Fonds de réserve pour les retraites (FRR), France’s €36.3 billion reserve fund, has awarded passive ESG mandates worth up to €5 billion to Amundi, Candriam and Robeco Institutional Asset Management.
FRR said it had launched the search for managers of the passive equity mandate to incorporate all current ESG concerns, including portfolio decarbonisation and the new portfolio exclusions implemented by the FRR in December 2016 (tobacco and coal sectors).
Commenting on the awards, the fund said: 'Through the contract ‘Equities Optimised Management Mandates with ESG approach’, launched on 10 July 2015, the FRR sought to surround itself with managers able to assist it in implementing its responsible investor strategy and to apply, to index replication, the best practices in terms of integrating ESG factors.'
The mandates awarded to the three asset manager are for a period of four years and can be renewed for an additional period of one year.
Commenting on winning the mandate, Head of Sustainability Investing Research & Development at RobecoSAM, Daniel Wild, told Modern Investor: 'Winning this mandate is a great achievement for RobecoSAM and Robeco. It rewards our commitment to the field of SI since 1995 and highlights the progress we are making on developing the third generation ESG score, which complements factors such as value and momentum.'
He added that the mandate was proof that in addition to generating returns, pension funds also want to make an impact by integrating ESG data into their investment portfolios.
FRR's ESG journey
This is yet another ESG step by the FRR, which was set up in 2001 as a public administrative institution with the goal of contributing to the financing of the French pension system, to manage its assets in a more sustainable way.
In 2005, the FRR launched its first SRI strategy and committed itself to pursuing more responsible investments while in 2007 it conducted its first measurement of the environmental footprint of its portfolio.
In 2012, FRR decided to invest over €165 million in mandates dedicated to innovative environmental companies.
Meanwhile, in September 2014, the fund, together with the Swedish Fund AP4, Amundi and MSCI, established ‘Low Carbon’ indices, enabling it to achieve a reduction in the carbon footprint of part of its equities portfolio.
In the same month, it signed two international initiatives: 'Montreal Pledge and the ‘Portfolio Decarbonisation Coalition'.
In October last year, Salwa Boussoukaya-Nasr, chief investment officer of Fonds de Réserve pour les Retraites, was featured as cover star of Modern Investor. Read an extensive interview with the CIO.