Responsible Investment: A Solution in Times of Crisis?
In an interview with Club Patrimonie, La Financière Responsable CEO Stéphane Prévost attributed the good performance of investments in SRI funds to the increased supply from institutions, as well as greater investor demand for ESG strategies. Improved communication and the profitability they have demonstrated during the crisis have, in Prévost’s opinion, been key aspects of this trend.
In the long term, these types of investments stand up well to an unprecedented situation such as the one we have experienced, he asserted in the interview. According to LFR, the ESG characteristic (companies that have long been at the forefront of social and governance issues, with virtues such as their relationship with suppliers) reflects flexibility, adaptability, and agility in a recovery scenario.
Management by conviction
Organizations with strong market capitalization report exceptionally well on extra-financial indicators, which enables managers such as LFR or MAPFRE AM to assess how they integrate this ESG commitment into their accounts. A study of stock market performance for this type of company shows that they have made it through this period well.
Management by conviction. This is how LFR works, studying the ESG factors of companies as elements that reveal the strategy of their senior management; in other words, how they seek to grow their business.
The health crisis has highlighted the importance of the “social” aspect. LFR uses a questionnaire and ranks the companies that work best in this area, with an agile, creative, and adaptable corporate culture. The French fund management boutique applies a specific methodology by sending questionnaires to companies based on these criteria.
“We are witnessing the power of questions. We see that, year after year, while there are organizations that remain silent on certain questions, many others are making great progress. It’s very interesting how we are encouraging involvement and thinking at length about the notion of impact. Once we have discussed this with the company, we also talk to the client to move companies forward and, for example, encourage the hiring of people with disabilities,” he explained.
LFR achieved profitability in a market that recorded declines of 4% and remains confident of its differential value thanks to proper management of the portfolio and choice of topics and trends that matter in the long term. These would also matter in a situation that would replicate this crisis: digitization of economies, energy efficiency and gas emissions, consumer goods, and medical activities and services.
For more than five years now, MAPFRE, through its manager, MAPFRE AM, has opted for this type of ESG funds. In 2017, it acquired 25 percent of the French management company, La Financière Responsable (LFR), a firm that already had more than ten years of experience in this field.
If you would like to watch the interview (available in French only), you can do so here.