Sustainable Investment Solutions delivering financial and ESG Performance
With a top-ranked ESG Research team, performing index solutions and a broad Sustainable and Positive Impact product offer – ranging from the most vanilla to the most customised proposal – our aim is to deliver sustainable investment solutions that fit the diverse ESG & SRI strategies of our clients.
SRI/ESG Research & Advisory
Socially Responsible Investing (SRI) issues, as well as Environmental, Social & Governance (ESG) factors, are material performance drivers.
Sitting alongside financial and macroeconomic considerations, ESG factors have become easier to quantify and should be considered when assessing any company. Since 2006, Societe Generale’s dedicated ESG research team has helped investors and asset managers to integrate financially material ESG criteria into investment decisions.
We have a strong track record. The Extel survey ranked our SRI Research teams in the top 5 for more than a decade.
Innovative Sustainable & Positive Impact Products
Societe Generale connects a wide range of issuers (sovereigns, supras, agencies, corporates) and investors (insurance companies, asset managers, private & retail banks...) through a comprehensive offer of vanilla to customised solutions.
Performing index solutions
The Societe Generale Index range covers a wide scope of assets, and includes Environment, Social and Governance (ESG) indices, based on Societe Generale’s in-house ESG research or on our comprehensive network of ESG partners.
• A wide array of formats is available to deliver the indices:
ETFs, Funds, Certificates, Structured Products, etc.
• Design custom indices: whether derived from a flagship index or created at the client’s request, these are developed to precisely match an investor’s objectives.
Tailored ‘Green’ or ‘Positive Impact’ custom investment solutions
Societe Generale has been issuing structured notes for more than 20 years, including ESG index-linked structured notes. Our latest structured solutions organize Sustainable or Positive Impact investments into 5 main formats.
1. Positive Impact notes: Societe Generale has created a range of products to allow clients to invest in a structured note whilst promoting Positive Impact Finance. Positive Impact notes are flexible and can be linked to a full range of performance engines. The bank commits to hold in its books an amount in Positive Impact Finance loans equivalent to 100% of the nominal amount of the Positive Impact notes.
2. Repack of a Green Bond: Societe Generale issues a bond-repacked note for which the yield of a third-party Green Bond (the reference bond) is used as a funding source.
3. Green, Social or Sustainable Notes issued by an external issuer:the issuer earmarks the note’s proceeds for green, social or sustainable projects, or is a recognised ‘pure player’ which exclusively funds such projects.
4. Socially Responsible Deposits: Societe Generale matches funds collected through the deposits with an equivalent amount in short-term loans to corporates that have received high ESG ratings, or in commodity finance transactions selected for their high sustainability standards. This offer allows our corporate clients to contribute to a new responsible lending approach.
5. Sustainability-Linked Derivatives: With derivatives whose features are contingent to the achievement of specified sustainability targets, Societe Generale strengthens its commitment to the sustainable transformation of its clients. Sustainability-linked swaps can notably hedge Sustainability-linked loans and bonds.
ESG innovation in Asset Management
As part of its responsible investor policy, Lyxor articulates its commitments around three pillars:
1. Designing innovative solutions with ESG criteria
• ESG ETFs: Lyxor is the only European ETF provider to offer thematic ETFs in line with four UN Sustainable Development Goals: water, new energy, climate change and gender equality. In 2018, Lyxor launched a broad ESG Leaders ETFs range, allowing investors to have a wider positive contribution to society. And the same year, the Lyxor Green Bond ETF received the “Greenfin” label, the first national certification for private investment in the green economy introduced by the French government.
• Equity active management strategies: The GARI stock selection, developed by Lyxor, integrates companies’ ESG ratings (best-in-class) and risks in the selection of investment universes. This rating model is characterised by sustained earnings while considering significant sustainability risks and chooses its investment universe by initially removing companies with the worst governance score.
• SMEs & mid-caps ESG integration: integrated in a dedicated French institutional mandate to finance SMEs & mid-caps, by analysing their ESG strengths and weaknesses and to encourage them to improve their ESG integration as well.
• Impact Multi-Manager vehicle providing innovative ESG integrations and selections to create an investment universe with measurable positive economic, social, or/and environmental impact (such investment approach known as “Impact Investing”).
2. Providing an ESG & Climate Assessment tool
Non-financial analysis enriches selection and contributes to robust management processes and long-term value creation. Therefore, Lyxor has implemented a proprietary methodology for assessing ESG (ESG scores, controversies and sensitive business exposure…) and Climate risks (carbon footprint, share of reserves, fossil fuel, environmental solution…) of most of its investment vehicles. The ESG & Climate Assessment tool covers all asset classes (including companies, countries, government organisations) and identifies ESG risks and opportunities. It also includes indicators on the risks associated with climate change. This means that investors can analyse their exposure to these risks and take advantage of ESG and Climate Reporting for their investment vehicles. Lyxor provides more than 300 funds’ assessment on ESG & Climate risks.
3. Acting as a committed and responsible shareholder
Lyxor has defined a shareholder engagement policy to express its expectations on the issuers in which it invests to ensure the extra-financial issues they must address are considered and treated with full transparency. By joining Climate Action 100+ in 2018, Lyxor became part of a community of investors who are asking more than 160 major greenhouse gas emitting companies worldwide to commit to concrete low CO2 emissions goals and help achieve the goals of the Paris Agreement.
In 2018, Lyxor exercised its right to vote on €14bn, in 200 European General Meetings with a total number of more than 2,400 voted resolutions.
LYXOR is a member of several international organisations, including academic ones, such as UN-PRI, Climate Action 100+, Climate Bond Initiative, Green Bond Principles, research Chairs linked to Sustainable and Responsible Finance with Polytechnique, Toulouse School of Economics and Dauphine.
For further information: www.lyxor.com