The Fonds de Réserve pour les Retraites (FRR), the €32.65bn French public fund set up in 2001, wants to align its portfolio with a 2°, or even 1.5° trajectory, according to a new four-pillar responsible investment strategy.
It says the approach, while a continuation of previous strategies, is “resolutely proactive and ever more ambitious”.
The first pillar of the strategy is integrating new reference frameworks, such as France’s Article 173 measure on climate disclosure, the Task Force on Climate-Related Financial Disclosures (TCFD) and the EU High-Level Expert Group (HLEG) on sustainable finance. Also under this banner are the UN Sustainable Development Goals (SDGs).
The FRR says it will conduct an “in-depth analysis” of the SDGs in order to align its management with the SDGs that are most relevant with its values and fiduciary responsibility.
The second pillar encompasses “extending responsibility requirements in investing”. In practice this means the integration of ESG in all investment processes, impact assessment, the “systematization of reporting” and other factors.The third pillar involves accelerating the energy transition. It says it will “as far as possible, continue gradually to align its portfolio with a 2°, or even 1.5° trajectory, by reducing the proportion of its most CO2-emitting investments and increasing so-called ‘green’ investment financing contributing to energy transition, especially in infrastructure, green or climate bonds and shares in businesses developing green technologies (that avoid emission of CO2 for example)”.
The final pillar focuses on the “asset management ecosystem”. The fund aims to “to maintain its influential role in terms of responsible investment by increasing the requirements it places on management companies to improve their practices and better integrate responsible investment aspects in their investment choices”.
It says the new strategy “ushers in a new phase that will drive ambition further by increasing accountability at all portfolio levels and involving the entire financial management ecosystem”.
Last year the FRR returned -5.16% due to what it termed a “a brutal fall” in the equity markets at the end of 2018.