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ERAFP aims for maximum impact with new engagement policy

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France’s public service supplementary pension scheme ERAFP has updated its voting policy and shareholder engagement strategy for 2015, restricting the number of issues it will discuss with securities issuers in the next round of general meetings to four for each.

The new shareholder engagement strategy will focus on climate change, responsible lobbying, labour conditions in the supply chain, and tackling aggressive tax optimisation practices, the pension fund said.

Jean-Philippe Rouchon, socially responsible investment (SRI) analyst at the €20bn ERAFP told IPE the fund had decided to prioritise a number of critical issues it thought were the most material to ERAFP’s investments.

“The objective is thus to concentrate our efforts on four main themes […] for 2015 and beyond so as to have more impact,” he said.

He said the pension fund would give priority to collaborative investor initiatives, such as those started and the Principles for Responsible Investment or the Institutional Investor Group on Climate Change, which he said had proven to be more successful.

In its new voting strategy for 2015, ERAFP says it will concentrate on making sure companies are transparent in their business and finance in each country they operate in; sharing added value and applying responsible dividend policies; ensuring women make up at least 30% of boards and promoting transparent, fair and moderate executive pay.

ERAFP said that in order to make sure the voting policy truly worked, its SRI team would analyse the resolutions submitted at the general meetings of 40 major French companies and 20 major international companies.

These companies represent more than 42% of the fund’s share-based investments, it said.

Rouchon said ERAFP did not have the SRI resources at the moment to allow it to discuss the voting recommendations of its asset managers for more than 60 companies.

But he pointed out this was an increase from 40 in 2013 and from 20 in 2012.

“And it is important to keep in mind that since we are delegating our SRI equity asset management to investment managers, this means that for the remaining stocks we own, our asset managers still vote in line with our voting policy,” he said.

The only difference was that in these cases, ERAFP did not check their voting recommendations beforehand, he said.

ERAFP’s voting policy on the presence of women on boards has been sharpened with the minimum threshold of 30% up from 25%.

“While we’ve observed some progress over the past few years, there is still a long way to go,” says Rouchon.

“The argument saying that the female talent pool is not deep enough is both wrong and unacceptable,” he says.

Read about how funds including ERAFP are tackling the risks associated with carbon emissions in the current issue of IPE

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