climate experts and prompting discussions of best practices.
LFDE’s coal policy
As part of its climate strategy, LFDE is also committed to totally eliminating thermal coal from its investments by 2030, by phasing in strict restrictions, in connection with the Global Coal Exit List from German NGO Urgewald. The aim of LFDE’s coal policy is to prevent the sector’s expansion and support its phase-out. Starting in January 2021, this commitment is translating into the establishment of an enhanced elimination policy on the subject, which until now involved excluding companies involved in thermal coal mining, with a threshold of 5% of revenue.
Beginning on 01.01.2021, LFDE is no longer investing in companies:
- that are developing new projects involving the use of thermal coal;
- that earn more than 5% of their revenue in thermal coal mining (exclusion in force since 2018) or more than 20% of their revenue in thermal coal-related operations.
- Also excluded are companies whose thermal coal-based power generation exceeds 20% of their energy mix or 10 million tonnes/year, or whose stations produce more than 5GW in power.
This coal policy is accompanied by intensified shareholder commitment.
Bettina Ducat, CEO of La Financière de l’Echiquier, said :
La Financière de l’Echiquier has been committed to responsible investing for 30 years. Right now, our ambition is to become the standard-bearer on climate finance issues. Asset management has a major role to play in combating climate change and shifting capital toward the most activist companies. LFDE intends to be a driver and an innovative force to help rise to the climate challenge.
Olivier de Berranger, Deputy CEO and CIO, added :
At a time when the climate emergency is demanding that companies adapt their business models, we are paying closer attention to the climate governance of our holdings, even as we become more closely involved with those companies. Our expectations are no different from the standards to which our management company holds itself.
To find out more about LFDE’s climate strategy, click here
To find out more about LFDE’s coal policy, click here
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