With recent attention on deforrestation and fires in the Amazon, and ongoing policy concerns around thermal coal linked to climate change, it could be thought difficult to reconcile responsible investing with exposure to commodities, but it is possible according to OFI AM commodities portfolio manager Benjamin Louvet.
Louvet, who joined the French manager in October 2015 as head of Commodities Management Strategies, said: "Being committed to responsible investment in the commodity sector is possible."
"First and foremost, management can easily consider excluding a sector, partially or totally, in order to limit the portfolio's environmental impact. It is what OFI AM decided to do by excluding coal developers, since they don't try to improve their impact on the climate. OFI AM is also thinking about phasing out shale oil producers that flare a lot of gas and whose real impact on biodiversity is unclear."
"Asset managers can also consider social aspects. For years now, miners have regularly published fatality report, and tried to set up and apply procedures to limit work-related accidents. This information is typically taken into account in our investment process."
"Thanks to our long-established proprietary analysis methodology that focuses on the ESG key issues affecting issuers in each sector, producing rankings and following up on the main controversies that may even lead to a full exclusion of a stock, the OFI portfolio managers get access to extra financial relevant information supporting them in their selection process. In the meantime, we also set up a commitment policy intended to influence and encourage companies' behaviors and ESG practices on the long term, emphasising the importance of a better consideration of environmental, particularly with regard to ecological footprint, social and governance factors. Two means: dialogue with European companies, mainly, and participation in general meeting of shareholders, also expressing our voting rights."