Ircantec, the €9.2bn French supplementary public sector pension scheme, has launched a four-year roadmap setting out its approach to the low-carbon transition, noting that the upcoming renewal of a large number of mandates would be “perfect timing” for it to put its ideas into practice.
The roadmap was presented by Jean-Pierre Costes, president of the board of directors at Ircantec, at an event in the Hôtel de Ville in Paris on Wednesday evening.
Ircantec is a pay-as-you-go pension scheme for a range of public sector employees, including national government employees, elected local government officials and non-civil service contract staff.
It has €9.2bn of reserves under management.
In Paris, Costes set out the commitments the scheme has already made – as signatory to the Montreal Carbon Pledge last year, for example – and then said that, above and beyond these engagements, “it is actions and results that count”.
To build on the scheme’s actions so far, the Ircantec board of directors earlier this month unanimously approved a four-year roadmap for how the scheme’s €9.2bn of reserves would be used to further the transition to a low-carbon economy.
In France, this is known as “la transition écologique et énergetique”, or TEE for short.
According to Caroline Le Meaux, head of delegated management at Caisse de Dépôts et Consignations (CDC), fiduciary manager for Ircantec, the roadmap is more of an intensification than a change of direction.
It sets out an investment policy based on four “axes”: engagement, measurement, financing and communication.
Under the former, Ircantec is updating its shareholder voting policy to demand that company executives’ variable pay be linked to the company’s strategy with respect to the energy transition, which should include “significant” investment in research and development.
Ircantec reserves the right to vote against AGM resolutions if this is not the case, according to Costes.
In relation to the second “axis”, Ircantec has committed to measure the carbon footprint of the scheme’s listed equity portfolios annually and reduce the footprint over time.
This could involve scaling back investments in “depreciable assets”, notably in the fossil fuel sector.
Financing – the third axis – is “the heart of the machine”, said Costes, and it is in this context Ircantec will be aiming to make climate risk an integral part of asset allocation and its mandates.
It will look closely at opportunities to invest in funds specifically dedicated to financing the energy transaction, he said, noting that that the upcoming renewal of several asset management mandates was “perfect timing” for Ircantec to be able to put into practice these ideas.
Nearly €8bn of assets are currently being managed under 10 Ircantec mandates, although the scheme may not renew all of these, according to CDC’s Le Meaux.
The renewal process will be rolled out over a 12-month period across several tenders.
At the end of March, Ircantec awarded to Access Capital Partners a €130m unlisted multi-asset mandate for co-investments in private equity, private debt and infrastructure.
The private equity investments can be in companies with less than €250m in turnover, while the private debt investments will comprise mezzanine and unitranche debt in companies of less than €500m of revenues, although Ircantec is targeting smaller companies than that, with less than €100m of turnover.
The infrastructure investments will be in renewable energy and energy-efficiency assets and as such very linked to the energy transition, Le Meaux said.
Costes also signalled the possibility of future Ircantec mandates requiring alignment with standards set under (SRI) labelling initiatives launched by the government.
In September and then December last year, the government announced two different labels that asset managers can obtain for investment funds if they meet certain criteria relating to social, environmental and governance considerations in their investment policy.
The labels are for retail-targeted funds but Eric Loiselet, Ircantec board member, said they can be seen as setting minimum standards for the wider investment community and are something that public institutions such as Ircantec will need to take into account.
The first label that was announced is the TEEC label, which is focused on climate change, with a more general socially responsible investment (SRI) label having been announced in December.