The €33bn French public sector pensions giant ERAFP, a 100% SRI investor, is seeking two asset managers to run a portfolio of French small and mid cap stocks over a minimum five-year period. The fund will be able to unilaterally extend the contract for an additional two years, bringing the mandate to a total of seven years, according to the contract’s terms.
ERAFP will also award two ‘standby’ mandates for the third and fourth best proposal, in line with the fund’s rules. In the event that multiple firms are tied for the best proposal, they will each receive a mandate from the fund.
Other details concerning the domestic portfolio’s management, such as its size and targeted returns, were not immediately available at press time.
The portfolio will be managed in line with the SRI framework of ERAFP – since 2008, the fund has claimed that 100% of its investments are aligned with this framework. Tendering firms have been asked to enquire directly with ERAFP on details of its SRI policy as some elements are considered “confidential”.
Among others, ERAFP’s SRI framework requires managers to analyse companies’ ESG scores to implement a ‘best-in-class’ portfolio and identify investment topics likely to be subject to shareholder engagement. Managers must also monitor the climate impacts of their investments, in line with ERAFP’s reporting commitments under the Net-Zero Asset Owner Alliance.
According to ERAFP, the holding period for the portfolio as recommended by French financial regulator Autorité des marches financiers (AMF) is five years.
ERAFP is one of the world’s largest public pension funds in terms of member numbers, serving over 4.5m civil servants, with over 45,000 employers and nearly €1.8bn in annual contributions, making it one of the fastest growing institutional asset pots globally, all of which is outsourced to third party managers.
Managers have to submit their proposals by March 18 at midday on a public tender portal.
Separately, the AMF has announced the introduction of a more comprehensive sustainable finance module in the general certification programme which French investment professionals are required to take. The updated questions will address concepts such as “green finance, managing climate risk, socially responsible investment and labels, ESG criteria and management approaches”, and will take effect in mid-March.
In addition, the AMF will introduce a new, optional sustainable finance certification by the end of the year. It will comprise 60 questions, “spanning the sustainable finance terminology and ecosystem, the French and European regulatory framework, ESG issues, non-financial asset management approaches and the marketing of sustainable investment products”.