Four asset managers share €2.4bn active equity mandate pot at French asset owner

French fund puts investment and ESG integration at 50% of manager selection criteria.

Four fund managers – Mirova, Candriam, Allianz Global Investors and CPR Asset Management – will share an €2.4bn pot for four segregated mandates to run active European equity strategies at Ircantec, the French public pension scheme, which has responsible investment principles as a significant part of its manager selection criteria.
Ircantec said it had received ten tenders for the awarded mandates. The €11bn scheme is housed within France’s €300bn Caisse des Dépôts et Consignations (CDC) sovereign wealth fund, and carries out its own manager selection. It has been one of the most active European pension funds on sustainability, notably within its fixed income allocation, but increasingly in equities.
Ircantec – or to give it its full name in French: L’institution de Retraite Complémentaire des Agents Non Titulaires de l‘État et des Collectivités Publiques – is a pay-as-you-go second pillar pension structure created in 1970. It covers state employees, and regional authority workers, including local politicians, and staff at companies such as EdF and GdF, the big French utilities, and the Banque de France. Its €11bn treasury is its contributions buffer for future pension payments.Ircantec says it selects managers based on the following criteria: experience, investment capacity and ESG integration in the strategy (50%), organisational capacity (30%) and operational capacity (20%). At the end of 2018, the fund announced that it was divesting some €51m in equity and €35m in bond holdings in specialised energy and non-European integrated oil and gas companies in order to meet climate change targets. Some of the bond divestment proceeds have been reallocated to green bonds. The equity divestment proceeds have gradually been reinvested in sustainable funds. It pulled its money from companies where investment expenditure was not aligned with keeping global warming to within 2°C above pre-industrial levels. The fund has also been reviewing its strategic asset allocation in order to lower its exposure to the oil and gas sector based on alignment with the 2°C warming trajectory. The pension fund is also engaging oil and gas majors through the Climate Action 100+ initiative and the PRI.

RI is running its ESG in Manager Selection Workshop at the RI Europe 2019 conference on June 11/12. It will feature case studies from asset owners and other institutional manager selectors explaining how they incorporate ESG into their decisions when awarding mandates and monitoring the successful managers across different asset classes.