Our approach to impact and ESG assessment

Any responsible investment approach involves looking at how issuers take into account environmental, social and governance (ESG) issues.

Our Responsible Investment policy is regularly updated taking into account any advancement in research or new material issues. Mirova’s proprietary internal research methodology is used to rate issues on a proprietary sustainability scale that further defines the investment universe of the strategy and rank the positions within the portfolio. In an increasingly complex and demanding environment, we have recently enhanced this methodology with 3 main objectives:

  • to fine-tune the tracking and measurement of the impact of our investments
  • to reinforce controversy risk management
  • to ensure we are compliant with the European definition of sustainable investment

 As a natural evolution over the years since inception, stemming from demand by investors and regulatory agencies, Mirova’s Sustainability Research Team is confident that the enhancements made will assist with identifying new opportunities to address market drivers and mitigate risks, while generating a greater impact. The fundamental principles are, and will remain unchanged.

Whether investing in companies, local authorities, government bodies or projects, investors need to be able to understand the complexity of the sustainable development issues these players face and how each one addresses them—or fails to. At present, there is no universally accepted frame of reference for this.

Whether to encourage clear and simple reporting by issuers on their actions or to assist investors in considering these issues, no framework has yet established a standard practice, leaving the matter to individual choice1. As a company dedicated to responsible investment, we have sought to develop our own approaches and methodologies to describe the links between economic actors and ESG issues. In an industry where initiatives offering assessment frameworks are multiplying rapidly, we believe it necessary to be transparent about the principles and indicators we have chosen, which guide our investment decisions and the way we report to our clients as well as other stakeholders.

[1] In Europe, the Sustainable Finance Disclosure Regulation provides a high-level definition of "sustainable investment” in its article 2.17, which leaves room for interpretation