The Intesa Sanpaolo Group’s product offering is completed by the ethical funds made available by Eurizon Capital SGR, the company specialising in asset management for retail and institutional customers, and by Banca Fideuram whose operations target high profile customers.
The ethical funds are mutual funds which invest in the financial instruments of issuers (companies, supranational organisations and governments) with a high social and environmental profile.
The “ethics system” of Eurizon Capital
From 1997 Eurizon Capital SGR has been the leading operator in Italy offering ethical funds that envisage clear, well-defined positive and negative selection criteria of the securities to be included in its portfolio (listed in the Prospectus and the Fund Management Regulations), a Sustainability Committee (external to and independent from the SGR) and the devolution of revenues. The experience gained in managing these products has over the years led to managers fine-tuning the selection criteria and, in 2002, adopting ethical benchmarks in order to provide objective financial measurement of the results.
Eurizon Capital’s range of ethical funds is now made up of an equity fund and two bond funds, all Italian. These products have the aim of gradually increasing the value of capital subscribed by implementing an investment policy based on strict ethical principles. All the products form part of the “Ethics System” and envisage that revenues are devolved.
Investments in ethical funds are selected on the basis of positive criteria (inclusive principle) to identify the presence of good social and environmental governance in companies or institutions under analysis and negative (exclusive principle) for those areas of activity that are considered to be in contrast with the ethical principles asserted by the funds. The “best in class” principle is also used to identify companies that, in certain markets at risk, stand out for their social-environmental initiatives. Environmental screening is entirely subject to the “best in class” principle given that all major listed companies have a notable impact on the environment, and this principle facilitates the selection of the most “virtuous” securities.
During 2014, the application of these criteria led to a variation in the investable universe, and consequently the inclusion or exclusion of certain issuing bodies from the fund portfolio. The reasons for inclusion include programmes to reduce greenhouse gases, the protection of biodiversity, the use of clean technologies, the involvement of suppliers and protection of minorities in the workforce. The reasons for exclusion include involvement in the arms sector, the breach of anti-trust rules, accounting fraud and discrimination in the granting of loans. The exclusions for 2014 were related to 6 companies for environmental issues, labour law disputes on fair conduct in market competition, product safety or exposure to controversial sectors.
Eurizon Capital supports its own institutional customers through the management of assets with environmental, social and governance (ESG) criteria, providing assistance in choosing among the available solutions and according to the expectations, needs and awareness of these issues of each customer. In 2014, Eurizon managed 5 institutional mandates with various ESG approaches.
Fonditalia Ethical Investment
Fonditalia Ethical Investment is the new socially responsible investment solution of the Fideuram Group which integrates income objectives with financial sustainability and social value aspects. The sub-fund invests in the bonds of those States that stand out for the special focus on social and environmental issues, in bonds issued by Supranational Bodies in favour of developing economies and in funds specialised in microfinance, fair trade funds, equity funds and shares with a positive impact at social and/or environmental level.
An Ethics Committee composed of managerial and other professionals with proven experience in social, economic, environmental and financial sustainability, including qualified academic professionals, is tasked with verifying consistency between the actual fund portfolio composition and the ethical principles characterising the same, thereby formulating, where applicable, its own opinions on the ethics of investments.
A further element characterising the ethics behind the sub-fund is given by its commitment to supporting scientific research, through the placement of share units and through the donation in favour of the AISM and its Foundation (FISM), the amount of which is proportional to the fund fees. The sub-fund assets as at 31 December 2014 amounted to 24.9 million euro.
Share ownership targets large institutional investors that request them. This activity translates mainly into engagement practices involving direct communication with the management boards of investee companies, posing questions and notes on topics of particular interest to customers on social, environmental and corporate governance issues.
The Intesa Sanpaolo Group Pension Fund - one of the primary pension funds of Intesa Sanpaolo personnel - is the first in Italy to adopt a share ownership strategy, interacting directly with a number of large companies included in the portfolio. The dialogue focused on the chain of suppliers and allowed assessment of the companies’ conduct and recommendations of improvement measures. For a more effective action, the Intesa Sanpaolo Group Pension Fund has also joined the Principles for Responsible Investments Initiative (PRI is an international network of institutional investors and managers, promoted by the United Nations, based on which the signatories cooperate to put the Principles for Responsible Investments into practice) and has become a member of the CDP, the international non-profit organisation that promotes the reduction of greenhouse gases and the improved management of water resources.
The FAPA’s equity and corporate portfolio in 2014 included 432 companies. 11 engagement initiatives were undertaken (2.55% of the total).