FRANCE - The e16bn Fonds de Reserve pour les Retraites (FRR) said that it would concentrate its socially responsible investment (SRI) approach initially on eurozone and non-euro Europe large cap equities mandates worth around e3bn.
The fund said that it had decided to adopt the SRI approach as it felt that “broadening the scope of risk analysis to encompass social and environmental factors has a positive impact on financial performance.”
However, due to the varied and complex nature of SRI practices, the fund said that to start with it would focus on the eurozone and non-euro Europe large cap equities mandates which represent approximately 18% of the fund’s total assets.
FRR said that it did not rule out the option of extending the SRI approach to a broader universe in the medium run. Possible areas would include Asian large caps, Eurozone small and mid caps, US mid caps, and US value/growth stocks and fixed-income mandates.
“Socially responsible fund management practices are heterogeneous and lack sufficient maturity. In particular, they are directly dependent on the quality, quantity and relevance of the sources of information available on a company’s social and environmental policies and performance.
“For certain geographical regions or asset classes, these sources are currently too limited to support the development of a thriving market for socially responsible asset management products and services,” the fund said.
FRR said that as it did not want to establish a fixed set of SRI criteria for all companies running its portfolios, it had decided to send out questionnaires to potential managers.
Requests for proposal were open not only to all existing SRI approaches but also to managers with no track record in SRI management but who have expressed the desire to work with the fund in the area, the fund said.
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