Ircantec, the French public sector supplementary pension scheme, has added ESG-related components to performance criteria for staff at its fiduciary agent, Caisse des Dépots (CDC).
In its sustainability report, the pension plan also revealed that it is working on developing a biodiversity policy to be adopted this year and has created a dedicated allocation to social bonds.
It also announced its financial results, reporting €15.48bn in assets at the end of 2023 following returns of 8.26%.
An idiosyncratic French public financial institution, CDC is often described as the fiduciary manager of French pension schemes such as Ircantec. Since 2010 Ircantec, CDC and the state get together to agree a multi-year contract setting out the terms for CDC’s mandate. The current one runs from 2022 to 2025.
In its sustainability report, Ircantec noted that its trustees are unpaid and that consideration was given to how sustainability risks could be better integrated in the pay components of key stakeholders.
A spokeswoman told IPE that individual goals for certain positions at CDC were defined at the beginning of the year and relate to further education on responsible investment as well as the ESG monitoring of the fund under the individuals’ responsibility.
The move comes after CDC adopted an innovative fee model for new credit and equity funds in 2022-23, with a portion of the outperformance fee conditional upon ESG-related performance.
In its sustainability report Ircantec noted that the EU Sustainable Finance Disclosure Regulation (SFDR) requires asset managers to set out how their remuneration policy is consistent with the integration of sustainability risks.
SFDR, biodiversity, social bonds
The pension scheme’s sustainability report also includes principal adverse impacts (PAI) disclosures. PAIs is a concept formalised by the SFDR, which requires financial market participants to make information available about how they address negative environmental and social impacts associated with their investments.
Ircantec is not covered by SFDR, but said it is “subject to the alignment of national law with European standards, which require the publication of information on the risks associated with climate change and on risks related to biodiversity in an annual report in a standardised format published within six months of the end of the financial year”.
In the lead-up to adopting a policy on biodiversity, Ircantec has organised working groups to study the portfolio’s exposure to different biodiversity risks, following the same process that was carried out for climate change in 2021.
The pension scheme said that this would allow for a more comprehensive integration of biodiversity into the management of its reserves, via exclusions and shareholder engagement, as well as regulatory compliance.
In 2021 a rule came into force in France that requires the country’s investors to report on biodiversity and impacts. Ircantec said it follows the recommendations of the Taskforce on Nature-related Financial Disclosures.
Ircantec’s move to launch a social bond fund follows its creation of a dedicated green bonds allocation almost 10 years ago. The social bond fund is for €250m, and is run by BNP Paribas Asset Management.
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