Guide to sustainable investing

At Carmignac, we believe a company that does not function in harmony with its environment and stakeholders is doomed for failure. Being a family business enables us to take a long-term view while embedding Environmental, Social and Governance (ESG) criteria into our investment processes and dialogue with investee companies.

ESG & SRI in practice

ESG investing, i.e. using Environmental, Social and Governance factors to evaluate companies and countries on how far advanced they are on sustainability, is an investment approach by which our analysts and portfolio managers seek to focus on material ESG issues in their fundamental analysis. The integration of ESG considerations into our investments allows us to get a more complete picture of the material risks and opportunities surrounding an investment decision, based on the externalities generated on society and the environment.

Explore our sustainable funds range

Our approach to ESG integration combines sustainable investment practices and active ownership activities around the following three core themes:

Climate
Climate change poses an existential threat and is a source of systemic risk for our economies and the financial markets. We expect every investee company to mitigate their impact on the environment and understand climate change impacts on their activities and operations. We encourage them to contribute to the development of a lower carbon economy in line with the goals of the Paris Agreement.

Empowerment
Companies cannot successfully operate without appropriately balancing the interests of their stakeholders.
We expect our investee companies to value their employees whilst providing a supportive, safe and inclusive environment at work. With regards to customers, the appropriate processes and internal controls should be put in place to ensure customer welfare, enhancing their experience and therefore, their loyalty.
We also look for companies to ensure, to the best of their ability, strong human rights standards through their supply chain.

Leadership
A robust leadership underpins the long-term performance and success of any corporation. While there is no one size-fits-all as it relates to good governance, we expect our investee companies to put in place the appropriate governance structure which will contribute to foster innovation as well as ensuring strong checks and balances.

View our sustainable approach

The early implementation of ESG criteria in the monitoring and selection of sovereign bonds has enabled us to complete the ESG integration in all the main asset classes of our fund range. While external solutions are slowly being developed, we have chosen to build our own proprietary models in order to ensure ESG integration and to provide material information to our investors. Two models have been developed in the last years:

  • A global sovereign ESG risk model, which aims to assess ESG risks faced by developed and emerging countries
  • An Emerging Markets-impact model that aims to identify positive ESG trajectories
View our ESG Reports & Policies

While ESG was first coined in 2004, its roots exist in the socially responsible movement, or SRI, based on exclusions. Our Socially Responsible Investment (SRI) funds take a stricter approach to ESG integration, partly based on ethical considerations. These funds can feature a wider range of investment exclusions, a low carbon footprint objective or a positive screening filter.

Explore our SRI funds

Our Funds' SFDR classifications

The Sustainable Finance Disclosure Regulation (SFDR) was adopted by the European Commission and implemented in March 2021 (Level 1).
It requires asset managers like Carmignac to include sustainability (ESG-related) risks in their investment decisions and requests funds to be clearly categorised as to their “greenness” while documenting their objectives, policies and methodologies in their prospectus, website and periodic reports. A second significant measure has been the requirement for asset managers to measure the adverse impacts on a “comply or explain” basis of their investments at both firm and fund level through a prescribed set of 18 mandatory and standardised ESG indicators.

The SFDR has heralded a new era in mainstream sustainable investment offerings and classifications.

Article 6
Implement sustainability (ESG-related) risk in their investment decisions. To do that they must include it in their due diligence and make an assessment on how these risks would affect the financial return of the company.

Article 8
Promote, among other characteristics, environmental or social characteristics, or a combination of those characteristics, provided that the companies in which the investments are made follow good governance practices.

Article 9
Have identified a measurable sustainable objective that is central to investment decisions and defines the investment universe.

Explore our sustainable funds range

Thematic investing is a manner to align investments towards a specific and focused theme. Carmignac’s thematic funds seek to find innovative ways of delivering long term alpha and can provide clients investment solutions that align with their own specific sustainability goals. The thematic range also aligns with our 3 key ESG themes: Climate, Empowerment, Leadership.

To meet emerging client demand and facilitate the classification of some of our Equity funds to the ambitious Article 9 (SFDR) classification as well as define sustainable investments, Carmignac has built a rules-based “Outcomes Framework” in line with the United Nations SDGs.

We have identified 9 SDGs as ‘investable’, which means that companies in which our funds can invest are able to support progress towards these goals through their products and services.

To identify companies that are aligned to the 9 SDGs, we have mapped over 1,700 business activities to the targets within the following investable SDGs:

  • SDG 1: No Poverty
  • SDG 2: Zero Hunger
  • SDG 3: Good Health and Well-being
  • SDG 4: Quality Education
  • SDG 6: Clean Water and Sanitation
  • SDG 7: Affordable and Clean Energy
  • SDG 9: Industry, Innovation and Infrastructure
  • SDG 11: Sustainable Cities and Communities
  • SDG 12: Responsible Consumption and Production

Within Carmignac’s SDG Outcomes framework, sustainable investments are defined as those companies that derive more than 50% of their revenues from goods and services positively aligned with at least one of the nine ‘investable’ SDGs by Carmignac. This high revenue threshold enables us to select companies whose intentionality to focus on sustainable activities is clearly demonstrated. Depending on the commitment and fund classification under the SFDR, our funds either invest a minimum of 50% or 75% of the eligible assets of the fund in aligned companies.

LATEST INSIGHTS

Sustainable investing • 17 July 2023 • English

Our environmental expectations through Climate

1 minute(s) read
Find out more
Sustainable investing • 17 July 2023 • English

Our social expectations through Empowerment

1 minute(s) read
Find out more
Sustainable investing • 17 July 2023 • English

Our governance expectations through Leadership

1 minute(s) read
Find out more
All analysis

Marketing communication. Please refer to the KID, prospectus of the fund before making any final investment decisions.

This material may not be reproduced, in whole or in part, without prior authorisation from the Management Company. This material does not constitute a subscription offer, nor does it constitute investment advice. This material is not intended to provide, and should not be relied on for, accounting, legal or tax advice. This material has been provided to you for informational purposes only and may not be relied upon by you in evaluating the merits of investing in any securities or interests referred to herein or for any other purposes. The information contained in this material may be partial information and may be modified without prior notice. They are expressed as of the date of writing and are derived from proprietary and non-proprietary sources deemed by Carmignac to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Carmignac, its officers, employees or agents.

Past performance is not necessarily indicative of future performance. Performances are net of fees (excluding possible entrance fees charged by the distributor). The return may increase or decrease as a result of currency fluctuations, for the shares which are not currency-hedged.

Reference to certain securities and financial instruments is for illustrative purposes to highlight stocks that are or have been included in the portfolios of funds in the Carmignac range. This is not intended to promote direct investment in those instruments, nor does it constitute investment advice. The Management Company is not subject to prohibition on trading in these instruments prior to issuing any communication. The portfolios of Carmignac funds may change without previous notice. The reference to a ranking or prize, is no guarantee of the future results of the UCIS or the manager.

Morningstar Rating™ : © Morningstar, Inc. All Rights Reserved. The information contained herein: is proprietary to Morningstar and/or its content providers; may not be copied or distributed; and is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

The decision to invest in the promoted fund(s) should take into account all its characteristics or objectives as described in its prospectus. Access to the Funds may be subject to restrictions regarding certain persons or countries. This material is not directed to any person in any jurisdiction where (by reason of that person’s nationality, residence or otherwise) the material or availability of this material is prohibited. Persons in respect of whom such prohibitions apply must not access this material. Taxation depends on the situation of the individual. The Funds are not registered for retail distribution in Asia, in Japan, in North America, nor are they registered in South America. Carmignac Funds are registered in Singapore as restricted foreign scheme (for professional clients only). The Funds have not been registered under the US Securities Act of 1933. The Funds may not be offered or sold, directly or indirectly, for the benefit or on behalf of a «U.S. person», according to the definition of the US Regulation S and FATCA.
Carmignac Portfolio refers to the sub-funds of Carmignac Portfolio SICAV, an investment company under Luxembourg law, conforming to the UCITS Directive. The French investment funds (fonds communs de placement or FCP) are common funds in contractual form conforming to the UCITS or AIFM Directive under French law

  • UK: Please refer to the KIID, prospectus of the fund before making any final investment decisions. This document was prepared by Carmignac Gestion and/or Carmignac Gestion Luxembourg and is being distributed in the UK by Carmignac Gestion Luxembourg UK Branch (Registered in England and Wales with number FC031103, CSSF agreement of 10/06/2013). FP Carmignac ICVC (the “Company”) is an Investment Company with variable capital incorporated in England and Wales under registered number 839620 and is authorised by the Financial Conduct Authority (the “FCA”) with effect from 4 April 2019 and launched on 15 May 2019. FundRock Partners Limited is the Authorised Corporate Director (the “ACD”) of the Company and is authorised and regulated by the FCA. Registered Office: Hamilton Centre, Rodney Way, Chelmsford, England, CM1 3BY; Registered in England and Wales with number 4162989. Carmignac Gestion Luxembourg SA, UK Branch (Registered in England and Wales with number FC031103, CSSF agreement of 10/06/2013) has been appointed as the Investment Manager and distributor in respect of the Company. The risks, fees and ongoing charges are described in the KIID (Key Investor Information Document). The KIID must be made available to the subscriber prior to subscription. The subscriber must read the KIID. Investors may lose some or all their capital, as the capital in the funds are not guaranteed. The Funds present a risk of loss of capital.
  • In Switzerland: the prospectus, KIDs and annual report are available at www.carmignac.ch, or through our representative in Switzerland, CACEIS (Switzerland), S.A., Route de Signy 35, CH-1260 Nyon. The paying agent is CACEIS Bank, Montrouge, Nyon Branch / Switzerland, Route de Signy 35, 1260 Nyon.

The risks, fees and ongoing charges are described in the KID (Key Information Document). The KID must be made available to the subscriber prior to subscription. The subscriber must read the KID. Investors may lose some or all their capital, as the capital in the funds are not guaranteed. The Funds present a risk of loss of capital.

The Funds’ prospectus, KIDs, NAV and annual reports are available at www.carmignac.com, or upon request to the Management.

  • In France, Luxembourg, Sweden: The risks, fees and ongoing charges are described in the KID (Key Information Document). The KID must be made available to the subscriber prior to subscription. The subscriber must read the KID. Investors may lose some or all their capital, as the capital in the funds are not guaranteed. The Funds present a risk of loss of capital. The Funds’ prospectus, KIDs, NAV and annual reports are available at www.carmignac.com, or upon request to the Management.

The Management Company can cease promotion in your country anytime.
Investors have access to a summary of their rights in English on the following links: UK ; Switzerland ; France ; Luxembourg ; Sweden