ERAFP, the French pension fund for civil servants, has awarded two mandates together worth Є1.2bn to manage US dollar-denominated socially responsible investment (SRI) credit bonds.

In November 2021, ERAFP launched a call for tenders and following the selection process, the scheme has awarded the active mandates to AXA Investment Managers and FundLogic, which will delegate financial management to Eaton Vance Management, the latter two entities both being subsidiaries of Morgan Stanley Investment Management.

Two stand-by mandates have also been awarded to Amundi and BlackRock. These will give ERAFP the option to activate them, notably with a view to spreading risk.

The portfolios will be invested mainly in USD-denominated bonds of issuers located in OECD countries, with the exception of bonds issued or guaranteed by a sovereign state or local authority, the scheme announced.

Each asset manager will be responsible for building a portfolio on the basis of a fundamental analysis of each issuer and a technical analysis of the bonds, ensuring sector diversification and compliance with ERAFP’s SRI framework.

The selected managers must also make every effort to support ERAFP in implementing its commitments as part of the Net Zero Asset Owner Alliance (NZAOA), the fund added.

The mandates awarded are for an initial term of six years; ERAFP may renew the contracts for a period of two years, it said.

With almost €37bn in total assets wholly invested in accordance with a fully SRI approach, ERAFP has since its inception in 2005 sought to maximise returns on its financial asset portfolio in accordance with SRI principles.

As a signatory of the UN Principles for Responsible Investment, ERAFP adopted an SRI Charter in March 2006 hinging on five values: respect for the rule of law and human rights; social progress; social democracy; environment; and high standards of governance and transparency.

ERAFP is also one of the world’s largest public pension funds in terms of member numbers, with almost 4.5 million beneficiaries, 43,000 employers and nearly €2bn in annual contributions in 2020.

As a mandatory points-based pension scheme, it has been managing supplementary pension benefits for French civil servants in state-run bodies, local authorities and public hospitals since 1 January 2005.

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