The Sub-Fund promotes a range of environmental and social characteristics by integrating environmental, social and governance (‘ESG’) criteria into the investment process. The Sub-Fund undertakes to promote, through the implementation of specific criteria of selection and the application of exclusion lists, investments aimed at reducing the negative impacts on society and the environment, by allocating capital in favour of companies that adequately manage and intentionally reduce their negative effects on the environment and on human health and well-being. In the selection criteria key elements of attention are climate change, water stress and biodiversity, pollution, waste and resource efficiency, and from the social performance end, human well-being, product quality and safety, and human rights.
The Sub-Fund’s portfolio invests at least 80% of its assets, net of cash, ancillary liquid assets and derivatives, in companies and countries with an ESG rating equal to or higher than B. The weighted average ESG rating of the portfolio, net of cash, ancillary liquidity assets and derivatives, cannot be lower than BBB. The Sub-Fund’s portfolio does not invest in companies with ESG rating below B.
The ESG ratings measure the company-level capacity to manage environmental and social risks and opportunities that could materially impact business performance, positively or negatively.
The ESG ratings are attributed at the company-level and then aggregated at the portfolio-level. For the attribution of the ESG ratings seven different levels are used, from the best rating of AAA to the worst rating of CCC, which are derived from a normalized ESG score, which ranges from 0 (worst performance) to 10 (best performance).