The Candriam Sustainable Global Equity Fund is a global core international equity fund benchmarked to the $A MSCI World, net dividends reinvested. Candriam Investors Group sustainable management philosophy generates alpha from two distinct sources: alpha from a sustainable investment universe of companies that rank best of sector with regard to their social, environmental, employment and ethical economic policies; and alpha results from detailed quantitative analysis coupled with a risk controlled portfolio construction process.
The investment process of the Candriam Sustainable Global Equity Fund adheres to a philosophy of Sustainable and Responsible Investment (SRI), where investment decisions are driven by environmental, social and corporate governance (ESG) criteria, together with tradition financial criteria.
The aim of Candriam AM’s internal SRI research is to optimise the risk-return ratio through the analysis of risk and opportunities linked to ESG factors that are often out of the scope of traditional financial analysis but which can have a significant and material impact on long term performance.
The Best-in-Class analysis assesses companies’ ability to manage sector specific sustainability-related challenges. Sustainability-related challenges are approached from two distinguishable, but interlinked, perspectives during the Macro and Micro analysis. The Macro analysis assesses companies’ exposure (e.g. services, products) to Global Sustainability Trends (GST) such as climate change, resource depletion, demographic evolution, interconnectivity, health and wellness and developing economies. The Micro analyses assesses companies’ ability to take into account stakeholders’ interests into their long-term strategies. Relationships with stakeholders are a source of both risk and opportunities which may influence companies’ long-term value.
Both the Macro and Micro consist of three parts: a sector study, company analysis and company ranking:
- Stage 1: Sector Study – Identify and analyse sustainable sector specific macro and micro issues.
- Stage 2: Company Analysis – Rank companies within their sectors based on their ability to manage both the sustainable macro and micro issues identified in stage 1.
- Stage 3: Company ranking – Best of companies (top 35%) selected for inclusion in the SRI universe.
Besides the best-in-class analysis, Candriam AM also conducts a Norms-Based analysis of companies. The goal of this analysis is to check whether companies comply with the 10 principles of the United Nations Global Compact which encompasses four main areas of Human Rights, Labour Rights, the Environment and Anti-Corruption.
As final layer, armament and other controversial activities check implies that companies involved in the production and sales of weapons will be excluded from SRI investments. More precisely, companies are excluded from our SRI universe if they: are embroiled in the production or sale of anti-personnel land mines, cluster bombs, depleted uranium weaponry and/or chemical/nuclear/biological weapons, regardless of the revenue generated, and/or generate more than 3% of their revenues from the production or the sale of conventional weapons.
During this check, companies are also assessed on their involvement in certain controversial businesses and activities including: Adult content, Alcohol, Animal testing, Gambling, Genetic modification, Nuclear, Tobacco and activities in oppressive regimes.