Bastien DUBLANC
Senior Fund Manager
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About this fund
Candriam Sustainable Equity Circular Economy (hereafter "the fund"), a sub-fund of the Candriam Sustainable SICAV, invests primarily in equities, and/or securities equivalent to equities, of companies throughout the world which are considered to become the future leaders of the Circular Economy. Companies involved in activities which contribute to recycling, replacement, repurpose and rationalization of products and resources. The sub-fund aims to invest in ‘circular enablers’, that have their core business positively aligned with the Circular Economy principles & ‘circular transformers’, that contribute to facilitate the mutation of the current economy into a circular one. The fund’s sustainability objective is to contribute to the reduction of greenhouse gases and the achievement of the Paris Agreement objectives. The Sub-Fund is intended for investors who are prepared to accept the risks of participating in equity market developments, together with the level of volatility generally associated therewith. The investment horizon is 6 years. The fund is managed actively, with reference to the index mentioned on the section "characteristics". For further information about this index and its use, please consult the fund’s key information document (KID).
Principal assets traded:
Shares of small, mid and large cap companies throughout the world that provide solutions aligned with a transition towards a circular economy.
Investment strategy:
The fund seeks to achieve capital growth by investing in the principal assets traded and selecting companies providing solutions a for a transition towards a circular economy. The circular economy represents an alternative to the current linear economic model (“extract, manufacture and dispose”) and aims to reduce the need to extract raw materials while reducing waste generation.
The fund implements quantitative screens relying on external data source as well as artificial intelligence to identify companies with a potential contribution to the transition to the circular economy.
These companies are implementing this in a variety of ways, depending on their business sector and the circularity challenges they face. This may involve integrating a greater proportion of biodegradable or recycled materials into their production processes, developing waste treatment solutions, enabling the extension of the lifespan of manufactured products, or reducing the need to produce new equipment by making it easier to share.
Companies are screened based on their ESG performance and exposure to controversial activities. The ESG analysis is the product of a methodology developed by the Management Company.
The analysis of a company's contribution to the circular economy is based on an internal model developed by Candriam which aims to create a body of evidence for each company to support its degree of circularity.
Moreover, each company is assessed through a financial framework according to five fundamental criteria: quality of management, business growth, competitive advantage, value creation, financial leverage. This assessment takes into account ESG aspects.
The strategy therefore also takes into account each company's overall contribution to the Paris Agreement objectives, and its alignment with a 2-degree global warming scenario. This alignment is not only based on carbon emissions, but includes avoided emissions, as well as a forward-looking assessment of a company's investment plans, credibility of greenhouse gas emission reduction targets and strategy.
The fund aims to invest primarily in companies that demonstrate a positive contribution to the objectives of the Paris Agreement and therefore intends to propose a temperature figure of 2.5 degrees or less.
In line with this objective, the fund aims to invest a higher proportion of total assets under management in high stake companies than the benchmark. The EU Climate Benchmark Regulation defines high stake companies as those belonging to one of the sectors considered to play a leading role in achieving the objectives of the Paris Agreement.
The analysis and selection process is also accompanied by active involvement, in particular through dialogue with companies and, as a shareholder, through voting at general meetings. For more information, please refer to the management company's website and/or the prospectus.
The fund may use derivative products both for investment and hedging purposes (hedging against unfavourable future financial events)
Benchmark: MSCI ACWI (Net Return).
The fund is actively managed and the investment approach implies a reference to a benchmark.
Benchmark definition: The index measures the performance of the large and mid-capitalization equity segment across developed and emerging markets worldwide.
Use of the benchmark:
- as investment universe. In general, the majority of the fund’s financial instruments are part of the benchmark. This said, investments outside this benchmark are admitted,
- in the determination of risk levels/parameters.
Deviation level of the portfolio composition from the benchmark:
The fund being managed actively, its objective is not to invest in all constituents of the benchmark, nor to invest to the same extent in the constituents of the benchmark. Under normal market conditions, the tracking error of the fund will be important this is more than 4%.
This measure is an estimation of the deviation of the fund’s performance compared to the performance of the benchmark. The more the tracking error is important, the more deviations compared to the benchmark are important. The effective tracking error depends notably on the market conditions (volatility and correlations between financial instruments) and can deviate from the expected tracking error.
Shares of small, mid and large cap companies throughout the world that provide solutions aligned with a transition towards a circular economy.
Investment strategy:
The fund seeks to achieve capital growth by investing in the principal assets traded and selecting companies providing solutions a for a transition towards a circular economy. The circular economy represents an alternative to the current linear economic model (“extract, manufacture and dispose”) and aims to reduce the need to extract raw materials while reducing waste generation.
The fund implements quantitative screens relying on external data source as well as artificial intelligence to identify companies with a potential contribution to the transition to the circular economy.
These companies are implementing this in a variety of ways, depending on their business sector and the circularity challenges they face. This may involve integrating a greater proportion of biodegradable or recycled materials into their production processes, developing waste treatment solutions, enabling the extension of the lifespan of manufactured products, or reducing the need to produce new equipment by making it easier to share.
Companies are screened based on their ESG performance and exposure to controversial activities. The ESG analysis is the product of a methodology developed by the Management Company.
The analysis of a company's contribution to the circular economy is based on an internal model developed by Candriam which aims to create a body of evidence for each company to support its degree of circularity.
Moreover, each company is assessed through a financial framework according to five fundamental criteria: quality of management, business growth, competitive advantage, value creation, financial leverage. This assessment takes into account ESG aspects.
The strategy therefore also takes into account each company's overall contribution to the Paris Agreement objectives, and its alignment with a 2-degree global warming scenario. This alignment is not only based on carbon emissions, but includes avoided emissions, as well as a forward-looking assessment of a company's investment plans, credibility of greenhouse gas emission reduction targets and strategy.
The fund aims to invest primarily in companies that demonstrate a positive contribution to the objectives of the Paris Agreement and therefore intends to propose a temperature figure of 2.5 degrees or less.
In line with this objective, the fund aims to invest a higher proportion of total assets under management in high stake companies than the benchmark. The EU Climate Benchmark Regulation defines high stake companies as those belonging to one of the sectors considered to play a leading role in achieving the objectives of the Paris Agreement.
The analysis and selection process is also accompanied by active involvement, in particular through dialogue with companies and, as a shareholder, through voting at general meetings. For more information, please refer to the management company's website and/or the prospectus.
The fund may use derivative products both for investment and hedging purposes (hedging against unfavourable future financial events)
Benchmark: MSCI ACWI (Net Return).
The fund is actively managed and the investment approach implies a reference to a benchmark.
Benchmark definition: The index measures the performance of the large and mid-capitalization equity segment across developed and emerging markets worldwide.
Use of the benchmark:
- as investment universe. In general, the majority of the fund’s financial instruments are part of the benchmark. This said, investments outside this benchmark are admitted,
- in the determination of risk levels/parameters.
Deviation level of the portfolio composition from the benchmark:
The fund being managed actively, its objective is not to invest in all constituents of the benchmark, nor to invest to the same extent in the constituents of the benchmark. Under normal market conditions, the tracking error of the fund will be important this is more than 4%.
This measure is an estimation of the deviation of the fund’s performance compared to the performance of the benchmark. The more the tracking error is important, the more deviations compared to the benchmark are important. The effective tracking error depends notably on the market conditions (volatility and correlations between financial instruments) and can deviate from the expected tracking error.
Investment Team
Tanguy CORNET
Deputy Head of Quantitative Equity
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Re-sourcing our planet
David Czupryna, Bastien Dublanc and Tanguy Cornet describe how an ESG (Environmental, Social, Governance) investment strategy on the theme of the circular economy can contribute to a more sustainable economy along with a long-term financial performance objective. -
Belgium - Communication to stakeholders
In the context of the change of our sicav/fcp, please find here the related communications to Belgian professional or private investors. -
Fund Range Information
The Funds Range Information gives you the latest modifications to the Candriam funds range.
Other information
This is a marketing communication. Please refer to the prospectus of the funds and to the key information document before making any investment decision. This marketing communication does not constitute an offer to buy or sell financial instruments, nor does it represent an investment recommendation or confirm any kind of transaction, except where expressly agreed. Although Candriam selects carefully the data and sources within this document, errors or omissions cannot be excluded a priori. Candriam cannot be held liable for any direct or indirect losses as a result of the use of this document. The intellectual property rights of Candriam must be respected at all times, contents of this document may not be reproduced without prior written approval.
Warning: Past performance of a given financial instrument or index or an investment service or strategy, or simulations of past performance, or forecasts of future performance does not predict future returns. Gross performances may be impacted by commissions, fees and other expenses. Performances expressed in a currency other than that of the investor's country of residence are subject to exchange rate fluctuations, with a negative or positive impact on gains. If the present document refers to a specific tax treatment, such information depends on the individual situation of each investor and may change.
In respect to money market funds, please be aware that an investment in a fund is different from an investment in deposits and that the investment’s principal is capable of fluctuation. The fund does not rely on external support for guaranteeing its liquidity or stabilizing its NAV per unit or share. The risk of loss of the principal is borne by the investor.
Candriam consistently recommends investors to consult via our website https://www.candriam.com the key information document, prospectus, and all other relevant information prior to investing in one of our funds, including the net asset value (“NAV) of the funds. Investor rights and complaints procedure, are accessible on Candriam’s dedicated regulatory webpages https://www.candriam.com/en/professional/legal-information/regulatory-information/. This information is available either in English or in local languages for each country where the fund’s marketing is approved.
According to the applicable laws and regulations, Candriam may decide to terminate the arrangements made for the marketing of a relevant fund at any time.
Information on sustainability-related aspects: the information on sustainability-related aspects contained in this communication are available on Candriam webpage https://www.candriam.com/en/professional/sfdr/. The decision to invest in the promoted product should take into account all the characteristics or objectives of the promoted product as described in its prospectus, or in the information documents which are to be disclosed to investors in accordance with the applicable law.
ESG Assessment
This fund has a sustainable investment objective. It invests in economic activities contributing to an environmental and/or social objective. To achieve this objective, the management team makes discretionary investment choices based on an economic/financial analysis process and an internal analysis of environmental, social and governance (ESG) criteria.
a. ESG selection criteria:
For corporates, the internal analysis of ESG criteria consists in selecting the issuers:
• that are the best positioned to meet the challenges of sustainable development;
• that comply with the principles of the United Nations Global Compact (i.e. human rights, labour law, the environment, anti-corruption), and which are therefore less exposed to the risks associated with these themes; and
• that are not engaged in controversial activities such as armament (securities of a company whose activity consists of manufacturing, the use or possession of anti-personnel mines, cluster bombs and/or depleted uranium weapons), tobacco, thermal coal.
For sovereign issuers, the internal analysis of ESG criteria consists in selecting:
• Countries that perform best across our four categories of sustainable development criteria: Human Capital, Natural Capital, Social Capital and Economic Capital;
• Countries that are not part of our highly Oppressive Regimes or dictatorships, based on the Freedom House Freedom in the World Index and the World Bank Voice & Accountability Index.
b. Selection methodology:
The companies selected by the management company are subject to a dual analysis:
• Analysis of their activity to assess their alignment with the major challenges of sustainable development. For example, regarding the transition to a circular economy, the management company will consider a company producing recycled steel to be more sustainable than a company producing steel exclusively from iron ore; and
• Analysis of how the company manages players interacting with the company: its employees, its customers, its shareholders, its suppliers and the environment. Here too, the management company will favour companies that adopt the most sustainable practices given their sector. For example, with regard to relations with its clients, the management company will favour pharmaceutical companies with balanced pricing practices and commercial policies. Similarly, with regard to relations with their employees, the management company attaches great importance to the fight against discrimination and compliance with social standards.
Our sovereign investible universe consists of those countries which perform best across our four categories of sustainable development criteria:
• Natural Capital: stock of naturel resources managed by the country;
• Social Capital: trust, norms and institutions which people can rely on to solve common problems and create social cohesion;
• Human Capital: human productivity to which the country participates through education and other initiatives;
• Economic Capital: assessing the level of economic activity viability.
c. A team of ESG analysts is responsible for assessing the selection criteria:
The analysis and selection of sustainable investments is carried out by a dedicated team of ESG analysts within Candriam. This team is made up of specialists whose mission is to analyse the exposure of companies and governments to the risks and opportunities associated with sustainable development.
Selection criteria are expected to evolve over time, based on advances in ESG research and changes in company practices.