As an active asset manager, Carmignac strives to identify and mitigate risks to client investments arising from governance, environmental and social factors. We are also committed to helping reduce greenhouse gases, and have been a signatory to the United Nations’ principles for responsible investment since 2012.
Today we are further increasing our commitment to this vision, by formalizing our long-held practice to exclude tobacco producing companies and coal miners. In future, we will not invest in any company that derives more than 25% of its revenue from coal mining. These investment restrictions will apply to over 90% of our total assets under management.
Our commitment to ESG principles is reinforced by an even broader approach to sustainability for these four Carmignac funds. Carmignac Emergents, Carmignac Portfolio Emergents, Carmignac Portfolio Emerging Patrimoine and Carmignac Portfolio Grande Europe apply an investment policy that excludes tobacco, oil sands and depending on the fund, gambling and animal processing. These funds have a tighter restriction on coal (excluding companies that derive more than 5% of their revenues from coal) together with an active voting and shareholder engagement policy.
Carmignac believes that ESG integration cannot only rely on the application of fixed rules. Uncovering tangible, long term, positive impacts can be complex: the environmental benefits of electric cars, for example, may be offset by the environmental and societal cost of mining the raw materials for car batteries and their later disposal.
In light of the European Commission’s Sustainable Finance initiatives (March 2018), to support a sustainable, environmental agenda, Carmignac urges legislators to frame their guidelines in a holistic manner. While Carmignac welcomes and supports industry-wide efforts to reduce carbon emissions, we believe that the European Commission’s proposed legislation could equally focus on efforts that investment managers are making in other areas of sustainability such as active voting, corporate engagement and governance. Carmignac has integrated Environmental, Social and Governance criteria in its investment analysis, in the belief that companies mitigating the risks associated with these issues will provide the best long-term performance and growth.
Sandra Crowl, Head of ESG Committee and Member of the Investment Committee at Carmignac comments: “The decision to formalize our coal and tobacco policy is a natural reflection of our strong, risk management focus together with our concern over the impact of climate change. This focus enables us to better identify and reduce the investment risks. By taking action and joining the commitment of policymakers and other investors worldwide to fight climate change and societal challenges, we are in a stronger position to encourage companies to generate sustainable and long-term value creation.”