ESG Innovation in Asset Management

Lyxor, the Group’s asset management subsidiary, is a signatory to the Principles
for Responsible Investment under the aegis of the United Nations, and is
thus committed to respecting the following six principles: ESG Integration,
Shareholder Commitment, Transparency, Promotion of PRI, Collaboration,
ESG Reporting.

As part of its responsible investor policy, Lyxor's commitments are based on three pillars:

1.  Designing innovative solutions integrating ESG criteria
  • ESG ETFs: Lyxor offers its clients a number of thematic ETFs aligned with UN sustainable development goals: SDG 6 - clean water and sanitation, SDG 7 - clean and affordable energy, SDG 33 - measures related to fighting climate change, SDG 11 - sustainable cities and communities and SDG 5 - gender equality.  The LYXOR Green Bond ETF, the 1st ETF Green Bond in the world and the 1st one to obtain the French "Greenfin" label, raised : €300m this year, in total €500m in two Green Bond ETFs. The LYXOR UCITS ETF New Energy, with assets under management of more than €600m, has more than tripled in one year.  The LYXOR ETF MSCI Europe Leaders, initiated for a pension fund, has strongly diversified its investor base and doubled in size to reach nearly €1 billion.  The LYXOR UCITS ETF World Water, with assets under management of over €700 m.  In 2020, Lyxor was the first ETF issuer to develop a segment of ETFs designed to fight against climate change and be aligned with the carbon emission reduction targets of the Paris Agreements.

  • ACTIVE MANAGEMENT: With more than €14 billion in assets under management, LYXOR offers several types of strategies. For example, the "GARI "* stock selection model integrates companies' ESG ratings and their E&S risks in the selection of investment universes by removing the 20% of companies with the worst governance score. In terms of unlisted assets related to SME/Mid-Cap financing, LYXOR integrates ESG analyses before each investment decision.  This set-up is complemented by annual ESG due-diligence of companies and a strong commitment to them.

  • Lyxor Asset Management has collaborated with SEB, a leading financial services group, to launch a Multi-Manager strategy of Impact solutions in 2019. The strategy exploits a broad investment universe of listed stocks selected by five managers and aims to generate measurable and positive economic, social and/or environmental impact. The Fund covers a wide range of investments in areas such as clean energy, water, agriculture, resource efficiency and social improvement that are directly aligned with the sustainable development goals of the United Nations.

  • Lyxor Asset Management continued to incorporate ESG filters into its sovereign bond management.  This so-called HQLA (High Quality Liquidity Assets) strategy, which enables Lyxor to manage the regulatory liquidity buffer of more than twenty banks, is accessible via dedicated mandates or funds and is invested in investment grade sovereign bonds. 

2.  Acting as a committed and responsible shareholder

Lyxor has defined a voting and public engagement policy in order to express its expectations of the companies in which it invests and to ensure that the non-financial issues they face are addressed transparently.  Through its membership of Climate Action 100+ in 2018, Lyxor has joined a community of investors that requires more than 160 of the world's most greenhouse gas-emitting companies to commit to targets to reduce their CO2 emissions and contribute to the achievement of the Paris Agreement objectives. In 2020, Lyxor exercised its voting rights on more than €12 billion and participated in more than 400 shareholders meetings of European, Japanese and American companies for a total of more than 5,000 resolutions voted. Finally, Lyxor is a member of several international organisations such as: UN-PRI, Climate Action 100+, Climate Bond Initiative, Green Bond Principles, and participates in the academic work of the Sustainable and Responsible Finance Chairs of the Ecole Polytechnique, ESC Toulouse and the University Paris IX Dauphine.

3 - Integrating ESG at the heart of the Lyxor model

Lyxor has developed a proprietary methodology to measure the extra-financial (ESG ratings, sensitive controversies and exposures, etc.) and climate risks (carbon footprint, fossil reserves, environmental solutions, etc.) of its investment portfolios. It applies to all asset classes (including companies, countries, government organisations) and assesses ESG risks and opportunities. It also includes indicators on climate change risks. As such, investors can benefit from ESG and Climate reporting from their investments.

In 2020, Lyxor strengthened this methodology and implemented a comprehensive analysis of the climate change risks of its portfolios and their alignment with the objectives of the Paris Agreement. Lyxor offers ESG and Climate risk assessments on more than 325 funds.

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