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.
Our corporate assessment process
Analysing companies on the basis of environmental, social and governance (ESG) criteria is essential for our investments, not only to enable us to learn more about the companies in which we invest but also to better assess the risks involved.
Industry & Services≈ 60% of the rating
Skill of the management team
Checks and balances
Respect for minority shareholders
Evaluation of non-financial risks
Industry ≈ 20% of the rating
Services ≈ 15% of the rating
Policy & actions
Environmental impact of products
Industry ≈ 20% of the rating
Services ≈ 25% of the rating
Loyalty & progression
Social impact of products
Relationship with civil society
Penalty for controversiesDepending 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.
Our proprietary methodologies
Since we first adopted a responsible investment approach, we have always relied on proprietary methodologies. Over the years, we have enhanced our ESG analysis model by integrating other methodologies:
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.
To assess the maturity of companies in how they address climate and biodiversity issues. This “Climate Maturity” methodology is central to the Echiquier Climate Impact Europe management process.
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
100% of votes at General Meetings! Shareholder dialogue is an integral part of our responsible investor approach. We are committed to voting systematically at general meetings, thereby making our contribution to improving corporate governance.
For several years now, we have also been implementing a shareholder engagement approach by sharing areas for improvement on ESG issues with the companies in which we invest, and whose progress we track over time.
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.