The French pensions reserve fund, Fonds de Réserve pour les Retraites (FRR), is in the process of devising and awarding SRI mandates. It has already appointed consultancy Bfinance to help with the request for proposals, and the tender process was launched at the end of June.
The whole manager selection process will be carried out with the same level of discipline and rigour as was the case for all the other mandates that the fund has awarded, says
Nada Villermain-Lécolier, investment director at the FRR.
The SRI mandates are expected to be awarded at the beginning of 2006. But they are only part of a more far-reaching policy on SRI that the fund has. “We have a policy which consists of three tracks,” she says.
Firstly, the FRR has a policy of exercising its voting rights over all equity classes. Secondly, the fund asks managers of all its European active equity mandates to consider extra-financial issues alongside the financial. The fund already has E3bn invested in actively managed European equities mandates. “We are not being specific as to how they should do it; we’re leaving it up to them to find a way and to report to us,” says Villermain-Lécolier.
And thirdly, there are the specialised SRI mandates. These will be using best-of-class approaches to SRI, rather than negative screening.
FRR is using external managers for all its investment, and SRI is no exception. When it came to choosing a consultant for the SRI portion of the fund’s assets, Bfinance’s offer was eventually preferred. It included two SRI specialists which the consultancy will subcontract to.
Villermain-Lécolier sees no conflict between SRI and the reserve fund’s duty. “SRI is consistent with our fiduciary responsibility, because we are acting in the interests of the community, and our investment policy must be in line with balanced sustainable economic, social and environmental development,” she says. This is true as long as there is no statistically significant relation between SRI and performance, she adds.
The FRR is a state-funded agency and acts in the interests of the community, she says. “Its objective is to maximise profits for future retirees, but this must not be at the cost of negative environmental and social consequences.”