e-fundresearch.com: Many fund management companies use terms like „sustainability“, „ESG“ or „SRI“ for their marketing. What track record can Petercam offer in the field of sustainable fixed income investments and how can you ensure that the strategy is more than just a clever trick for better marketing?
Thierry Larose: We have 8 years of experience in managing government bond funds with an SRI overlay. We started off with our strategy investing in OECD bonds and later on transposed the internal model to the particular needs of an emerging market SRI government bond fund. Emerging market bonds have been a part of the strategic asset allocation of other bond funds at Petercam for many years.
It is important to note that internal reflection is well organised. We have a committee composed of 6 internal and external specialists providing insights and critical views on the criteria used. The Fixed Income SRI Advisory Board selects the SRI criteria, which fulfil the preliminary requirements (see criteria) and are the most relevant in the framework of sustainability assessment of the OECD universe. It determines the weights attributed to each criterion. It plays a role in reviewing the ranking, during its bi-annual meeting, (determining the country allocation) and during the periodic debates attended by external sustainable development specialists, thus refining the model continuously.
We also have the courage of conviction and only invest in the countries which meet our criteria of sustainability and financial strength. When launching the fund, Russia was excluded for democratic reasons. Nevertheless, it represented up to 10% of the benchmark and even more in competitive portfolios. The turmoil in Russia and Ukraine afterwards gave us reason but it was not obvious at the launch of the strategy.
In other words, we do not practice greenwash and adopt a global approach (laid out in several publicly available documents such as our Responsible Investment approach, controversial activities, voting policy, adherence to UN PRI…).