Sustainability is an important value. We integrate ESG criteria into the investment process and apply them to a broad range of actively-managed funds through a strict selection of issuers.

As a signatory to the principles for responsible Investment (PRI)*, Eurizon adopted a methodology for the selection aimed to the mitigation of risks, including reputation risks. In this context, Eurizon incorporates environmental, social and governance factors into its investment analysis and decision-making.
We integrate ESG criteria into the investment process
Strategic Asset Allocation Tactical Asset Allocation Portfolio Management
DECISION-
MAKERS
Board of Directors Investment Committee,
Chief Executive Officer
Head of Investment
Macroeconomic analysis
Market analysis Balance
Equilibrium models
Technical analysis
Medium-short term trends
Market positioning
Market updates
Investment ideas
Sustainability criteria
Strategic views Tactic views Portfolio allocation
PROPOSING
ACTORS
Investment Committee,
Chief Executive Officer
Asset Managers
Analysts
Macro Research Team
Management Team
RISK CONTROL

Internal considerations for the choice of issuers
Screening
of issuers
Identification of issuers who are most exposed to ESG or who are not compliant with sustainable and responsible investment criteria.
Integration of sustainability risks into the Investment Process
Selection of financial instruments taking into consideration the integration of sustainability risks within the Investment Process of managed assets.
Monitoring
of investments
Control in the order preparation and portfolio valuation phases.
Screening of issuers

The controls adopted by Eurizon Capital, consistent with the following SRI/ESG Strategies, take into consideration:

  • - SRI exclusions and restrictions: issuers operating in sectors considered not "socially responsible" to which restrictions or exclusions are applied with respect to the Investment Universe of the single assets managed (so-called "SRI Binding screening"); exclusions are applied to all actively managed products, while for Limited Tracking Error products (except those that explicitly integrate ESG factors) and indexed products, the maximum direct investment allowed is equal to the issuer's weight in the benchmark; issuers operating in sectors considered not "socially responsible" are defined as those companies characterised by a clear, direct involvement in the manufacture of non-conventional weapons (anti-personnel landmines; cluster bombs; nuclear weapons; impoverished uranium; biological weapons; chemical weapons; invisible fragmentation weapons; blinding lasers; incendiary weapons; white phosphorous) or in the thermal coal sector;
  • - ESG exclusions and restrictions: "critical" issuers for which an escalation process is activated that determines restrictions and/or exclusions with respect to the Investment Universe of the individual assets under management (so-called "ESG Binding screening"); exclusions are applied to all actively managed products while for Limited Tracking Error products (except those that explicitly integrate ESG factors) and indexed products, the maximum direct investment allowed is equal to the weight of the issuer in the benchmark; "critical" issuers are defined as those companies characterised by a higher exposure to environmental, social and corporate governance risks, i.e. that present a lower level of ESG sustainability rating in the equity and bond investment universe.

Integration of sustainability risks into the Investment Process

The controls adopted by Eurizon Capital, consistently with the following SRI/ESG Strategies, take into consideration further selection/integration principles:

  • - Integration of ESG factors: integration of ESG factors in the analysis, selection and composition of managed portfolios with the aim of building portfolios characterised by an "ESG score" higher than that of their own investment universe (so-called "ESG integration"); this category also includes the process of selecting investments for ethical funds, based on specific positive and negative criteria specified in the offer documentation and defined in coordination with the Sustainability Committee;
  • - Carbon footprint: integration of methods for measuring carbon dioxide (C02) emissions generated by issuers, aimed at building portfolios characterised by a carbon footprint lower than that of their own investment universe (so-called "Carbon Footprint");
  • - Impact investing methodologies for selecting investments aimed at generating a social or environmental impact together with a measurable financial return (so-called "lmpact investing");
  • - Active shareholding: promoting a proactive interaction with the issuers, both through the exercise of intervention and voting rights and through comparison with the companies in which the company has a stake, encouraging effective communication with the companies' management (so-called "active ownership - engagement").

Monitoring of investments

The selected securities are constantly monitored.
The activity of monitoring the consistency of managed portfolios is supervised by the Compliance and Risk Management Function, both through ex-ante controls during the creation of orders for managed products and through ex-post controls during the valuation of the portfolios.

The main players involved in the ESG/SRI process
Board of Directors
Sustainable and Responsible
Investments Committee planned
for ESG/SRI products
Defines the proposals to be submitted to the Board of Directors on sustainable and responsible issues; monitors the exposure of assets against identified ESG indicators; monitors the Critical Issuers’ escalation process.

Within Eurizon thare are also: Sustainability Committee for Ethical products
Collaborates with the Board of Directors to ensure the compliance of management choices with ethical principles for Ethical products

Devolutions Committee
Oversees the activities of devolution and charity for funds of ethical system
Players
* The Principles for Responsible Investment (PRI) have been prepared by the United Nations in 2006 with the aim of promoting the dissemination of sustainable and responsible investment among investors.
The principles are:
1) Incorporation of environmental, social and governance factors into investment analysis and decision-making;
2) Integration of environmental, social and governance factors into active ownership policies;
3) Requesting investees to appropriately disclose information concerning their environmental, social and governance factors;
4) Promotion, acceptance and implementation of PRI in the investor community;
5) Collaboration with the financial community to improve PRI implementation effectiveness;
6) Disclosure of the Eurizon activity and progress reports in application of the principles.

To learn more, visit www.unpri.org.

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