Abacus Discovery

“This financial product promotes environmental or social characteristics but does not aim at sustainable investment.”

The fund focuses on investing in companies that contribute to environmental and social objectives. Thus, the fund promotes the following characteristics in companies:

The fund ensures that it is aligned with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, including the principles and rights set out in the eight core conventions identified in the International Labour Organisation’s Declaration on Fundamental Principles and Rights at Work and the Human Rights Charter.

This alignment is verified and monitored at the level of the investable universe. A company found to be in violation of these Principles is excluded from the investable universe.

Scope 4 emissions are avoided emissions from the use of this product, through efficiency improvements or energy-efficient and carbon-intensive reductions. In other words, scope 4 emissions are not the emissions induced by working from home, they are the emissions avoided by not using transport to come to the office.
They are not the ‘negative’ emissions to be subtracted from the induced emissions.
These emissions are not currently established in a standardised way, so we make sure that our approach is transparent and based on recognised benchmarks and methodologies.
Scope 4 emissions are included in our analysis only as an indication to complement our carbon approach.

Using data on the emissions of invested companies, some of which may be modelled, the management team calculates the greenhouse gas (GHG) emissions footprint and intensity of our funds.

• The emissions footprint is calculated at portfolio level and represents the amount of tonnes of CO2 per million euros invested.
• Emissions intensity is first calculated at company level and represents the ratio of emissions to company turnover. The portfolio intensity is calculated as the average of the total emissions over the companies’ turnover.

The intensity and footprint can include different sums of scopes (scope 1 and 2 or scope 1 and 2 and 3), depending on the portfolio coverage. The scopes taken into account for the calculation are specified.

The Fund uses a specific internal tool to assess the positive impact and sustainability of companies. Our specific impact assessment tool calculates the direct or indirect contribution of each company to one or more of the Sustainable Development Goals (SDGs). When building the investment case, we look at companies whose activities intentionally and measurably achieve positive environmental and social impacts. This positive impact analysis of issuers does not constrain the investment universe.

The impact analysis contains two components to measure the positive impact of companies:

• The calculation of the direct contribution, which looks for the direct or fundamental correlation between the activity of the invested company and the objectives of sustainable development,
• The calculation of the indirect contribution, due to its approach, its behaviour and its corporate culture independently of its activity

The fund calculates the sustainable investment rate for issuers.  This calculation is carried out internally using a proprietary tool, taking into account three criteria: substantial contribution to one or more of the Sustainable Development Goals (SDGs), absence of significant harm and good governance.

We attach great importance to the development of proprietary models built on our expertise to provide tangible added value in the application of our non-financial strategy. Our analysis and monitoring tools respect this principle and aim to offer results that we control as a whole.

The management team is responsible for scientific, technical and regulatory monitoring in terms of tool development and extra-financial management. It relies on international standards:

• The UN Sustainable Development Goals (SDGs) for their granularity and in-depth, global approach.
• The Global Reporting Initiative (GRI) and Carbon Disclosure Project (CDP), for their relevant publications and their work on improving transparency in the extra-financial field;
• Documentary sources published by European Union bodies such as the European Securities and Markets Authority (ESMA) and the European Environment Agency (EEA).
• Publications from national public authorities such as, for France, the French Environment and Energy Management Agency (ADEME) and the French Financial Management Agency (AFG);

The management team is also responsible for the identification, measurement and control, at the first level, of the risks related to the implementation of the extra-financial approach within the managed portfolios. These risks are controlled at the second level by the management company’s Middle Office Risk, with the support of the permanent control delegate.

Philippe Hottinguer Gestion wishes to promote the consideration of the extra-financial sphere among its clients and investors. The company encourages the integration of ESG factors into the decision-making processes and activities of the companies in which it invests.

The company is committed to the UN Principles for Responsible Investment, to the 6 Principles for Responsible Investment, including those relating to shareholder engagement. We are committed to

• Being active shareholders, integrating ESG issues into our shareholding policies and procedures.
• Encourage the companies in which we invest to publish information about their ESG practices.
• Promote the adoption and implementation of the Principles in the investment industry.
• Cooperate to improve the effectiveness of our implementation of the Principles.

To this end, we have planned several engagement approaches.