03.03.2020

CPR Asset Management launches “Social Impact” fund dedicated to tackling inequalities

New thematic fund aims to tackle the social dimension of responsible investing

  • CPR Invest - Social Impact is the first global equity fund to address the issue of social inequality
  • Provides retail and institutional investors with the opportunity to participate in reducing inequalities and to take account of social risks in their investments
  • New methodology to calculate social inequality as an extra-financial risk, based on five pillars: Labour & Income, Health & Education, Diversity, Taxation, and Human Rights & Access to Basic Needs.

CPR Asset Management, the thematic equities arm of the largest European asset manager Amundi, has launched a fund dedicated to tackling social inequalities, adding to CPR AM’s €10 billion thematic equities range.  

One of the major phenomena that accompanies globalization has been the widening of economic inequality around the world in recent decades. Between 1980 and 2018, globally, the incomes of the richest 1% increased twice as much as that of the poorest 50%. In addition, several studies show that the rise of inequality worldwide has negative effects on growth.[1]

Inequality is also at the root of populist political agendas and social unrest movements, which have powerful negative consequences for markets. Investors are becoming conscious of the risks related to rising inequality, but until now lacked the appropriate investment solutions to address them.

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.


Inequalities as a holistic phenomenon

Inequalities must be understood holistically and should not be limited to income gaps or gender disparities. Instead CPR AM proposes a holistic definition of inequalities is based on five pillars: Labour & Income, Health & Education, Diversity, Taxation, and Human Rights & Access to Basic Needs.

As inequalities must be assessed at country level first, the management team designed evaluation criteria for countries (e.g. progressiveness of the tax system, legal minimum wage, share of total expenditure on health and education as a percentage of GDP, legal provisions to combat discrimination, workers’ rights). They then compile an inequality score for 3,000 companies (e.g. pay differentials, working conditions, diversity policy, tax optimisation, employee training). This way, companies are assessed according to their efforts in reducing inequalities in the countries where they are headquartered.


Proprietary ‘inequality’ scoring combined with Amundi’s ESG scoring

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).


Valérie Baudson, CEO of CPR Asset Management, said: "The increasing tensions in our societies illustrate the pressing need for a transition to a fairer economic model. As an asset manager, we seek solutions that are concrete and relevant to social issues, and to fulfil our fiduciary duties. We believe that investing in listed companies that pay attention to social issues is a driver of value creation over the long term. CPR Invest – Social Impact provides investors with a unique solution taking into account the financial risks associated with inequalities and making it possible to contribute to reducing them through their investments.”

Jean-Jacques Barbéris, Head of Institutional and Corporate Clients Coverage at Amundi, added: “Much like the environment, social inequality is the critical issue for the 21st century. Investors should integrate this dimension in their decisions. No one can substitute government action, but companies and investors do have a role to play. While the topic is complex, we offer investors a transparent methodology capable of selecting companies based on their participation in remedying social inequality. We hope this innovative approach will encourage the entire investment community to question their existing strategies and spur them to act fast.”                        

 

  1. ^ [1] “Trends in income inequality and its impact on economic growth”, 2014, OECD Social, Employment and Migration working papers / “Inequality overhang”, 2017, IMF working paper

This material is solely for the attention of journalists and professionals of the press/media sector. The information contained herein, is given solely in order to provide journalists and professionals of the press/media sector with an overview of the above-mentioned investment program and the use of same falls within their sole editorial independence, for which CPR Asset Management and its affiliates assume no responsibility nor accepts any liability whatsoever, whether direct or indirect, that may arise from the use of information contained on this page. CPR Asset Management and its affiliates can in no way be held responsible for any decision or investment made on the basis of this information. This material is communicated solely for information purposes and neither constitutes an offer to buy, an investment advice nor a solicitation to sell a product. Investments involves risk. Past performance is not a guarantee or indication of future results.

The provided information is not guaranteed to be accurate, exhaustive or relevant, it may be changed without notice. This document is not intended for citizens or residents of the United States of America or to any «U.S. Person», as this term is defined in SEC Regulation S under the U.S. Securities Act of 1933.

For Professional Clients only. This document is being issued in the United Kingdom by Amundi (UK) Limited, 41 Lothbury, London EC2R 7HF, which is authorised and regulated by the Financial Conduct Authority (the “FCA”) under number 114503. This may be checked at https://register.fca.org.uk/ and details about the extent of regulation by the FCA are available on request. This document is only directed at persons who are Professional Clients (as defined in the FCA’s Handbook of Rules and Guidance), must not be distributed to the public and must not be relied or acted upon by any other persons.

CPR AM is the Amundi group’s global thematic equity investment expertise centre. With more than 10 billion euros in assets under management as of end-December 2019 and flagship strategies such as the ageing population and disruptive companies, CPR AM is one of Europe’s largest players in this area. Since 2017, the company has been developing a wide ESG thematic range, on investment themes such as the food value chain, education, global warming and sustainable urbanisation.

Led by Vafa Ahmadi, the team of 12 investment professionals share their know-how in optimising and enhancing thematic investment management capabilities with a major ambition of ensuring the sustainability and development of existing and future thematic investment solutions that reconcile “meaning and quest for performance”.

CPR AM is an investment management company certified by the French Financial Markets Authority, an autonomous and wholly owned subsidiary of Amundi Group. CPR AM works exclusively in third-party investment management (for institutional, corporate, insurance, private banking, fund management, and wealth management clients). CPR AM covers the main asset classes, including equities, convertibles, diversified investments, interest rates and credit).

CPR AM in figures: (End-December 2019)
-        More than €52 billion in assets under management
-        More than 100 employees, of which a third are involved in investment management

 

Amundi is the European largest asset manager by assets under management and ranks in the top 10 globally[1]. It manages 1,563 billion[2] euros of assets across six main investment hubs[3]. Amundi offers its clients in Europe, Asia-Pacific, the Middle East and the Americas a wealth of market expertise and a full range of capabilities across the active, passive and real assets investment universes. Clients also have access to a complete set of services and tools. Headquartered in Paris, Amundi was listed in November 2015.

Thanks to its unique research capabilities and the skills of close to 4,500 team members and market experts based in 37 countries, Amundi provides retail, institutional and corporate clients with innovative investment strategies and solutions tailored to their needs, targeted outcomes and risk profiles.

 

Amundi. Confidence must be earned.

Visit amundi.com for more information or to find an Amundi office near you.

 

 

  1. ^ [1] Source: IPE “Top 400 Asset Managers”, published in June 2019, based on AuM at December 2018
  2. ^ [2] Amundi figures as of 30 September 2019
  3. ^ [3] Investment hubs: Boston, Dublin, London, Milan, Paris and Tokyo