CPR Asset Management, the thematic equities arm of Amundi, has launched a fund dedicated to tackling social inequalities, adding to CPR AM's €10bn thematic equities range.
CPR Invest - Social Impact provides the opportunity to put their savings to work helping to reduce inequalities and generate a positive social impact along with potentially higher financial returns. More socially aware companies should prosper since they will find it easier to attract capital, human talent, consumers and regulatory approval, while businesses that do not help to reduce inequalities are likely to face greater regulatory, political and reputational risk.
CPR Invest - Social Impact is an actively managed global equity fund, non-benchmarked, containing around 70 stocks. It will utilise an internal scoring methodology for companies and the countries where they are based, using 40 criteria. The investment objective is to outperform global equity markets over the long term (minimum five years), by investing in companies that are participating in the reduction of inequalities in their countries of establishment.
Thematic equity portfolio managers, Yasmine De Bray and Eric Labbé, will co-lead the management of this fund.
CPR AM has proposed a holistic definition of inequalities is based on five pillars: labour & income, health & education, diversity, taxation, and human rights & access to basic needs.
CPR AM's scoring methodology is the result of two years of research and will use a scoring scale from A to E to assess companies based on 17 criteria and countries using 22 criteria. Data sources will be from recognised providers and organisations.
The methodology is based on three principles:
- Selection: 50% of the 3,000 stocks in the MSCI All Country World Index are excluded on the overall ‘inequality' score.
- Materiality: despite a good overall score, misconduct one or more pillars could adversely impact a company's valuation; therefore, the worst 10% per pillar is excluded. Each pillar carries equal weighting.
- Improvement: the company's social policy must reflect the best practice of its country or improve the country's practices; therefore, companies selected must have an overall score greater than or equal to the country in which they are headquartered.
In addition to the ‘inequality' scoring, CPR AM's ESG methodology assesses whether a particular company is to be included in the fund's investment universe. Filters are applied to businesses involved in major ESG controversies, as well as on any company that scores poorly on both overall ESG criteria and underlying social criteria (S).