afg-fir-eurosif transparency code · 2019-06-14 · sycomore am afg-fir-eurosif transparency code...

SYCOMORE ASSET MANAGEMENT

Agrément AMF n°GP01030

14 Avenue Hoche – 75008 Paris

www.sycomore-am.com

AFG-FIR-Eurosif Transparency Code

SYCOMORE ASSET MANAGEMENT

Sycomore Sélection Responsable

Sycomore Happy@Work

Sycomore Eco Solutions

Sycomore Shared Growth

Declaration of commitment Sycomore Asset Management has been active in Socially Responsible Investment (SRI) since 2008. SRI is a key feature in the strategic positioning and management of Sycomore Sélection Responsable, Sycomore Happy@Work, Sycomore Eco Solutions, and Sycomore Shared Growth (formerly Sycomore European Growth), as well as Sycomore Sélection Crédit, which is covered by a separate transparency code. This is our 8th edition of the SRI Transparency Code covering the period from December 31st 2017 to the publication date stated in this document. Our full answers to the SRI Transparency Code are provided below and are available in the annual reports for each of our open-ended SRI funds and on our website. Compliance with the Transparency Code Sycomore Asset Management is committed to transparency. We believe our disclosure of information is as transparent as possible given the current regulatory and competitive environment of the country in which we operate.

The Sycomore Sélection Responsable, Sycomore Happy@Work, Sycomore Eco Solutions and Sycomore Shared Growth funds comply with all the recommendations laid down in the Code.

Published on: October 22nd 2018

http://www.sycomore-am.com/

http://www.afg.asso.fr/index.php

https://www.frenchsif.org/isr-esg

SYCOMORE AM AFG-FIR-Eurosif Transparency Code

Sycomore Sélection Responsable, Sycomore Happy@Work, Sycomore Eco Solutions

and Sycomore Shared Growth

SOMMAIRE

FOREWORD

1. LIST OF FUNDS CONCERNED

1.1. SYCOMORE SELECTION RESPONSABLE

1.2. SYCOMORE HAPPY@WORK

1.3. SYCOMORE ECO SOLUTIONS

1.4. SYCOMORE SHARED GROWTH

2. GENERAL INFORMATION ON SYCOMORE AM

2.1. ASSET MANAGEMENT FIRM

2.2. HISTORY

2.3. OUR APPROACH AS RESPONSIBLE INVESTORS

2.4. RISK MANAGEMENT AND ESG OPPORTUNITIES

2.5. TEAM ENGAGEMENT

2.6. HUMAN RESOURCES DEPLOYED

2.7. INITIATIVES

2.8. SRI ASSETS UNDER MANAGEMENT

2.9. ASSETS UNDER MANAGEMEMNT: SRI RELATIVE TO TOTAL AUM

2.10. LIST OF SRI FUNDS AVAILABLE TO RETAIL INVESTORS

3. SRI EQUITY FUNDS

3.1. OBJECTIVES

3.2. ESG ASSESSMENT: INTERNAL AND EXTERNAL RESOURCES

3.3. ESG PRINCIPLES AND CRITERIA

3.4. ZOOM: CLIMATE CHANGE-RELATED PRINCIPLES AND CRITERIA

3.5. ESG ANALYSIS & ASSESSMENT METHODOLOGY

3.6. CONTROVERSIES: MANAGEMENT AND UPDATE FREQUENCY

4. INVESTMENT PROCESS

4.1. ESG CRITERIA AND PORTFOLIO CONSTRUCTION

4.2. ZOOM: INTEGRATION OF CLIMATE CHANGE ISSUES




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4.3. ISSUERS THAT ARE NOT ANALYSED

4.4. INVESTMENTS IN “SOLIDARITY ORGANISATIONS”

4.5. SECURITIES LENDING AND BORROWING

4.6. DERIVATIVES

4.7. INVESTMENTS IN OTHER UCITS

5. INTERNAL AND EXTERNAL CONTROL PROCEDURES ENSURING

PORTFOLIO ESG COMPLIANCE

6. IMPACT MEASUREMENT AND ESG REPORTING

6.1. ESG QUALITY ASSESSMENT AT FUND LEVEL

6.2. ESG PERFORMANCE INDICATORS

6.3. OUTCOMES FROM OUR VOTING AND ENGAGEMENT POLICIES

APPENDIX – PORTFOLIO INVENTORIES AS OF 30/06/2018




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FOREWORD

Founded in 2001, Sycomore Asset Management features among France’s leading asset management

companies. Approved by the AMF, Sycomore AM’s sole and core business is third-party asset

management.

Our primary concern is about building the value of our investments. In light of the changes in the

economic and regulatory environment, companies are currently facing a new set of challenges. In order

to broaden and deepen our fundamental analysis, Sycomore AM developed an ESG (Environment, Social

and Governance) research capability in 2008, which is embedded within our traditional financial

analysis efforts.

Sycomore AM takes a global approach to extra-financial analysis. We assign an ESG risk premium to all

companies within the investment universe, thereby impacting Sycomore’s full range without applying

investment constraints. The launch of our SRI-labelled funds, Sycomore Sélection Responsable,

Sycomore Happy@Work, Sycomore Eco Solutions and Sycomore Shared Growth in particular – the focus

of this Transparency Code – is consistent with the development of this approach. A separate

Transparency Code has been drawn up for Sycomore Sélection Crédit. The main constraints applying to

all SRI funds are ESG analysis criteria.

As a member of the AFG (Association Française de la Gestion financière) since the company was

founded, Sycomore AM naturally chose to become a signatory of the AFG-FIR Transparency Code for the

Sycomore Sélection Responsable, Sycomore Happy@Work, Sycomore Eco Solutions and Sycomore Shared

Growth funds. This commitment reflects our determination to be transparent with respect to the

integration of ESG criteria.

Emeric Préaubert

CEO, Sycomore Asset Management




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1. LIST OF FUNDS CONCERNED

1.1. SYCOMORE SELECTION RESPONSABLE


Dominant approach(es)

Classification Exclusions applied

by the fund

Fund AUM as of

31/12/2017

Labels Links

Positive selection (best in universe, best effort) ESG integration Exclusion Engagement

Eurozone equities

Controversial

weapons

Tobacco

Arms

GMOs Nuclear energy Coal, oil and non-conventional gas extraction Human Rights

€1,432 M SRI

Label

Austrian

Eco-label

(Umweltz

eichen)

- KIID

- Prospectus

- Investment

Report as of

29.03.2018

- Annual report

Sycoway as an

Investor for

2017

- Monthly report

as of 30.09.2018

1.2. SYCOMORE HAPPY@WORK

Sycomore Happy@Work

Dominant

approach(es) Classification

Exclusions applied by the

fund

Fund AUM as of

31/12/2017 Labels Links

Positive selection (best in universe, best effort) ESG integration Thematic Exclusion Engagement

International equities

Controversial

weapons

Tobacco

Arms


€164 M SRI Label

- KIID

- Prospectus - Investment Report as of 31.12.2017 - 2017 annual

report Sycoway

as an Investor

- Monthly report as of 30.09.2018

http://www.sycomore-am.com/files/documents/shared_documents/prospectus/sycomore_selection_responsable/prospectus_fr_sycomore_selection_responsable.pdf

https://www.sycomore-am.com/files/documents/shared_documents/rapports/rapport_fr_sycomore_selection_responsable.pdf



https://www.sycomore-am.com/files/documents/shared_documents/Article173/sycomore_selection_responsable.pdf



https://www.sycomore-am.com/files/documents/FR0010971705/reporting/reporting_fr_sycomore_selection_responsable_i.pdf

https://www.sycomore-am.com/files/documents/FR0010971705/reporting/reporting_fr_sycomore_selection_responsable_i.pdf

http://www.sycomore-am.com/files/documents/LU1301026206/kiid/kiid_fr_sycomore_happy_at_work_i.pdf

https://www.sycomore-am.com/files/documents/shared_documents/prospectus/sycomore_fund_sicav/prospectus_en_sycomore_fund_sicav.pdf

https://www.sycomore-am.com/files/documents/shared_documents/rapports/rapport_en_sfs_annual.pdf



https://www.sycomore-am.com/files/documents/LU1301026206/reporting/reporting_fr_sycomore_happy_at_work_i.pdf

https://www.sycomore-am.com/files/documents/LU1301026206/reporting/reporting_fr_sycomore_happy_at_work_i.pdf




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1.3. SYCOMORE ECO SOLUTIONS



Classification Exclusions

applied by the fund

Fund AUM as of


Positive selection (best in universe, best effort) ESG Integration Thematic Exclusion Engagement Impact investing

International equities

Controversial

weapons

Tobacco

Arms


€76 M SRI Label CEET Label

- KIID - Prospectus - Investment report as of 31.12.2017 - 2017 Annual

Report

Sycoway as an

Investor

- Monthly report as of 30.09.2018

1.4. SYCOMORE SHARED GROWTH

Sycomore Shared Growth (formerly Sycomore European Growth)


Classification Exclusions

applied by the fund

Fund AUM as of


Positive selection (best in universe, best effort) ESG Integration Thematic Exclusion Engagement Impact investing

Eurozone equities

Controversial

weapons

Tobacco

Arms


€151 M SRI Label ISR pending approval

- KIID

- Prospectus - Investment report as of 30.06.2017 - 2017 Annual report annuel Sycoway as an Investor - Monthly report as of 30.09.2018

https://www.sycomore-am.com/files/documents/shared_documents/prospectus/sycomore_fund_sicav/prospectus_en_sycomore_fund_sicav.pdf

https://www.sycomore-am.com/files/documents/shared_documents/Article173/sycomore_eco_solutions.pdf




https://www.sycomore-am.com/files/documents/LU1183791281/reporting/reporting_fr_sycomore_eco_solutions_i.pdf



https://www.sycomore-am.com/files/documents/FR0010117085/kiid/kiid_fr_sycomore_shared_growth_i.pdf

https://www.sycomore-am.com/files/documents/shared_documents/prospectus/sycomore_shared_growth/prospectus_fr_sycomore_shared_growth.pdf

https://www.sycomore-am.com/files/documents/shared_documents/rapports/rapport_fr_sycomore_shared_growth.pdf



https://www.sycomore-am.com/files/documents/shared_documents/Article173/sycomore_shared_growth.pdf




https://www.sycomore-am.com/files/documents/FR0010117085/reporting/reporting_fr_sycomore_shared_growth_i.pdf







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2. GENERAL INFORMATION ON SYCOMORE AM

2.1. ASSET MANAGEMENT FIRM

Sycomore AM is an entrepreneurial asset management company, approved and regulated by the AMF

since July 2001 (Approval No. GP-01-30). Sycomore AM is a public limited company (société anonyme)

with a capital of €3,600,000.

The company's offices are located at 14 Avenue Hoche – 75008 Paris, France.

Website: http://www.sycomore-am.com

2.2. HISTORY

Since the creation of the company and as shown in the chart below, Sycomore AM has applied a

consistent responsible investment approach based on the industry’s best practices.

http://www.sycomore-am.com/




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Sycomore AM’s general approach is consistent with the firm’s corporate social responsibility policy

(CSR). For more information, the Sycomore as a Company report which lays out Sycomore AM’s

corporate responsibility, is available on our Responsible Investment page.

2.3. OUR APPROACH AS RESPONSIBLE INVESTORS

Our approach as a responsible investor is global, integrated and lies at the heart of our investment

philosophy. Our financial and ESG research serves our conviction-driven investment choices. As a

responsible investor, our objective is to meet our clients’ performance objectives while giving a sense

of purpose to their investments. Sycomore AM has formalised this approach in the documents presented

below:

ESG integration policy

Exclusion policy applicable to companies involved in anti-personnel mines

SRI exclusion policy

Voting policy

Engagement policy

Human Capital Strategy

Natural Capital Strategy

Details of “Our approach as responsible investors” are provided here: https://en.sycomore-

am.com/Our-responsible-approach. The documents listed above and described below can also be

downloaded from this page.

ESG integration policy

Sycomore AM’s integration policy lies at the heart of the firm’s mission statement: to bring a human

dimension to investment. It provides a basis for dialogue with Sycomore AM’s stakeholders and serves

as a framework for the firm’s approach as a responsible investor. The document also presents the

principles, analysis tools and human resources dedicated to ESG integration, as well as a summary of

Sycomore AM’s transparency, voting, engagement and exclusion policies.

Exclusion policy applicable to companies involved in anti-personnel mines

Consistent with the Ottawa Treaty (1997) and the Oslo Convention (2008), Sycomore AM excludes all

direct investments in shares or bonds issued by companies that produce, sell, stockpile or transfer

cluster bombs and anti-personnel mines. The Exclusion policy applicable to companies involved in anti-

personnel mines provides details on the businesses excluded and the manner in which Sycomore AM

manages these exclusions.

https://en.sycomore-am.com/5bf81235-RAPPORT_SYCOMORE_AS_A_COMPANY_UK_WEB_A4.pdf

https://en.sycomore-am.com/Our-responsible-approach?sid=1jrmmu8u6vu5tr5cgt0c5gu1uh

https://en.sycomore-am.com/Our-responsible-approach

https://en.sycomore-am.com/Our-responsible-approach

https://en.sycomore-am.com/5c531686-ESG_integration_policy_SPICE_Sycomore_AM_aug2018_ENG.PDF

https://en.sycomore-am.com/58eb37bf-57f3688a-Exclusion_Policy_Controversal_Weapons_2015.PDF

https://en.sycomore-am.com/58eb37bf-57f3688a-Exclusion_Policy_Controversal_Weapons_2015.PDF




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SRI exclusion policy

Sycomore AM’s SRI exclusion policy is applicable to all investments held by the SRI-labelled funds. The

document provides details on the activities excluded from the funds and the impact of these exclusions

on our investment universe.

Exclusions cover the following areas:

Armament and weapons; Coal extraction; Coal heat and power generation; Genetically modified organisms (GMOs); Nuclear industry; Oil extraction from tar sands; Shale gas and shale oil extraction; Tobacco products; United Nations Global Compact violations.

Voting policy

Sycomore AM’s voting policy naturally takes its inspiration from the AFG’s recommendations on

corporate governance, as Sycomore AM has been a member of the organisation since its launch. This

document is flexible and reviewed every year to take into account changing practices in the fields of

investment and corporate governance. We exercise our voting rights independently and in the exclusive

interests of our clients.

In 2015, Sycomore AM extended the scope to all domestic and international companies held in the

portfolios. Our ESG team is responsible for analysing the resolutions and executing the votes, with

support from ISS, the proxy voting agency.

Engagement policy

The objective of Sycomore AM’s engagement policy is to maintain a constructive and structured

dialogue with the companies in order to promote further transparency, a more formal approach to

sustainable development challenges and the continued improvement of their ESG practices.

Sycomore AM meets management teams on a daily basis and encourages them to improve transparency

and formalise their policies with respect to sustainable development issues.

Since early 2016, we record all of our engagement initiatives in the specific “Engagement” section of

our Sycovalo tool, used to research issuers. This enables the investment team to keep track of the areas

earmarked for improvement and measure the progress that has been made by the companies in this

regard.

https://en.sycomore-am.com/5bcddf07-SRI_exclusion_policy_Sycomore_AM_Sept_2018_VENG.PDF

https://en.sycomore-am.com/5cb749fb-Politique_de_vote_SAM_2019_EN.pdf

https://en.sycomore-am.com/58eb371b-57922823-Sycomore_AM_Engagement_Policy.pdf




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Human Capital Strategy

Alongside our ESG integration policy, our Human Capital strategy presents our philosophy and our

methodology for analysing human capital in the corporate world; it is addressed to all of our

stakeholders, and notably to the companies we target in the context of our investment process. As a

foundation to this collaborative dialogue, the summary discusses our vision of the key challenges that

can arise between a company and its employees. As a didactic interface with our contacts and a

purveyor of best practices, our Human Capital strategy also guides our own in-house developments and

our investment strategies.

Natural Capital Strategy

In addition to our ESG integration policy, our Natural Capital strategy summarises our approach and

how we account for environmental and natural capital related considerations. It is fully consistent with

our philosophy and positioning as a responsible investor. The Strategy is addressed to all of our

stakeholders: employees, clients, suppliers, institutions, associations, shareholders and companies

within our investment universe. It not only guides how we engage with our stakeholders, but also how

we manage our own internal developments and our investment strategy.

2.4. RISK MANAGEMENT AND ESG OPPORTUNITIES

At the heart of our mission “to bring a human dimension to investment”, our ambition is to give meaning

to our clients’ portfolios by creating sustainable and shared value. We seek to invest in companies

whose fair value or fundamentals are under-appreciated by the market and that therefore offer

potential upside. To achieve this, looking beyond the financial reports, our fund managers examine

how these companies interact with their stakeholders; they seek to understand the resilience of their

business models and their social, societal, as well as environmental impacts.

https://en.sycomore-am.com/5b9248e2-Human_Capital_Strategy.PDF

https://en.sycomore-am.com/5b34f956-Natural_Capital_Strategy_2018.pdf




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Extra-financial or ESG factors enable us to identify risks or opportunities that are not yet visible in the

financial statements. Convinced that a company can only create long-term value if this value is shared

among all its stakeholders, we have structured our SPICE fundamental analysis model around five

pillars: Society & Suppliers, People, Investors, Clients and the Environment.

Our approach is global and

integrated; it aims at

addressing the risks and

opportunities faced by

companies within our

investment universe in the

broadest possible way.

2.5. TEAM ENGAGEMENT

Driven by its entrepreneurial spirit, Sycomore AM leverages on the high levels of engagement shown by

its founding partners and its teams to assert its leadership in the field of responsible investment.

Working together around a clearly defined mission – to bring a human dimension to investment – all of

Sycomore’s teams (sales, compliance, investment, IT, marketing, middle office, risks) are driven by a

common goal: to deliver performance while bringing a sense of purpose to our clients’ investments.

Training sessions are organised on a regular basis by the ESG research team in order to deepen our

teams’ knowledge and understanding of ESG/SPICE issues and the way in which these considerations

are integrated to our fundamental analysis. Detailed sessions on the methodology used to analyse SPICE

criteria are provided more specifically to the investment team.




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2.6. HUMAN RESOURCES DEPLOYED

Sycomore AM’s responsible investment strategy is an integral part of our corporate mission. All team

members take part in its implementation, each in their respective roles. Fully integrated to a broader

team of 21 fund manager-analysts, the ESG unit employed 7 dedicated investment professionals as of

December 31st 2017.




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2.7. INITIATIVES

As we strive to raise awareness and promote responsible investment, Sycomore AM has chosen to be a

strong player, taking part in industry think tanks and promoting these new investment practices to the

widest audience. We are therefore involved in many initiatives, including:

General initiatives Environment/climate-related

initiatives Social initiatives

PRI – United Nations’ Principles for Responsible Investment FIR – Forum pour l’Investissement Responsable (member and Director, member of the General Public, Research and Engagement commissions) AFG – Association française de gestion financière (member of the Responsible Investment Committee and Taskforce on Article 173) SFAF – Société Française des Analystes Financiers (member of the Sustainable Development Commission) SRI Label (member of the taskforce run by the label’s scientific committee on impact indicators) GIIN – Global Impact Investing Network

IIGGC – Institutional Investors Group on Climate Change CDP (carbon, forests, water) Montreal Carbon pledge Signature of TCFD – Task Force on Climate-related Financial Disclosures recommendations ACT Project – Assessing low-Carbon Transition Took part in the High-Level Expert Group for sustainable finance consultation process

Human Capital Management Coalition (member) PRI collective shareholder engagement on sustainable taxation Workforce Disclosure Initiative (signatory)

For more information on our involvement in these initiatives and on events that took place in 2017,

please refer to our Sycoway as an Investor report (pages 8 and 9).

SRI promotion and communication

As we seek to communicate regularly and provide quality publications, we are frequent speakers at

roundtables and conferences related to SRI; we also take part in many interviews and debates with the

media during fund fairs or forums for retail investors. We regularly publish our SRI Way Newsletters

focusing on specific sustainable development issues. These newsletters enable us to outline how we

address these challenges as an investor and to hear from some inspiring companies.

2.8. SRI ASSETS UNDER MANAGEMENT

The table (opposite) shows our assets under management for each level of SRI integration (inclusion of

sustainable development issues). Our strategies come with three levels of SRI integration:

https://en.sycomore-am.com/5be1c5f9-Sycoway_as_an_Investor_UK_web.pdf




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Sustainable development driven selection: as explained above, the SRI-labelled funds and SRI

mandates apply screenings based on specific SPICE related criteria, with a view to selecting

“sustainable” companies. Some funds have also received environmental labels (the French TEEC

- Transition Energétique et Ecologique pour le Climat and the Austrian Umweltzeichen labels.

Systematic “sustainable development” integration: all long only, credit and flexible funds are

managed using valuation data that include companies’ SPICE ratings, yet their investment

universe carries no restrictions in relation to SPICE criteria. This systematic integration offers

more meaningful insights into the risk/return combination and has an impact on investment

decisions.

Partial “sustainable development” integration: the analysts-fund managers of our long short

and co-managed funds have access to our valuation tools, which include the SPICE rating;

however, their use is not systematic and as a result, the integration is only partial.




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2.9. ASSETS UNDER MANAGEMEMNT: SRI RELATIVE TO TOTAL AUM

Sycomore AM’s range of Socially Responsible labelled funds has grown steadily: at end 2017, AUM in

these SRI strategies now weigh 36% of total assets under management (up from 25% at end 2016).

2.10. LIST OF SRI FUNDS AVAILABLE TO RETAIL INVESTORS

Sycomore AM has published the list of its open-ended funds on the company’s website, including

information on how these strategies address long-term SRI challenges. Five funds are SRI-certified:

Sycomore Sélection Responsable;

Sycomore Sélection Crédit (the strategy has its own transparency code);

Sycomore Happy@Work;

Sycomore Eco Solutions;

Sycomore Shared Growth.

3. SRI EQUITY FUNDS

3.1. OBJECTIVES


Launched in January 2011, the Sycomore Sélection Responsable fund displays the following

characteristics:

LEGAL FORM Fonds commun de placement (FCP)

INCEPTION January 24th 2011

EUROPEAN PASSPORT Yes

FUND OF FUND No

AMF CLASSIFICATION Eurozone equities

EUROSIF/EFAMA CATEGORY SRI conviction

BENCHMARK EURO STOXX TR

PEA ELIGIBILITY Yes

MINIMUM SUBSCRIPTION 1 share (up to 5 decimals)

I SHARE CLASS ISIN code Management fees Performance fees Max. subscription/redemption fees Charity share ID share class ISIN code Management fees Performance fees Max. subscription/redemption fees

FR0010971705 1.00% (VAT incl.) 20% (VAT incl.) on returns above the EURO STOXX TR index 7% / Nil No FR0012719524 1.00% (VAT incl.) 20% TTC on returns above the EURO STOXX TR index 7% / Nil




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Charity share RP share class ISIN code Management fees Performance fees Max. subscription/redemption fees Charity share R share class ISIN code Management fees Performance fees Max. subscription/redemption fees Charity share A SHARE CLASS ISIN code Management fees Performance fees Max. subscription/redemption fees Charity share SHARES OF SYCOMORE FUND SICAV IC SHARE CLASS ISIN code Management fees (master fund) Performance fees Max. subscription/redemption fees Charity share ID share class ISIN code Management fees (master fund) Performance fees Max. subscription/redemption fees Charity share RC share class Code ISIN Management fees (feeder fund) Management fees (master fund) Performance fees Max. subscription/redemption fees Charity share RD share class ISIN code Management fees (feeder fund) Management fees (master fund) Performance fees Max. subscription/redemption fees Charity share

No FR0010971721 2.00% (incl. VAT) 20% (incl. VAT) on returns above the EURO STOXX TR 3% / Nil Yes FR0011169341 2.00% (incl. VAT) 20% (incl. VAT) on returns above the EURO STOXX TR 3% / Nil No FR0013076452 1.50% VAT incl. 20% (VAT incl.) on returns above the EURO STOXX TR 5% / Nil No LU1440642087 1.00% VAT incl. 20% (VAT incl.) on returns above the EURO STOXX TR 7% / Nil No LU1440644372 1.00% VAT incl. 20% (VAT incl.) on returns above the EURO STOXX TR 7% / Nil Non LU1440644455 1.00% VAT incl. 1.00% VAT incl. 20% (VAT incl.) on returns above the EURO STOXX TR 3% / Nil No LU1440644612 1.00% VAT incl. 1.00% VAT incl. 20% (VAT incl.) on returns above the EURO STOXX TR 3% / Nil No

Sycomore Sélection Responsable is a conviction-driven SRI fund. This concentrated portfolio focuses on

a selection of stocks picked on the basis of ESG research (Environment, Social and Governance) and in

keeping with the principles of sustainable development. Our approach values quality CSR practices and

aims at outperforming the benchmark over a 5-year investment horizon. Stock selection is carried out

in two stages in order to prevent the risk of a company failing to account properly for sustainable

development issues (negative risk screening), but also with a view to selecting potential drivers for

value creation (selection screening).




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Sycomore Happy@Work

Launched in July 2015*, Sycomore Happy@Work displays the following characteristics:

LEGAL FORM Société d’Investissement à Capital Variable (SICAV)

INCEPTION 06/07/2015*


FUND OF FUND No

AMF CLASSIFICATION -



PEA ELIGIBILITY Yes

MINIMUM SUBSCRIPTION 1 share (decimalisation: up to 5 decimals)

I SHARE ISIN code Management fees Performance fee Max. subscription/redemption fees Charity share R SHARE ISIN code Management fees Performance fee Max. subscription/redemption fees Charity share

LU1301026206 1.00% VAT incl. 20% (VAT incl.) on returns above the EURO STOXX TR index 7% / Nil No LU1301026388 2.00% VAT incl. 20% (VAT incl.) on returns above the EURO STOXX TR index 3% / Nil No

*Performances prior to 04.11.2015 are those recorded by an identical French-domiciled fund which was closed on

that date and assets transferred to the Luxembourg sub-fund; the French fund was launched on 06.07.2015.

Sycomore Happy@Work is a conviction-driven SRI fund. Stocks are selected based on ESG analysis

(Environment, Social and Governance), with a strong focus on social/labour considerations. In

particular, the fund looks at how companies value their human capital; it aims to outperform its

benchmark over a 5-year investment horizon. Stock selection is a two-stage process designed to prevent

the risk of a company failing to account properly for sustainable development issues (negative risk

screening), but also with a view to selecting potential drivers for value creation – notably companies

with innovative HR practices and fostering durable employee engagement (selection screening). The

research process also draws on input from experts, human capital managers, employees and on-site

visits.


Launched in August 2015, Sycomore Eco Solutions displays the following characteristics:

LEGAL STRUCTURE Société d’Investissement à Capital Variable (SICAV)

INCEPTION 31/08/2015





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FUND OF FUND No

AMF CLASSIFICATION -


BENCHMARK MSCI Daily Net TR Europe Index

PEA ELIGIBILITY Yes


I SHARE ISIN code Management fees Performance fee Max. subscription/redemption fees Charity share R SHARE ISIN code Management fees Performance fee Max. subscription/redemption fees Charity share A SHARE ISIN code Management fees Performance fee Max. subscription/redemption fees Charity share

LU1183791281 1.00% VAT incl. 20% (VAT incl.) on returns above the MSCI Daily Net TR Europe Index 7% / Nil No LU1183791794 2.00% VAT incl. 20% (VAT incl.) on returns above the MSCI Daily Net TR Europe Index 3% / Nil No LU1183793220 1.50.% VAT incl. 20% (VAT incl.) on returns above the MSCI Daily Net TR Europe Index 5% / Nil No

Sycomore Eco Solutions is a conviction and impact-driven SRI fund. The strategy offers access to a

selection of stocks based on ESG analysis (Environment, Social and Governance) with a focus on business

models that contribute to the energy and environmental transition and therefore obtained the TEEC

label.

By focusing on ‘green solutions’ in dynamic segments, the fund aims to outperform its benchmark over

a 5-year investment horizon. Stock selection is a two-stage process designed to prevent the risk of a

company failing to account properly for sustainable development issues, notably businesses that destroy

natural capital (negative risk screening), but also with a view to selecting opportunities for value

creation aligned with the energy and environmental transition (selection screening).


Launched in June 2002, Sycomore Shared Growth displays the following characteristics:

LEGAL STUCTURE Fonds commun de placement (FCP)

INCEPTION June 24th 2002


FUND OF FUND No

AMF CLASSIFICATION Eurozone equities





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PEA ELIGIBILITY Yes


I SHARE ISIN code Management fees Performance fee Max. subscription/redemption fees Charity share ID SHARE ISIN code Management fees Performance fee Max. subscription/redemption fees Charity share R SHARE ISIN code Management fees Performance fee Max. subscription/redemption fees Charity share A SHARE ISIN code Management fees Performance fee Max. subscription/redemption fees Charity share

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Sycomore Shared Growth is an SRI conviction-driven fund. The strategy offers access to a concentrated

selection of stocks picked on the basis of ESG analysis (Environment, Social and Governance) focusing

on companies demonstrating a positive societal impact.

By identifying companies with a positive societal impact, able to drive sustainable performance, the

fund aims to outperform its benchmark over a 5-year investment horizon. Stock selection is a two-stage

process designed to select high-visibility growth stocks (selection screening) and remove those with an

inadequate societal impact (exclusionary screening).

3.2. ESG ASSESSMENT: INTERNAL AND EXTERNAL RESOURCES

Investment duties are performed based on a team approach. All fund managers are involved in the

fundamental analysis and valuation models. The investment team as a whole receives training from the

ESG research specialists on our SPICE analysis process. Fully integrated to the investment team, the

ESG research group supports the portfolio managers and helps them monitor companies based on their

sustainable development performances.




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To carry out these tasks effectively, the investment team relies on the sources and partners shown

below.

As far as our ESG analysis is concerned, the model is primarily fed from data published by the companies

and obtained through our meetings with their management. We systematically send companies requests

for additional information when the specific data we have access to does not enable us to conduct

comprehensive research. Lack of transparency on the part of the company reflects poorly.

Furthermore, on-site company visits are an important aspect of the research team’s work. We also

draw on information reported in the daily and financial press, in NGO reports or obtained through

expert networks such as Thirdbridge. In terms of external research, we use ESG specialist brokers,

Oekom’s analysis on the contribution of products and services to the United Nations’ Sustainable

Development Goals, and MSCI’s research on controversies. For our votes at shareholders’ meetings, we

use the services of the proxy voting specialist ISS. We use data available from Bloomberg, Factset or

Trucost as input for our ESG performance reports. The development of our environmental impact metric

(Net Environmental Contribution – NEC) draws on the expertise of I Care & Consult and Quantis, in

partnership with BNP Paribas Securities Services.




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3.3. ESG PRINCIPLES AND CRITERIA

In order to provide a clear assessment of the fundamental risk carried by our investments, our

investment team assigns ratings to each company at the end of the analysis process. These SPICE ratings

are based on the analysis of over 80 qualitative or quantitative criteria, structured around the five

stakeholders. These ratings are assigned on a scale of 1 to 5 and their weighted average, based on the

company’s underlying sector and business lines, constitutes the overall SPICE rating.

The ratings assigned to the SPICE pillars take the following factors into account:

Society & Suppliers (S)

The S rating reflects the performance of the company with respect to its suppliers and civil

society. The criteria analysis includes:

The societal contribution of products and services: based on an assessment of the

company’s turnover and sales, we review the contribution of each business line to

societal priorities, and in particular the 17 Sustainable Development Goals (SDGs) drawn

up by the United Nations – a joint roadmap used by public and private entities with a

horizon in 2030.

Corporate citizenship: we appreciate companies that have developed a positive societal

impact mission that is both clearly defined and embedded within their strategy. The

company also has to meet its primary obligations to society by ensuring it complies with

human rights, contributes to the financing of local economies through responsible

taxation, and fights climate change. Our analysis also takes positive externalities into

account: for example, we may value durable commitments to charity work, or

involvement in sustainable development initiatives.

The outsourcing chain: we analyse the extent to which a company manages its supply

chain and any associated risks. We value the companies that have implemented

responsible sourcing policies and those that engage with their contractors, with a view

to improving their practices in compliance with sustainable development principles.

People (P)

The P rating focuses on a company’s employees and its management of human capital. The

assessment of the People pillar covers the following criteria:

The integration of people-related issues: we appreciate companies whose directors have

embedded human capital at the very heart of their corporate strategy and pay

attention to the fulfilment of their employees. In exposed industries, we also assess the

culture and performance in terms of safety at work – temporary workers and




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subcontractors included - which offers a meaningful insight into the quality of

management at grassroots level.

The Happy@Work environment: This part of the analysis process is designed to assess the

company’s ability to create a working environment that is conducive to fostering talent

and to the development of skills. We believe this requires the definition of a strong

corporate culture that gives meaning and autonomy to the duties workers are expected

to accomplish. We also appreciate clear structures, training initiatives, assistance with

mobility, quality labour relations and working environments, equal opportunities and

treatment, as well as profit sharing.

Measuring employee engagement: we pay considerable attention to measuring

employee engagement, notably via surveys. These help to highlight precise risks and

tensions with a view to setting up corrective measures suited to the reality in the field,

and to measure team engagement levels over time.

For more information on our approach to human capital related issues, please refer to our Human Capital strategy.

Investors (I)

The I rating focuses on the relation between companies and their shareholders. The rating is

assigned based on an in-depth analysis of the company’s shareholder and legal structure and of

the interactions and power relations between different players: management, shareholders and

their representatives, directors. Our research covers the following aspects:

The business model: we analyse the strength of a company’s business model based on its

income structure, competitive positioning, growth drivers – such as innovation and

opportunities for external growth – and the company’s ability to create value.

Governance: here, we assess the quality of a company’s governance based on its

management and its board of directors or supervisory board. We look at the balance of

power and the execution of the company’s strategy. Importantly, when analysing a

company’s long-term performance, we ensure it acknowledges the interests of all

stakeholders by sharing value equitably and that sustainable development issues are

embedded within its strategy. We therefore analyse the quality of the company’s

financial communication and the alignment of management’s interests with those of

the shareholders by examining the shareholder structure, its executive shareholding and

the compensation policy. Drawing from our analysis of the company’s capital structure,

we also assess the bondholder risk.






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Clients (C)

The C rating focuses on the company’s clients as stakeholders. We take the following criteria into

account:

The offer: we seek to identify the company’s market positioning by examining its offer

and brands relative to the competition, but also by analysing the quality of its marketing,

its distribution channels and how the offer has adapted to the digitalisation of the

economy.

Client relations: we also assess the quality of the company’s offer by looking at the tools

and means deployed to serve clients and their degree of satisfaction. We prefer

companies that diversify their client base while ensuring they maintain durable relations

with their clients.

Environment (E)

The E rating assesses how the company stands with regards to natural capital. It takes into

account the in-house management of environmental aspects and the positive or negative

externalities of the company’s business model.

Integration of environmental issues: we analyse the degree of involvement shown by

executives in the management of environmental risks and opportunities. This is achieved

by measuring the importance of these issues for the company: we appreciate those that

have integrated environment-related factors at the highest level across the company’s

strategy, culture and operations.

Environmental impact of the business model: we assess a company’s environmental

impacts through a Life Cycle Analysis that integrates impacts on an upstream (supply

chain) and downstream (use of products and services) basis. We take into account positive

and negative impacts. This assessment is based on the Net Environmental Contribution®

in particular. This indicator measures the extent to which a company’s different business

lines are aligned with the energy and environmental transition and the fight against global

warming. It ranges from -100% for businesses that are highly damaging to natural capital,

to +100% for companies with a strong positive net impact, offering clear solutions to

environmental and climate-related challenges.

Level of exposure to mid and long-term environmental risks: we analyse the company’s

exposure to idiosyncratic and exogenous risks and how these are addressed and managed.

For more information on our approach to environmental issues, please consult our Natural Capital

strategy.






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NB. Human rights issues are dealt with in the S pillar of our ESG analysis, i.e. in relation to the Suppliers

& Society (S) and People (P) stakeholder groups of the SPICE rating. These two groups cover issues of

equity, diversity, freedom of expression and association, working conditions within the company and

its supply chain, and the respect of local communities.

3.4. ZOOM: CLIMATE CHANGE-RELATED PRINCIPLES AND CRITERIA

Understanding the environmental impacts of corporate activity is essential for transparency,

accountability, risk management or investment strategy purposes. When designing a new investment

strategy focusing on the environmental and energy transition in 2015, Sycomore AM developed the Eco

Solutions methodology based on a comprehensive environmental impact philosophy. The approach was

two-fold: first, it covered the full scope of the impact – i.e. the life cycle of products and services

under analysis; second, it took into account both negative and positive impacts. In 2016, after running

successful tests on the initial metric (known as the Contribution to the Environmental and Energy

Transition, CEET), we extended and enhanced the indicator to create the Net Environmental

Contribution (NEC), which measures the extent to which a business model is aligned with the

environmental and energy transition and with climate-change targets. The NEC was launched in 2017.

Expressed as a percentage of a company’s income and ranging from -100% for a business that is

particularly harmful to natural capital, such as the production of electricity from coal or the

manufacture of pesticides, to +100% for businesses with high positive net environmental impacts

offering pertinent responses to today’s environmental and climate-related challenges, such as the

production of wind turbines or organic foods. This metric is used to build investment strategies and

provides input for the environmental impact reporting produced for our clients.

(1) Average market offers estimated for each business category or value chain.




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Designed in partnership with I Care & Consult and Quantis and drawing upon their specific expertise,

the Net Environmental Contribution measures the environmental impact at business, portfolio and index

level. Designed by “practitioners” for responsible investment professionals, this method reviews the

activities of the company under analysis, business by business, and each of their physical impacts. Each

significant impact is measured based on the most representative physical unit for each functionality:

km.passengers for the transportation of people, tonnes.km for freight, weight for manufacturing, MWh

for electricity, m2 for construction, etc. This ambitious work, begun in 2016, received a special

distinction from the chair of the jury for the Best International Climate Investor reporting award. In

2017, the collaborative work on the NEC was broadened after we signed a partnership with BNP Paribas

Securities Services in order to accelerate the deployment of the indicator.

3.5. ESG ANALYSIS & ASSESSMENT METHODOLOGY

A unique tool shared by the investment team: SYCOVALO

The financial analysis and evaluation of listed stocks is carried out using a dedicated tool: SYCOVALO.

This database includes all past, current and prospective financial and ESG data for the companies under

analysis.

The tool acts as a “collective memory” for the investment team; it pools together historical and

analytical information from which each fund manager can then extract investment ideas for the

different strategies. Updated on a daily basis, SYCOVALO enables its users to compile, extract and

archive a wide range of data on every single company under review:

Quantitative financial data: 10-year account statement history, 3 years of forecasts,

comparison with consensus, valuation ratios, profitability levels, growth…

Qualitative data and extra-financial information: minutes from interviews or on-site visits,

analysis of competitive positioning, growth outlook, SPICE-based stakeholder performance

assessment …

New options and modules are added to our tools on a regular basis, particularly to Sycovalo. To ensure

all Sycomore AM employees have a full working understanding of this tool, which is at the very heart

of our working processes, and in order to ease the transition for newly-arrived personnel, training

modules have been developed and are directly accessible in the tool.

SPICE: ESG analysis embedded within our fundamental research

As detailed above, ESG analysis is fully integrated to our SPICE model for fundamental research. This

fundamental analysis is designed to understand and assess strategic challenges, business models, the

quality and commitment shown by management teams, and the risks and opportunities faced by the

company.




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To achieve this, our investment team regularly meets the management of the listed companies actively

covered by our fund manager-analysts; in this respect, we carry out around 2,000 meetings per year.

In order to provide a clear assessment of the fundamental risk carried by our investments, our

investment team assigns ratings to each company at the end of the analysis process. These SPICE ratings

are based on the analysis of over 80 qualitative or quantitative criteria, structured around the five

stakeholders. These ratings are assigned on a scale of 1 to 5 and their weighted average, based on the

company’s underlying sector and business lines, forms the overall SPICE rating.

Furthermore, the criteria used to analyse the company’s relations with its other stakeholders as part

of the SPICE rating have a decisive impact – via the beta - on the risk premium and target stock prices

set on the basis of the valuation work carried out by the analyst-fund managers. The SPICE rating has

a direct impact of +/- 20% on stock valuations, and therefore on the target prices. To summarise, ESG

integration takes place at individual stock level and has a direct bearing on the fund managers’

investment decisions.




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The following chart illustrates our ESG integration methodology:

3.6. CONTROVERSIES: MANAGEMENT AND UPDATE FREQUENCY

ESG rating revisions

Our stock analysis is adjusted permanently, based on news flow, company statements / information

and management meetings. The integration and analysis of controversies is carried out daily.

Furthermore, the investment team conducts a detailed review and full update of stock research every

two years.

Integration of ESG controversies

Sycomore AM carries out a full monitoring of the controversies impacting the companies within our

investment universe based on several sources of external data. Effective from 2017, this process relies

on the analysis of ESG controversies conducted by MSCI ESG Research, for most of the companies within

our Sycovalo research universe.

Analysing these issues enables us to highlight potential discrepancies between a company’s statements

and its actions, any areas of weakness, or new risks. This work adds another dimension to our corporate

ESG analysis and helps us identify events that could potentially weigh on its market value. Controversies

that are considered to be very severe can lead to an exclusion from the SRI funds, after consultation




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with the ESG investment team.

The most severe controversies are monitored daily: the investment team takes an active part in the

monitoring and is responsible for the timely input of any severe controversies as soon as they have been

identified through our daily media watch or the warnings received from external analysts. Furthermore,

the controversies analysed by MSCI ESG Research are imported on a weekly basis: these data inputs

cover new controversies as well as the monitoring of on-going events. The controversies are integrated

to our Sycovalo analysis tool and matched with the company/ies and the SPICE criteria concerned.

Each controversy is assigned a rating from 0 to 3 based on the severity, type and status of the

controversy, and on the company’s attitude and reaction to the event:

This score then has a direct bearing on the company’s SPICE rating: each controversy point lowers the

relevant stakeholder group’s rating by 0.1 point as shown hereafter.




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4. INVESTMENT PROCESS

4.1. ESG CRITERIA AND PORTFOLIO CONSTRUCTION


The universe of eligible stocks for Sycomore Sélection Responsable is determined based on ESG

exclusion and selection screenings.

Exclusionary and selection screening

In order to be included in the investment universe applicable to Sycomore Sélection Responsable,

companies must successfully go through two successive screenings:

Exclusionary screening based on key ESG risks: the negative exclusion screen is designed to

exclude all companies carrying sustainable development related risks. These include

inadequate sustainable development practices and performances which call into question a

company’s competitiveness. A company is therefore excluded if it is assigned a rating below

2.5 out of 5 for one of the 3 following criteria (accounting risks, People rating, Environment

rating) or if it is affected by a level 3 controversy.

A selection screening for identifying ESG opportunities: the positive screening is designed to

highlight companies displaying potential for sustainable development opportunities. These

opportunities include quality extra-financial practices and positioning choices that are positive

for the company’s competitiveness and growth. Based on this screening, the company must

meet at least 2 of the 3 selection criteria (governance rating ≥3, SPICE rating ≥3.5 and/or

societal and/or environmental repositioning).




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All selection and exclusion criteria carry the same weight. Sycomore Sélection Responsable is not

managed with market capitalisation, sector or regional biases.

Selection process

Broadly speaking, these exclusion/selection criteria together with our SRI exclusion policy reduce

Sycomore AM’s investment universe (980 stocks monitored actively) to around 55% thereby forming a

universe for Sycomore Sélection Responsable.

Portfolio construction is carried out based on the fund’s eligible investment universe. Traditional

fundamental analysis, valuation and liquidity factors determine portfolio investments, weightings and

divestments.

Portfolio construction

A tool developed by Sycomore AM’s IT team designed to screen the universe based on the exclusion

criteria mentioned above supports the portfolio manager when building the portfolio.

Generally speaking, the divestment process applied to Sycomore Sélection Responsable is based on

several factors:

The stock is close its fundamental value (price target set by Sycomore AM),

Financial or contextual factors call into question our investment thesis,

The overall ESG rating is downgraded due to extra-financial aspects,

The company is impacted by a level 3 controversy.

In the course of our ESG analysis, in the event of major changes in circumstances or serious

controversies, stocks are removed from the portfolio within 3 months maximum. Investors are informed

of these divestments via the fund’s monthly report. This report highlights the main changes (buys and

sells) that have occurred within the portfolio during the past month.




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Sycomore Happy@Work

The eligible universe for Sycomore Happy@Work is determined based on ESG exclusionary and selection

screenings.

Exclusionary and selection screening

In order to be included in the investment universe applicable to Sycomore Happy@Work, companies

must successfully go through two successive screenings:

Exclusionary screening based on key ESG risks: the negative screening is designed to exclude

all companies carrying sustainable development related risks, with particular care given to HR

considerations. These include inadequate sustainable development practices and

performances, notably in the management of human capital, which call into question a

company’s competitiveness. A company is therefore excluded if it is assigned an overall SPICE

rating below 3 out of 5 or if the company is affected by social/labour controversies with a

cumulated severity rating above 2 points (one or two controversies) and/or SPICE controversies

with a cumulated severity rating above 10 points - or 10 controversies maximum.

A positive ‘selection’ screening to help identify the best opportunities for employee

recognition: the selection screen is designed to highlight companies offering potential for

durable performance thanks to their positive approach to human capital considerations,

thereby fostering their employees’ long-term engagement. To be selected, the companies must

meet the following criteria: integration of human-related issues ≥ 3 out of 5 (management

vision, management of growth & crises, health & safety); Happy@Work environment ≥ 3 out of

5 (sense of purpose, empowerment, skills, relations and equity) and employee surveys and

reviews ≥ 3 out of 5 (assessed based on site visits, in-house engagement surveys and/or external

rankings).

Engagement process with portfolio companies: the investment philosophy applied to

Sycomore Happy@Work also includes an engagement process based on constructive dialogue

with the managers of each company, with a focus on sharing best practices and increasing

transparency in a spirit of continuous improvement.




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Selection process

Generally speaking, these exclusion/selection criteria together with our SRI exclusion policy create an

eligible investment universe for Sycomore Happy@Work which represents around 35% of Sycomore AM’s

investment universe (980 stocks monitored actively).



divestments.


As is the case for Sycomore Sélection Responsible, a tool developed by Sycomore AM’s IT team and

designed to screen the universe supports the portfolio manager when building the portfolio.

Generally speaking, the divestment process applied to Sycomore Happy@Work is based on several

factors:










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The eligible universe for the Sycomore Eco Solutions fund is first determined based on environmental

analysis, followed by ESG exclusionary screening.

Environmental analysis and exclusionary screens

In order to be included in the investment universe applied to Sycomore Eco Solutions, companies must

emerge from three successive screenings:

Environmental analysis: to be included in the portfolio of Sycomore Eco Solutions, the

CEET/NEC - determined following the analysis of each of the company’s business lines - must

represent 10% or more of the company’s sales. Companies displaying a CEET/NEC that is lower

than 10% of their sales are therefore excluded from the portfolio.

Sector-based exclusionary screening: this is about removing the businesses that are

particularly harmful to natural capital; consequently, companies operating in the following

lines of business are removed from the portfolio: coal extraction, energy production from fuel

and coal, production of nuclear energy, manufacture of pesticides and fertilizers, intensive

farming, livestock, fishing and forestry, air travel and cement manufacturing.

Exclusionary screening covering main ESG risks: the negative screening is designed to exclude

companies displaying sustainable development-related risks, notwithstanding the

environmental analysis carried out beforehand. Identified risks include insufficient practices

and extra-financial performances which call into question the resilience of the companies

concerned. A company is therefore excluded if its overall SPICE rating is 2.5 out of 5 and lower.




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Selection process

Broadly speaking, these exclusion/selection criteria together with our SRI exclusion policy create an

eligible investment universe for Sycomore Eco Solutions representing around 20% of Sycomore AM’s

investment universe (approx. 200 out of the 980 stocks monitored actively) and less than 10% of the

overall universe (3,000 stocks with sufficient liquidity in Europe).




divestments.

A tool developed by Sycomore AM’s IT team and designed to screen the universe supports the portfolio

manager when building the portfolio.

Generally speaking, the divestment process applied to Sycomore Eco Solutions is based on several

factors:






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The eligible universe for Sycomore Shared Growth includes growth companies, market leaders or

businesses that are benefiting from a positive momentum and gaining market share. The universe is

then reduced using negative ESG screens.

To be included in the eligible universe for Sycomore Shared Growth, companies must pass a set of two

exclusionary screens:

Negative screening based on the SPICE rating: this screening excludes companies if their extra-

financial practices or their positioning fails to offer material opportunities in terms of

competitiveness and growth. A company is therefore excluded if its SPICE rating is ≤ 3/5.

Societal impact negative screening: this screening excludes companies whose products and

services fail to offer solutions addressing main societal challenges and/or that are lacking in

terms of corporate citizenship. A company is therefore excluded if its Society ranking is < 2.5/5.

Sycomore Shared Growth is managed with a style bias driven by financial criteria which may result in a

distinctive sector breakdown. However, the fund has no market capitalisation or regional biases.




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*Formerly Sycomore European Growth.

Selection

These financial and extra-financial criteria, together with our SRI exclusion policy, create an eligible

investment universe for Sycomore Shared Growth representing around 30% of Sycomore AM’s investment

universe (approx. 300 out of the 980 stocks monitored actively).



fundamental analysis, valuation (discount relative to our price target) and liquidity factors determine

portfolio investments, weightings and divestments.

A tool developed by Sycomore AM’s IT team and designed to screen the universe on the basis of financial

and exclusion criteria (see image below) is used to support the portfolio construction process.




37

The selling discipline applied to Sycomore Shared Growth is triggered in the following circumstances:

The stock has reached or is close to the price target set in Sycovalo – its fundamental value

according to Sycomore AM.

Financial factors (business model, financial structure…) evolve negatively or new extra-

financial developments call into question the SPICE rating which is downgraded to below 3/5.

Specific events (societal behaviour, new business acquisitions, asset disposals…) affect the

Society rating, which falls to below 2.5/5.

The company is involved in a level 3 controversy.

Context-related factors call into question our stock ownership.








38

4.2. ZOOM: INTEGRATION OF CLIMATE CHANGE ISSUES

As shown in paragraph 3.4, Sycomore AM has developed the NEC – a metric that enables our teams to

take into account the environmental impact of issuers at the portfolio construction stage.

As shown in the figure below, the methodology we apply takes climate change into account in all impact

domains under examination:

As detailed in paragraph 3.3, the NEC serves as input for the E rating of SPICE within our Sycovalo

analysis tool.

The integration of these issues in our issuer selection process is directly related to the investment

criteria set for each fund and presented in more detail in paragraph 4.1.

4.3. ISSUERS THAT ARE NOT ANALYSED

In compliance with the requirements of the SRI Label, we are committed to analysing and assigning

long-term ratings to 90% of the stocks held in the portfolio, based on ESG criteria.

4.4. INVESTMENTS IN “SOLIDARITY ORGANISATIONS”

None of the four SRI funds invests in “solidarity organisations”.

4.5. SECURITIES LENDING AND BORROWING

Sycomore Sélection Responsable does not lend or borrow securities.

Sycomore Happy@Work does not lend or borrow securities.

Sycomore Eco Solutions does not lend or borrow securities.

Sycomore Shared Growth does not lend or borrow securities.




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4.6. DERIVATIVES

Sycomore Sélection Responsable does not use derivatives at present.

Sycomore Happy@Work does not use derivatives at present.

Sycomore Eco Solutions does not use derivatives at present.

Sycomore Shared Growth does not use derivatives at present and is only authorised to use futures

over transition periods.

4.7. INVESTMENTS IN OTHER UCITS

Sycomore Sélection Responsable, Sycomore Happy@Work, Sycomore Eco Solutions and Sycomore Shared

Growth can invest in:

Money market funds for treasury management purposes;

Equity, bond, or diversified funds as long as the investment strategies are consistent with those

of the funds concerned and are instrumental in achieving their performance objective.

These UCITS are selected by the investment team after meetings with the managers of these funds;

after the relevance of the strategies, the main selection criterion is the sustainability of the investment

process.

Each of the funds concerned may – within the limits mentioned hereafter – invest in UCITS managed or

promoted by Sycomore Asset Management or one of its subsidiaries:

Sycomore Sélection Responsable can invest up to 10% of its net assets in French or European

UCITS;

Sycomore Happy@Work can be exposed to units or shares of collective investment undertakings

within the scope of European directive 2009/65/CE within a limit of 10%;

Sycomore Eco Solutions can be exposed to European UCITS within a maximum limit of 10%;

Sycomore Shared Growth can invest up to 10% of its net assets in units or shares of UCITS or

AIFs.




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5. INTERNAL AND EXTERNAL CONTROL PROCEDURES ENSURING PORTFOLIO ESG COMPLIANCE

Sycomore AM’s ESG analysis was designed to assess how the company performs in terms of stakeholder

relations within the SPICE research framework. As a result, the 80 criteria and 30 SPICE ratings provide

a comprehensive picture of the risks to which the company is exposed. For each factor:

The lower the score and the closer it is to 1/5, the less the risk is correctly managed;

The higher score and the closer it is to 5/5, the stronger the performance and the management

of associated risks.

Sycomore AM has set up a number of procedures aimed at identifying and managing these risks. The

Risk Management team sends the SRI fund managers a monthly report including alerts on a potential

non-compliance breach. The managers have 5 working days to justify this breach with the Risk

Management and Internal Control teams or to take remedial action.

For example, the following situations would trigger a breach alert:

A stock held by Sycomore Sélection Responsable is assigned an E rating below 2.5/5;

Or a stock held by Sycomore Eco Solutions has a Contribution to the Energy and Environmental

Transition below 10%.




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6. IMPACT MEASUREMENT AND ESG REPORTING

6.1. ESG QUALITY ASSESSMENT AT FUND LEVEL

ESG information featured in monthly reports

Since 2012, Sycomore AM has published ESG reports for its entire range of long only funds. Every month,

the ESG footprints are incorporated to all performance reports, based on the following disclosure

system:

This data was extracted from the September 2018 monthly report for the Sycomore Sélection

Responsable fund.

For purposes of clarity, we continue to report on these three traditional pillars. The correspondence

between the S, P, I, C and E ratings and E, S and G ratings is the following:

ESG ratings SPICE ratings

E E

S Aggregation of S, P and C

G G incorporated to the I rating

Focus on Environment

The report provided for the long-only funds of the range includes two environmental indicators

aggregated at fund level:

Carbon footprint: an estimate of the number of tonnes CO2 equivalent produced every year,

per million euros invested;

Net Environmental Contribution® (NEC) aggregated at fund level: a metric developed by

Sycomore AM which accounts for the impacts of our portfolio on the environment; the NEC

takes into account issues of energy/climate, resources and waste, biodiversity, water and air

quality.




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This data was extracted from the September 2018 monthly report for Sycomore Sélection Responsable. The carbon impact is the weighted average of greenhouse gas emissions covering scopes 1 and 2 and part of scope 3. This figure does not take into account all the emissions produced or prevented by the company.

The NEC, Net Environmental Contribution®, measures the extent to which corporate business models are aligned with the energy and environmental transition and global warming targets.

ESG information featured in annual reports

For each SRI labelled fund, we produce an annual report (Sycoway as an Investor) which describes the

resources deployed for the integration of sustainable development criteria within our investment

approach; it also presents the sustainable development performances of our investments over the past

year. These reports meet the requirements of Article 173-VI of law n°2015-992 of August 17th 2015 on

“the energy transition for green growth”. The reports can be downloaded from the pages of the relevant

funds and from our Approach to Responsible Investment page.

Finally, in compliance with the Grenelle 2 Act, all investment annual reports produced for Sycomore

funds mention whether or not ESG criteria are taken into account.

Sycomore AM’s communication tools on our SRI and CSR approach

As a committed SRI manager, we are keen to promote responsible investment and raise awareness

among our different stakeholders, based on the following tools:

The SRI Way Newsletter (published three times a year): Sycomore AM has published around

three SRI or SRI Way Newsletters per year since 2015. Entirely focused on ESG research, these

newsletters examine a variety of ESG-related news features and themes. To support our in-

house research capabilities, Sycomore AM draws on input from outside experts who share their

experience and expertise in a series of interviews. These newsletters (including back issues)

are available for download on Sycomore AM’s website: https://en.sycomore-am.com/Our-

Magazine.


https://en.sycomore-am.com/Our-responsible-approach?sid=1jrmmu8u6vu5tr5cgt0c5gu1uh

https://en.sycomore-am.com/Our-Magazine

https://en.sycomore-am.com/Our-Magazine




43

Accredited training courses: in order to raise awareness of SRI with as many investors as

possible, Sycomore AM provides accredited training courses dedicated to Independent Financial

Advisors and takes part annually in the SRI training session run by First Finance.

Sycoway CSR Report: Sycomore AM launched the SYCOWAY initiative in 2012. This collaborative

corporate project structures our approach to social and environmental responsibility. The

Sycoway as a Company 2017 report provides a specific focus on this approach, presents the

initiatives we have launched, helps us monitor progress and sets guidelines for our future

ambitions; it is complementary to our Sycoway as an Investor report, focused on our approach

as a responsible investor.

6.2. ESG PERFORMANCE INDICATORS

Measuring the ESG performance of our investments is also part of our mission as a responsible investor.

We have therefore selected a series of ESG performance indicators to be published annually for the

SRI-labelled funds (Sycoway as an Investor Reports):

The ESG indicators published for each of our SRI funds are the following:

Percentage of women in the company’s headcount and at executive level: the difference

between the percentage of female executives and the percentage of women under the

company’s headcount provides insight into a company’s ability to promote diversity and equal

opportunities with the business;

Headcount variation over the past 3 years: a company’s ability to create employment is

measured by looking at the cumulated growth in headcount over the past 3 financial years;

Percentage of companies with a Human Rights Policy: at present, companies provide limited

tangible information on their integration of human rights issues. We have therefore chosen to

publish the percentage of companies that have drawn up a formal human rights policy;

Measurement of the company’s environmental impact: the Net Environmental Contribution®

(NEC) described above.

Each investment team can also add qualitative or quantitative information that demonstrates how their

investments contribute to a more sustainable economy, notably by reporting data on the contribution

of portfolio companies to the Sustainable Development Goals (SDGs). Sample indicators can be

published for a limited number of portfolio companies, for information purposes only: companies are

currently working on quantifying their impacts and have reached different stages of maturity.

https://www.sycomore-am.com/5ba9f27f-Sycomore_AM_Sycoway_as_a_Company.pdf




44

6.3. OUTCOMES FROM OUR VOTING AND ENGAGEMENT POLICIES

In accordance with the General Regulations of the Autorité des Marchés Financiers (AMF), Sycomore AM

publishes an Annual Proxy Voting Report which provides an overview of the terms and conditions for

exercising voting rights pertaining to stocks held in UCITS managed by Sycomore AM. The Annual Proxy

Voting Report is also available on Sycomore AM’s website.

The Sycoway as an Investor and Sycoway as a Company reports pertaining to our SRI-labelled funds

(available on our Responsible Approach page) also provide information on the implementation of our

voting and engagement policies.

https://en.sycomore-am.com/5cb7493e-Rapport_AMF_d_exercice_des_droits_de_vote_en_2018_Version_EN.pdf

https://en.sycomore-am.com/5cb7493e-Rapport_AMF_d_exercice_des_droits_de_vote_en_2018_Version_EN.pdf


https://en.sycomore-am.com/5bf81235-RAPPORT_SYCOMORE_AS_A_COMPANY_UK_WEB_A4.pdf




45

APPENDIX – Portfolio inventories as of 30/06/2018 INVENTORY OF SYCOMORE SELECTION RESPONSABLE AS OF 30/06/2018

COMPANY NAME COMPANY NAME COMPANY NAME

ABN AMRO GROUP N.V. SHS DEPOSITARY RECEIPTS DANONE SA KORIAN SA

ADIDAS AG DASSAULT SYSTEMES SA LEGRAND SA

ALLIANZ SE DS SMITH PLC MONDI PLC

AMADEUS IT GROUP SA CLASS A ELIS SA ONTEX GROUP N.V.

AMG ADVANCED METALLURGICAL GROUP N.V.

EUROFINS SCIENTIFIC SOCIETE EUROPEENNE PLASTIC OMNIUM SA

ANHEUSER-BUSCH INBEV SA/NV FRESENIUS MEDICAL CARE AG & CO. KGAA PRYSMIAN S.P.A.

APPLIED MATERIALS, INC. FRESENIUS SE & CO. KGAA QIAGEN NV

ASML HOLDING NV GEA GROUP AKTIENGESELLSCHAFT ROYAL DSM NV

ATOS SE GERRESHEIMER AG SAP SE

AUMANN GMBH GRIFOLS, S.A. CLASS A SCHNEIDER ELECTRIC SE

AXA SA IMCD N.V. SMURFIT KAPPA GROUP PLC

B&M EUROPEAN VALUE RETAIL SA ING GROEP NV SOPHOS GROUP PLC

B&S GROUP S.A. INGENICO GROUP SA SYCOMORE ECO SOLUTIONS

BIOCARTIS GROUP NV INTERXION HOLDING N.V. SYCOMORE RENDEMENT DURABLE

BNP PARIBAS SA CLASS A KBC GROUPE SA UNILEVER NV CERT. OF SHS

BOIRON SA KERRY GROUP PLC CLASS A VALEO SA

BRENNTAG AG KINGSPAN GROUP PLC VOLTALIA

COMPAGNIE GENERALE DES ETABLISSEMENTS MICHELIN SCA KION GROUP AG WESSANEN NV

CONTINENTAL AG KONE OYJ CLASS B WORLDLINE SA

CRODA INTERNATIONAL PLC

INVENTORY OF SYCOMORE HAPPY@WORK AS OF 30/06/2018 COMPANY NAME COMPANY NAME COMPANY NAME

1000MERCIS SA EVS BROADCAST EQUIPMENT SA SCOR SE

2CRSI SA FOCUS HOME INTERACTIVE SAS SEB SA

ACCOR SA HEINEKEN NV SMURFIT KAPPA GROUP PLC

ADESSO AG HERMES INTERNATIONAL SCA SOCIETE POUR L'INFORMATIQUE INDUSTRIELLE

ADIDAS AG HOPSCOTCH GROUPE SA SOMFY SA

AIA GROUP LIMITED IMCD N.V. SOPRA STERIA GROUP SA

AIR LIQUIDE SA INGENICO GROUP SA SPIE SA

AUMANN GMBH LEGRAND SA SVENSKA HANDELSBANKEN AB CLASS A

BIOMERIEUX SA LOWE'S COMPANIES, INC. SWEDBANK AB CLASS A

BOIRON SA MAISONS DU MONDE SA SYNERGIE SA

BONDUELLE SA MANUTAN INTERNATIONAL SA TARKETT SA

BOUYGUES SA MASTERCARD INCORPORATED CLASS A TECHNOGYM S.P.A

BRUNELLO CUCINELLI S.P.A. MEDIAWAN SA TENCENT HOLDINGS LTD.

CHRISTIAN DIOR SE NEURONES SA TESSI SA

COGELEC SA ONTEX GROUP N.V. THERMADOR HOLDING SA

COMPAGNIE DE SAINT-GOBAIN SA PHARMAGEST INTERACTIVE SA T-MOBILE US, INC.

COMPAGNIE GENERALE DES ETABLISSEMENTS MICHELIN SCA RATIONAL AG VALEO SA

COSTCO WHOLESALE CORPORATION ROBERTET SA VOLTALIA

DANONE SA SAGE GROUP PLC WAVESTONE SA

DEVOTEAM SA SALESFORCE.COM, INC. WESSANEN NV

DIRECT ENERGIE SA SAP SE XILAM ANIMATION SA

EIFFAGE SA SAVENCIA SA XING SE

ESSILORLUXOTTICA SA SCHNEIDER ELECTRIC SE




46

INVENTORY OF SYCOMORE ECO SOLUTIONS AS OF 30/06/2018 COMPANY NAME COMPANY NAME COMPANY NAME

ACCELL GROUP N.V. CONTINENTAL AG PRYSMIAN S.P.A.

ACCIONA SA COVESTRO AG RENAULT SA

ACERINOX SA CROPENERGIES AG SCHAEFFLER AG

AKASOL AG DERICHEBOURG SA SCHNEIDER ELECTRIC SE

ALFEN NV EIFFAGE SA SECHE ENVIRONNEMENT SA

ALSTOM SA ENERGIEKONTOR AG SIGNIFY NV

AMG ADVANCED METALLURGICAL GROUP N.V. FAURECIA SA SMURFIT KAPPA GROUP PLC

APERAM SA GESTAMP AUTOMOCION S.A. SPIE SA

ARCADIS NV KAUFMAN & BROAD SA TI FLUID SYSTEMS PLC

ARCELORMITTAL SA KION GROUP AG UMICORE

ARKEMA SA LENZING AG VALEO SA

AUMANN GMBH MBB SE VELCAN HOLDINGS SA

BAIC MOTOR CORPORATION LIMITED CLASS H MONDI PLC VEOLIA ENVIRONNEMENT SA

BEFESA SA NEXANS SA VESTAS WIND SYSTEMS A/S

CENTROTEC SUSTAINABLE AG ORSERO SPA VOLTABOX AG

COMPAGNIE D'ENTREPRISES CFE SA ORSTED VOLTALIA

COMPAGNIE DE SAINT-GOBAIN SA PIAGGIO & C. S.P.A. WESSANEN NV

COMPAGNIE GENERALE DES ETABLISSEMENTS MICHELIN SCA PLASTIC OMNIUM SA

CONSTRUCCIONES Y AUXILIAR DE FERROCARRILES, S.A. PNE AG

INVENTORY OF SYCOMORE SHARED GROWTH AS OF 30/06/2018 COMPANY NAME COMPANY NAME COMPANY NAME

ADESSO AG GR. SARANTIS S.A. QIAGEN NV

AIR LIQUIDE SA GRANDVISION NV RHON-KLINIKUM AG

ALLIANZ SECURICASH FCP 3DEC GRIFOLS, S.A. CLASS A RIB SOFTWARE SE

ALMIRALL SA GRIFOLS, S.A. PREF CLASS B S&T AG

AS COMPANY S.A. ILIAD SA SALVATORE FERRAGAMO S.P.A.

BEIERSDORF AG INDUSTRIA DE DISENO TEXTIL, S.A. SAMSONITE INTERNATIONAL S.A. UNSPONSORED ADR

C&C GROUP PLC INNATE PHARMA SA CLASS A SANOFI

CANCOM SE JDC GROUP AG SAP SE

CELLNOVO GROUP SA JUMBO S.A. SCHNEIDER ELECTRIC SE

COMPUGROUP MEDICAL SE KERRY GROUP PLC CLASS A SEB SA

CORBION NV KORIAN SA SES SA FDR (CLASS A)

DANONE SA LABORATORIOS FARMACEUTICOS ROVI, S.A. SHIRE PLC

DATAGROUP SE LUXOTTICA GROUP S.P.A. SHOP APOTHEKE EUROPE NV

DEAG DEUTSCHE ENTERTAINMENT AKTIENGESELLSCHAFT MAISONS DU MONDE SA SLM SOLUTIONS GROUP AG

DRAEGERWERK AG & CO. KGAA GENUSSSCH. 1997 -O.F. VERFALL SERIE D NACHRANGIG MEDIOS AG SOL S.P.A.

ELIOR GROUP SA NEXUS AG SYCOMORE RENDEMENT DURABLE

ESSILORLUXOTTICA SA NORMA GROUP SE TERVEYSTALO OY CLASS A

EUROFINS SCIENTIFIC SOCIETE EUROPEENNE ORSERO SPA VA-Q-TEC AG

F.I.L.A. - FABBRICA ITALIANA LAPIS ED AFFINI S.P.A. PANDORA A/S WALLIX GROUP SA

FRESENIUS MEDICAL CARE AG & CO. KGAA POLYPHOR LTD WIRECARD AG

FRESENIUS SE & CO. KGAA PUBLICIS GROUPE SA ZEALAND PHARMA A/S




47

Further information can also be obtained by contacting our teams directly:

Sycomore Asset Management

14 Avenue Hoche 75008 Paris

Tél. : 01 44 40 16 00

Email : [email protected]

Bertille Knuckey

Portfolio manager and Head of ESG research


Anne-Claire Imperiale

ESG analyst


DISCLAIMER

Readers should note that the information contained in this document is the exclusive responsibility of

Sycomore Asset Management. This document was created for information purposes only. It constitutes

neither an offer nor a personalized recommendation or solicitation of investment.

The FCP offers no guarantee as to returns or capital protection. Investors should be aware that their

capital invested may not be fully recovered. The fund may not achieve its target performance and may

not meet investor objectives. The performance of a bond can be attributed in part to environmental,

social or governance indicators, which are not, however, the only determining factors of this

performance. It should be noted that past performance are not an indication of future performances

and are not constant over time. Before investing, read the fund’s full prospectus, available for

consultation on our website www.sycomore-am.com.

afg-fir-eurosif transparency code · 2019-06-14 · sycomore am afg-fir-eurosif transparency code...

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