Equity World Global Goals Strategy

Play a part in achieving the Sustainable Development Goals

THE STRATEGY IN A NUTSHELL

In a world where the necessity to tackle environmental and social challenges keeps strengthening, the investment landscape has been rewritten with all players in the investment value chain shifting their focus towards long-term sustainable solutions.

The Equity World Global Goals strategy offers investors more opportunities to take part in this transformation.
The strategy targets a diversified selection of world developed companies that display high Environmental, Social and Governance (ESG) standards and a positive financial outlook, while contributing to the achievement of the United Nations’ 17 Sustainable Development Goals (SDGs).

SCREENING OF CONTROVERSIES AND ESG CRITERIA

The strategy selects companies with high ESG standards using the Vigeo Eiris ESG score and BNP Paribas Asset Management ESG screening:

VIGEO EIRIS GLOBAL ESG SCORE

Vigeo Eiris rates companies using a methodology that is compliant with international conventions and treaties (ILO, OECD, UN). It is based on 38 environmental, social and governance issues (“ESG”) grouped in 6 domains, graded on a scale from 0 to 100. Only companies with a score greater or equal to 30 and ranked within the top 2/3 of their sector and zone can be selected.

CARBON FOOTPRINT

Companies with a significant involvement in the extraction or production of coaltar sands or oil shale are excluded from the index.

 

 

NO INVOLVEMENT IN CRITICAL CONTROVERSIES

Concerning the environment, the fundamental conventions of the International Labour Organization and the International Bill of Human Rights (IBHR)1.

NO MAJOR INVOLVEMENT IN CONTROVERSIAL ACTIVITIES

Companies with a major involvement in alcohol, armament, gambling, nuclear related activities, pornography and tobacco cannot be part of the index.

BNP PARIBAS ASSET MANAGEMENT ESG SCREENING

BNP Paribas Asset Management rates companies on a scale from 1 to 10 (10 being the worst score) based on ESG criteria. Companies with a score at or above 9 are automatically eliminated.

Source Vigeo Eiris, 2018.

1Consisting of the Universal Declaration of Human Rights, the International Covenant on Economic, Social and Cultural Rights, and the International Covenant on Civil and Political Rights and its two Optional Protocols.

POSITIVE FINANCIAL OUTLOOK

Over the last century, some of the greatest and most well known asset managers – the financial markets “Gurus” – have built their career on how (and how not) to successfully invest in equities over the long-term. Investment Gurus such as Warren Buffett or Peter Lynch have delivered consistently high performance over a long-term period, thanks to investment principles based on companies’ fundamentals. These principles are used by the strategy to select stocks with a positive outlook on three dimensions:

PROFITABILITY

Measured by assessing whether a company is sufficiently profitable given the resources required for it to run its operations.

PROSPECTS

By analysing the prospects of companies in the future.

VALUATION

By looking at the “value for money” of the selected stocks.

Each company obtains a financial score based on these criteria and the best 50% are selected. Stocks which are deemed attractive in terms of their ESG proposition, but with unattractive fundamentals will be excluded from the selection.

PORTFOLIO OPTIMISATION AND DIVERSIFICATION

A tight risk control is implemented within the strategy in order to limit risk and offer an effective diversification of the portfolio, which must satisfy the following constraints:

  • TRACKING ERROR

    The portfolio should maintain an expected tracking error below 3% versus its global equity benchmark.

  • DIVERSIFICATION

    The weight of each region and sector should not differ by more than 30% compared with their respective weights in the benchmark. The weight of each company in the portfolio should not exceed 1%.

GIVING MORE WEIGHT TO COMPANIES WITH HIGH SUSTAINABLE STANDARDS (SDG CHAMPIONS)

SDGs have overlapping relationships which makes it difficult to quantify the contribution of corporations. For this reason, Vigeo Eiris carries-out an extra financial assessment of companies using its Equitics Methodology, defining distinct areas for corporate action. Contribution to the SDGs is assessed on the companies’ product offering and behaviour in favour of sustainable development. The best performers are qualified as “SDG Champions” and are given a higher weight in the portfolio, while respecting the previous criteria.

In order to be qualified as an SDG champion, companies must have a minimum Vigeo Eiris ESG score of 50/100 and be the first of their geographical zone and sector with regards to at least one of the 3 following criteria:

PRODUCT SCORE

Measuring the percentage of business activity dedicated to sustainable products.

PRACTICES SCORE

Measuring companies’ behaviours towards the achievement of the SDGs.

PROGRESSION SCORE

Measuring the progression of the companies’ practices score.

This process is replicated on a monthly basis.

 

Equity World Global Goals NTR Index

TERMS OF USE

 

The methodology of and rules governing the index (the “Index Methodology” and the “Index”) are proprietary. None of the sponsor of the Index (the “Index Sponsor”), the index calculation agent (where such party is not also the Index Sponsor, the “Index Calculation Agent”) nor, where applicable, the index Investment Advisor (the “Index Investment Advisor”) guarantee that there will be no errors or omissions in computing or disseminating the Index.

The Index Methodology is based on certain assumptions, certain pricing models and calculation methods adopted by the Index Sponsor, the Index Calculation Agent and, where applicable, the Index Investment Advisor, and may have certain inherent limitations. Information prepared on the basis of different models, calculation methods or assumptions may yield different results. You have no authority to use or reproduce the Index Methodology in any way, and neither BNP Paribas nor any of its affiliates shall be liable for any loss whatsoever, whether arising directly or indirectly from the use of the Index or Index Methodology or otherwise in connection therewith.

The Index Sponsor reserves the right to amend or adjust the Index Methodology from time to time in accordance with the rules governing the Index and accepts no liability for any such amendment or adjustment. Neither the Index Sponsor nor the Index Calculation Agent are under any obligation to continue the calculation, publication or dissemination of the Index and accept no liability for any suspension or interruption in the calculation thereof which is made in accordance with the rules governing the Index. None of the Index Sponsor, the Index Calculation Agent nor, where applicable, the Index Investment Advisor accept any liability in connection with the publication or use of the level of the Index at any given time.

The Index Methodology embeds certain costs in the strategy which cover amongst other things, friction, replication and repo costs in running the Index. The levels of such costs (if any) may vary over time in accordance with market conditions as determined by the Index Sponsor acting in a commercially reasonable manner.

BNP Paribas and/or its affiliates may act in a number of different capacities in relation to the Index and/or products linked to the Index, which may include, but not be limited to, acting as market-maker, hedging counterparty, issuer of components of the Index, Index Sponsor and/or Index Calculation Agent. Such activities could result in potential conflicts of interest that could influence the price or value of a Product.

© BNP Paribas. All rights reserved.

The current information results from the application of Vigeo Eiris’ Equitics methodology and is based on sources which Vigeo Eiris believes to be reliable. However, the accuracy, completeness and up-to-datedness of this are not guaranteed, and Vigeo Eiris shall under no circumstances be responsible for the strategy choices, management decisions and, more generally, decisions of any nature taken by the reader in reliance upon the information contained in this website.

Reproduction of this information in whole or in part is prohibited without the express written authorization of Vigeo and is protected by the provision of the French Intellectual Property Code

© Vigeo Eiris 2018